Which of the following is true regarding a health savings ac

Which of the following is true regarding a health savings account hsa - aPHR Prep

Question

Which of the following is true regarding a health savings account (HSA)?

Answers

Employees can contribute unlimited funds to an HSA.
If an employee leaves the company, they lose the HSA.
HSA funds can be used to pay for monthly health insurance premium costs.
correct
Only employees enrolled in a high-deductible health plan may contribute to an HSA.

Explanation

The Correct Answer is: D. Only employees enrolled in a high-deductible health plan may contribute to an HSA.

Eligibility to contribute to a health savings account is restricted to individuals enrolled in a qualified high-deductible health plan (HDHP). This requirement is set by federal tax law and ensures HSAs are paired with plans designed to shift initial healthcare costs to the participant. Without HDHP enrollment, employees cannot make or receive HSA contributions.

Why the other options are incorrect:

A. Employees can contribute unlimited funds to an HSA.
HSA contributions are capped annually by IRS limits, which vary by coverage type and year. Contributions beyond these limits are not permitted and may trigger tax penalties.
B. If an employee leaves the company, they lose the HSA.
HSAs are employee-owned accounts. Funds remain with the employee even after termination or job changes, unlike flexible spending accounts tied to employment.
C. HSA funds can be used to pay for monthly health insurance premium costs.
HSA funds generally cannot be used for insurance premiums, with limited exceptions such as COBRA or certain post-employment coverage situations.

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