To qualify for a tax-exempt Health Savings Account, what type of health plan must an individual be enrolled in?

A Health Savings Account (HSA) can only be established by individuals who are enrolled in a qualified high-deductible health plan (HDHP). The primary purpose of an HSA is to allow individuals to set aside money on a pre-tax basis specifically for qualified medical expenses, while also providing tax advantages.

To qualify as a high-deductible health plan, a health plan must have specific minimum deductible amounts and maximum out-of-pocket expense limits as defined by the IRS. The HDHP features lower premiums but requires individuals to pay higher deductibles before the health coverage kicks in. This structure encourages consumers to take more responsibility for their healthcare spending, as they bear more of the upfront costs until the deductible is met.

In contrast, other types of health plans, such as comprehensive health plans, low-deductible health plans, or Health Maintenance Organizations (HMOs), do not meet the criteria set forth for HDHPs, and therefore do not qualify for the tax-exempt benefits associated with HSAs. A comprehensive health plan typically covers a wider range of services with lower out-of-pocket costs, while low-deductible plans minimize the deductible but may not meet the higher threshold required for HSAs. HMOs focus on a network of providers and often