What types of expenses can typically be covered by funds in a health savings account (HSA)?

Funds in a health savings account (HSA) are specifically designated for qualified medical expenses. This includes a wide range of healthcare costs that can be expected throughout the course of a person's medical care. Examples of qualified expenses include costs for doctor visits, prescription medications, dental care, vision care, and other healthcare-related services or products that have been outlined by the IRS.

The significance of using an HSA for these expenses lies in the tax advantages it provides; contributions made are tax-deductible, and withdrawals for qualified medical expenses are tax-free. This unique characteristic encourages individuals to save for health-related costs and promotes proactive health management.

Other options, such as covering only major health emergencies, would not capture the full range of expenses that can be paid for with HSA funds, which include routine and preventive care as well. Day-to-day living expenses and education costs for dependents also fall outside the scope of what HSAs are intended to be used for, as these funds are strictly for medical-related expenditures.