What is a health savings plan?

A health savings plan specifically refers to a savings option that allows employees to set aside money on a pre-tax basis to be used for qualified medical expenses. This option is typically linked to high-deductible health plans (HDHPs) and includes contributions from the employee, potentially combined with employer contributions. By opting for payroll deductions, employees can effectively lower their taxable income while also saving for future healthcare costs.

This structure is designed to offer individuals greater control over their health care spending, encouraging them to use their healthcare resources more judiciously. It also provides financial flexibility, as funds can be rolled over yearly and invested for long-term growth if not used immediately.

The other options listed do not align with the definition or purpose of a health savings plan. They focus on scenarios unrelated to the specific savings mechanism designed for healthcare expenses tied to employment.