South Carolina Insurance Practice Exam

When a health savings account (HSA) is established, what type of health plan must the holder have?

1. High-deductible health plan

2. Comprehensive health plan

3. Standard health insurance plan

4. Managed care plan

The correct answer is: High-deductible health plan

The requirement for a health savings account (HSA) is that the account holder must be enrolled in a high-deductible health plan (HDHP). This type of plan is designed with higher deductibles than traditional insurance plans, and it works in conjunction with an HSA to provide tax-advantaged savings for qualified medical expenses. The specific design of HDHPs includes lower premiums and higher deductibles that enable individuals to set aside money in an HSA to cover out-of-pocket medical costs. HSAs offer several tax benefits, including contributions that are tax-deductible and withdrawals for qualifying medical expenses that are tax-free. By requiring a high-deductible health plan, the HSA structure encourages individuals to save for their healthcare while also managing their medical expenses more strategically. Other types of health insurance, like comprehensive health plans or managed care plans, do not meet this specific requirement for HSA eligibility.