Which of the following statements is true about health savings accounts (HSAs)?
A)There is no restriction on the kind of health insurance taxpayers must carry in order to qualify for an HSA.
B)Contributions to HSAs are not deductible for adjusted gross income (AGI), but are treated as an itemized deduction.
C)Individuals taking distributions from HSAs which are not for medical expenses are subject to a 50 percent penalty.
D)Distributions from HSAs are tax and penalty free when used for qualified medical expenses.
E)Taxpayers may take tax and penalty free distributions from HSAs to purchase automobiles after age 65.

Question

Quizplus · Accepted Answer

Distributions from HSAs are tax and penalty free when used for qualified medical expenses. This is one of the main benefits of having an HSA. The other statements are false: A) taxpayers must have a high-deductible health plan (HDHP) to qualify for an HSA, B) contributions to HSAs are deductible for AGI, not as an itemized deduction, C) distributions used for non-medical expenses are subject to income tax and a 20 percent penalty, not 50 percent, and E) taxpayers cannot take tax and penalty free distributions from HSAs to purchase automobiles at any age.

Which of the Following Statements Is True About Health Savings