Distributions from a Health Savings Account (HAS) for qualified medical expenses are

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Study for the Louisiana Series 103 – Life, Health, and Accident or Sickness Insurance Exam. Familiarize yourself with key concepts through engaging questions and explanations. Prepare effectively for your exam!

Multiple Choice

Distributions from a Health Savings Account (HAS) for qualified medical expenses are

Explanation:
Distributions from a Health Savings Account used to pay qualified medical expenses are tax-free. This follows the tax-advantaged design of HSAs: contributions are typically deductible or pretaxed, earnings grow tax-free, and withdrawals for qualified medical expenses are not subject to federal income tax. If a distribution is used for non-qualified expenses, it becomes taxable (and may incur a penalty if under age 65). After 65, non-qualified withdrawals are taxed as ordinary income but no longer incur the penalty. So the best answer is tax-free.

Distributions from a Health Savings Account used to pay qualified medical expenses are tax-free. This follows the tax-advantaged design of HSAs: contributions are typically deductible or pretaxed, earnings grow tax-free, and withdrawals for qualified medical expenses are not subject to federal income tax. If a distribution is used for non-qualified expenses, it becomes taxable (and may incur a penalty if under age 65). After 65, non-qualified withdrawals are taxed as ordinary income but no longer incur the penalty. So the best answer is tax-free.

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