Health Savings Account (HSA)
A tax-advantaged savings account that can be used for health care expenses. You must have a high-deductible health plan to contribute to an HSA.
Detailed Explanation
HSA contributions are tax-deductible, the funds grow tax-free, and you can make tax-free withdrawals for qualified medical expenses—a triple tax advantage!
Practical Example
David has a high-deductible health insurance plan, so he also contributes to a Health Savings Account. This allows him to save money for future medical expenses while also enjoying tax benefits.
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