Which term describes a trust created to pay the account holder's qualified medical expenses, typically paired with an HDHP?

Which term describes a trust created to pay the account holder's qualified medical expenses, typically paired with an HDHP?

• A. Health Savings Account (HSA)
• B. Surrenders
• C. Misrepresentation
• D. Dividend Paid-Up Additions

Answer: (A)

A Health Savings Account is a tax-advantaged vehicle designed to pay qualified medical expenses when paired with a high-deductible health plan. It’s owned by the account holder, funds can roll over year to year, and contributions are tax-deductible (or pre-tax), with earnings growing tax-free and withdrawals for qualified medical expenses being tax-free. This setup is often structured as a trust to hold the funds for the account holder’s medical costs. The other terms don’t describe an account meant to cover medical expenses: surrender relates to terminating a policy, misrepresentation is giving false information, and dividend paid-up additions pertain to life insurance dividends used to buy more insurance.

A Health Savings Account is a tax-advantaged vehicle designed to pay qualified medical expenses when paired with a high-deductible health plan. It’s owned by the account holder, funds can roll over year to year, and contributions are tax-deductible (or pre-tax), with earnings growing tax-free and withdrawals for qualified medical expenses being tax-free. This setup is often structured as a trust to hold the funds for the account holder’s medical costs. The other terms don’t describe an account meant to cover medical expenses: surrender relates to terminating a policy, misrepresentation is giving false information, and dividend paid-up additions pertain to life insurance dividends used to buy more insurance.