What is a primary function of spending accounts like FSAs and HSAs?

The primary function of spending accounts like Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) is to set aside funds for qualified medical expenses. These accounts allow individuals to contribute pre-tax dollars specifically designated for healthcare expenditures. This means that any money withdrawn from these accounts to pay for eligible medical costs is tax-free, which offers significant financial advantages for managing healthcare expenses.

Both FSAs and HSAs are designed to ease the burden of out-of-pocket medical bills, enabling individuals to budget more effectively for healthcare needs. Moreover, HSAs have the added benefit of allowing unused funds to roll over from year to year, providing even greater long-term savings potential for future medical expenses. This unique feature makes them a valuable tool for proactive health expense management.

The other options do not align with the primary purpose of these accounts, as spending accounts are specifically focused on healthcare costs rather than general savings for vacations, managing insurance premiums directly, or providing loans for medical bills.