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A health savings account may be established by a person who

Rationale

A health savings account may be established by a person who is covered under a qualified high-deductible health plan.

To establish a health savings account (HSA), an individual must be enrolled in a qualified high-deductible health plan (HDHP), which allows them to contribute pre-tax income to the account for eligible medical expenses. This requirement ensures that HSAs are used in conjunction with specific types of health insurance plans that meet federal criteria.

A (Has no health insurance) YOUR ANSWER

Individuals without health insurance do not qualify for an HSA, as the account is designed to complement a qualified high-deductible health plan. Without any insurance coverage, the individual cannot legally open an HSA, as they are not meeting the essential requirement of being enrolled in an HDHP.

B (Is receiving benefits from Medicare) YOUR ANSWER

Those receiving Medicare benefits are not eligible to open an HSA. Enrollment in Medicare typically occurs at age 65 or due to disability, and it does not meet the criteria of a high-deductible health plan. Therefore, individuals on Medicare cannot contribute to or establish an HSA.

C (Is covered under a qualified high-deductible health plan) CORRECT

This choice accurately reflects the eligibility criteria for opening an HSA. Only individuals who are enrolled in a qualified high-deductible health plan can establish an HSA and benefit from its tax advantages for medical expenses.

D (Is claimed as a dependent on another person's tax return) YOUR ANSWER

Individuals who are dependents on another person's tax return do not qualify for their own HSAs. This is because HSAs are intended for individuals who have their own health insurance, and being a dependent typically means the individual does not have independent coverage that meets the HSA eligibility requirements.

Conclusion

To qualify for a health savings account, an individual must be covered by a qualified high-deductible health plan. This requirement aligns the tax benefits of HSAs with specific insurance coverage, ensuring that individuals can use their contributions for qualified medical expenses. All other options either lack insurance coverage or fall outside the eligibility criteria defined by the IRS, making choice C the only correct response.

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