Georgia Navigator Practice Exam

What is a Health Savings Account (HSA) primarily used for?

1. To fund long-term disability insurance premiums

2. To invest in stocks and bonds for retirement

3. To save for routine medical costs and cover catastrophic care

4. To pay for non-medical expenses tax-free

The correct answer is: To save for routine medical costs and cover catastrophic care

A Health Savings Account (HSA) is specifically designed to help individuals save for qualified medical expenses. It allows individuals to set aside pre-tax money to cover routine medical costs, such as doctor visits and prescription medications, while also providing a financial cushion to help with unexpected, high-cost medical events, often referred to as catastrophic care. This dual purpose makes the HSA a valuable tool for managing healthcare expenses efficiently. In contrast, other options do not meet the primary function of an HSA. Funding long-term disability insurance premiums does not align with the intended use of HSAs, which is strictly for health-related expenses. Investing in stocks and bonds for retirement touches more on retirement accounts like IRAs or 401(k)s rather than HSAs. While HSAs can be used for non-medical expenses, this typically results in tax penalties if the account holder is under 65, making that option secondary to the primary health-related uses of the account. Overall, the core purpose of an HSA is to facilitate savings and payment for health-related costs.