Arthur's employer establishes Health Savings Accounts (HSAs) for its employees. Arthur pays $2,100 into his HSA. During the year, the HSA earns $90 interest and Arthur receives $1,850 from the HSA for reimbursement of medical expenses.
I.Arthur must include $90 in gross income from the HSA arrangement.
II.Arthur loses the $250 in contributions that are not spent on medical expenses in the current year.

Question

Arthur's employer establishes Health Savings Accounts (HSAs) for its employees. Arthur pays $2,100 into his HSA. During the year, the HSA earns $90 interest and Arthur receives $1,850 from the HSA for reimbursement of medical expenses.
I.Arthur must include $90 in gross income from the HSA arrangement.
II.Arthur loses the $250 in contributions that are not spent on medical expenses in the current year.
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Quizplus · Accepted Answer

Interest earned on an HSA is not included in gross income if it remains within the HSA. Unused contributions to an HSA roll over year to year and are not lost.

Arthur's Employer Establishes Health Savings Accounts (HSAs) for Its Employees