What type of contributions fund Health Savings Accounts (HSAs)?

Health Savings Accounts (HSAs) are designed to allow both employees and employers to contribute funds, providing greater flexibility and potential for savings to cover qualified medical expenses. This dual contribution structure helps ensure that both parties can financially participate in the healthcare funding process.

Employers often contribute to HSAs as part of their employee benefit offerings, promoting health savings and encouraging employees to develop a more proactive approach to managing their healthcare costs. Employees can also contribute to their HSAs, either through payroll deductions or direct contributions. This combination not only maximizes the potential savings for employees but also allows contributions to reach the annual limits set by the IRS.

The inclusion of both employee and employer contributions is critical because it enhances the overall utility of HSAs, allowing for more significant savings and spending flexibility for covered medical expenses. Thus, the correct answer highlights the collaborative funding nature of these accounts, making them a beneficial tool for managing healthcare costs.