Under federal law, a tax exempt Health Savings Account can only be opened for an...

A Health Savings Account is available only to an eligible individual, and a central eligibility requirement is coverage under a qualified High Deductible Health Plan. Therefore, choice A is correct. The individual also generally must not have disqualifying other health coverage, be enrolled in Medicare, or be claimable as another person’s tax dependent. Long-term care insurance does not itself establish HSA eligibility. Medicare enrollment generally prevents new HSA contributions, although the account balance may still be used for qualified expenses under applicable tax rules. An HSA offers tax-favored contributions, tax-deferred growth, and tax-free distributions for qualified medical expenses when statutory requirements are met. The HDHP must satisfy annual federal deductible and out-of-pocket limits, which are adjusted periodically. The IRS states that eligible individuals must have HDHP coverage and no disqualifying health coverage to make HSA contributions. See IRS HSA guidance . Study Guide References/Topics: Taxation and Business Uses of Health Insurance; Health Savings Accounts; High Deductible Health Plans.

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