Which statement about Health Savings Accounts (HSA) paired with a High Deductible Health Plan (HDHP) is correct?

• A. Contributions are tax-deductible, and withdrawals for qualified medical expenses are tax-free.
• B. Funds grow tax-free, but withdrawals for qualified medical expenses are taxable.
• C. HDHP requires no minimum deductible.
• D. HSAs are owned by employers.

Answer: (A)

Health Savings Accounts paired with a High Deductible Health Plan are designed to encourage saving for medical costs with favorable tax treatment. Contributions to an HSA are tax-deductible, reducing your current taxable income. The money in an HSA grows tax-free, and withdrawals to pay for qualified medical expenses are also tax-free. This combination—tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified expenses—explains why this statement is correct.

The other points don’t fit: withdrawals for qualified medical expenses are not taxed, they’re tax-free; HDHPs do require a minimum deductible; and HSAs are owned by the individual, not the employer, though an employer can contribute.