Which of the following best describes a key benefit of a health savings account (HSA)?

A health savings account (HSA) is designed specifically to help individuals save for medical expenses while enjoying significant tax advantages. One of the most notable benefits of an HSA is that it allows tax-free withdrawals for qualified medical expenses. This means that when individuals withdraw funds from their HSA to pay for eligible health-related costs, those withdrawals do not incur federal income tax. This tax benefit is especially advantageous for individuals looking to manage healthcare costs effectively while also maximizing their savings.

Furthermore, HSAs can also receive contributions that are tax-deductible, providing another layer of tax relief. The funds can also grow tax-deferred, and individuals may even benefit from interest accumulation or investment returns on the balance in their HSAs. This combination makes HSAs a powerful financial tool for managing healthcare expenses while simultaneously offering tax advantages.

The other options do not accurately represent the key benefits associated with HSAs. For instance, immediate cash benefits are not a primary purpose of HSAs, and they are not limited to retirees; they are available to anyone with a qualifying high-deductible health plan. Lastly, while HSAs can accrue interest, this is not their primary selling point compared to the significant tax advantages they provide.