What happens to the funds in a Health Savings Account if they are not used in a given year?

The correct answer highlights that funds in a Health Savings Account (HSA) do not expire at the end of the year; instead, they remain in the account and can accumulate over time. This characteristic of HSAs is significant because it allows account holders to build up savings for future medical expenses without the pressure of losing unspent funds.

Unlike flexible spending accounts (FSAs), which may have a "use it or lose it" policy where unused funds can expire, HSAs offer the flexibility to roll over funds from year to year. This rollover feature is part of what makes HSAs an attractive option for individuals who want to save for future healthcare costs. Additionally, the funds grow tax-free, providing an added incentive for long-term savings.

This accumulation aspect of HSAs enables individuals to plan for larger medical expenses or to use the funds for qualified expenses later in life, even if they do not use all the funds in a given year.