What type of account can individuals use to save for health care expenses?

Individuals can use a Health Savings Account (HSA) specifically to save for health care expenses. HSAs are designed to allow people to set aside money on a tax-free basis to pay for qualified medical expenses. Contributions to an HSA are tax-deductible, and the money can grow tax-free, as long as it is used for eligible health costs.

One of the primary advantages of an HSA is that the funds roll over from year to year, meaning that unspent funds do not expire, allowing for long-term savings for health-related expenses. Additionally, HSAs usually come with investment options after a certain balance is reached, offering the potential for growth over time.

In contrast, while retirement accounts can be used for general long-term savings and may provide some liquidity in terms of withdrawals, they are primarily focused on retirement income rather than immediate health care expenses. Education Savings Accounts are intended primarily for funding education costs, and regular savings accounts do not offer the specific tax advantages or purposes related directly to health care expenses that an HSA does. Thus, the Health Savings Account is uniquely tailored for this purpose.