An HSA is a combination of which two components?

• A. A savings account with no tax benefits and a low-deductible plan
• B. A tax-exempt dollar-for-dollar health savings container and a traditional plan
• C. A tax-favored savings account and a high-deductible health insurance plan
• D. A retirement account and a flexible spending arrangement

Answer: (C)

An HSA combines a tax-advantaged savings account with a high-deductible health plan. The savings account provides tax benefits: contributions may be deducted, earnings grow tax-free, and withdrawals used for qualified medical expenses are tax-free. The accompanying health plan must be a high-deductible health plan, which typically has lower premiums but higher deductibles and out-of-pocket costs, making it eligible to pair with the HSA. Together, these two components define what an HSA is.

This pairing matches the correct idea because it describes the actual structure of an HSA: a tax-favored savings vehicle plus a high-deductible health insurance plan. Other options describe elements that don’t fit this combination—for example, a plan with no tax benefits or a non–HDHP, or a mix with a retirement account or a flexible spending arrangement—so they don’t capture the true two-part setup of an HSA.