Which of the following accurately describes a feature of health savings accounts?

Health Savings Accounts (HSAs) are uniquely designed to help individuals save for medical expenses, providing significant tax advantages. One of the key features of HSAs is that funds can be used tax-free for qualified medical expenses. This tax benefit incentivizes saving for healthcare costs, allowing individuals to make contributions with pre-tax dollars, and then withdraw those funds without incurring federal taxes when they are used for eligible medical expenses.

Using HSA funds for qualified medical expenses can include a wide range of costs, such as doctor visits, prescription medications, and other healthcare-related expenditures. This feature underscores the purpose of HSAs as a means to encourage savings for medical needs while also easing the financial burden of unexpected healthcare expenses.

In contrast, some of the other statements regarding HSAs do not accurately reflect their structure or benefits. For instance, contributions to HSAs are made with pre-tax dollars, meaning they are not subject to federal taxes at the time of deposit. Additionally, while HSAs can be used in a manner that supports retirement savings, they are not exclusively for that purpose. Lastly, withdrawals for qualified medical expenses are exempt from penalties, which is another critical advantage of HSAs.