Health Savings Accounts (HSAs) allow tax-free withdrawals for qualified healthcare costs, excluding which of the following?

Health Savings Accounts (HSAs) are designed to allow individuals to save money for medical expenses on a tax-advantaged basis. Contributions to HSAs are tax-deductible, and withdrawals for qualified medical expenses are tax-free. However, not all expenses qualify for tax-free withdrawals.

Qualified healthcare costs generally include a wide range of services, such as dental and vision care, as well as prescription medications. Medigap, or Medicare Supplemental Insurance, is designed to cover the out-of-pocket costs not covered by Medicare. Although Medigap premiums can help cover healthcare costs, they are considered insurance premiums rather than direct medical expenses that can be paid tax-free from an HSA.

Therefore, while individuals can use funds from their HSAs for various healthcare-related payments—like dental work, vision expenses, and prescription medications—payments made towards Medigap premiums do not qualify for tax-free withdrawals from an HSA. This distinction is essential for individuals managing their HSA funds and planning for their healthcare expenses.