Question 63

Health savings accounts are designed to pay qualified medical expenses for individuals covered by high-deductible health plans.

Health savings accounts (HSAs) are specifically created to allow individuals with high-deductible health plans to save money tax-free for qualified medical expenses. This makes HSAs a valuable financial tool for managing healthcare costs.

A) Flexible spending account

Flexible spending accounts (FSAs) are also used to pay for medical expenses, but they are not exclusively designed for individuals with high-deductible health plans. FSAs can be used by anyone whose employer offers them, and they typically have a "use it or lose it" policy regarding unused funds at the end of the year.

B) Health savings account

Health savings accounts are explicitly designed for individuals enrolled in high-deductible health plans, allowing them to save pre-tax dollars for medical expenses. This option provides tax benefits and is a key feature of high-deductible plans, making it the correct answer.

C) Medicare supplement insurance

Medicare supplement insurance, or Medigap, is intended to cover costs that original Medicare does not cover, such as copayments, coinsurance, and deductibles. It is not related to high-deductible health plans or designed for managing medical expenses under those specific plans.

D) Long-term care insurance

Long-term care insurance provides coverage for services that assist with daily living activities, typically needed as people age. This type of insurance does not address the qualified medical expenses associated with high-deductible health plans.

Conclusion

Health savings accounts are uniquely tailored for individuals with high-deductible health plans, allowing them to save money for qualified medical expenses in a tax-advantaged manner. In contrast, the other options either serve different purposes or do not specifically cater to those with high-deductible plans, confirming that B is the correct choice.