What type of account permits tax-free withdrawals for qualified medical expenses?

A Health Savings Account (HSA) is designed specifically to allow individuals to save money for medical expenses on a tax-free basis. Contributions to an HSA are tax-deductible, and the funds grow tax-free. When used for qualified medical expenses, withdrawals from an HSA are also tax-free, which provides a significant tax benefit.

This account is available to individuals enrolled in high-deductible health plans and encourages saving for future medical costs. The other account types listed may provide benefits for medical expenses, but they do not have the same tax advantages or conditions that HSAs offer. For example, while Flexible Spending Accounts (FSAs) can also be used for medical expenses, they typically require funds to be used within a specified time frame, and they don’t enjoy the same long-term tax-deferred growth potential as HSAs do.