What is a "health savings account" (HSA)?

A health savings account (HSA) is a tax-advantaged account specifically designed to help individuals save money for qualified medical expenses. The primary feature of an HSA is that contributions made to the account are tax-deductible, which means they can reduce your taxable income. Additionally, any interest or earnings that accumulate within the account grow tax-free, and withdrawals for qualified medical expenses are also tax-free.

HSAs are typically paired with high-deductible health plans (HDHPs) to provide a safety net for health expenses while encouraging saving and responsible spending on healthcare. This makes option C the correct choice.

In contrast, a savings account for housing expenses does not relate to healthcare and would serve a different financial need. A tax-free account for investment purposes generally refers to accounts like Roth IRAs or other investment vehicles but does not apply specifically to medical expenses. Lastly, while a retirement account for healthcare professionals could potentially exist, it is not the defining feature of an HSA, which focuses specifically on medical expenses during the individual's working life and potentially into retirement as well.