**Case Study: Tax Implications of Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs)**

**Background:** XYZ Corporation, a mid-sized company, offers its employees the option to enroll in either a Health Savings Account (HSA) or a Flexible Spending Account (FSA) as part of their employee benefits package. Both HSAs and FSAs provide tax advantages for qualified medical expenses, but they have different eligibility criteria, contribution limits, and rollover rules.

**Health Savings Account (HSA):** HSAs are available to individuals enrolled in high-deductible health plans (HDHPs). Employees can contribute pre-tax dollars to their HSA, and the funds can be used to pay for qualified medical expenses, including deductibles, co-payments, and certain medical services not covered by insurance. Contributions to an HSA are tax-deductible, and any interest or investment earnings within the account are tax-free. Additionally, unused funds in an HSA can be rolled over from year to year, and the account belongs to the individual, meaning it is portable if they change jobs.

**Flexible Spending Account (FSA):** FSAs are available to employees regardless of their health insurance coverage. Employees can contribute pre-tax dollars to their FSA through payroll deductions, and the funds can be used to pay for qualified medical expenses, such as deductibles, co-payments, prescription medications, and certain over-the-counter items. Contributions to an FSA are also tax-deductible, and funds are available for immediate use at the beginning of the plan year. However, unlike HSAs, funds in an FSA generally cannot be carried over from year to year (with certain exceptions), so any unused funds at the end of the plan year may be forfeited.

**Case Study Scenario:** John, an employee at XYZ Corporation, has the option to enroll in either an HSA or an FSA for the upcoming year. He is considering the tax implications and other factors before making his decision.

**Objective Question:**

Based on the case study presented, what is one key difference between Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs)?

A) HSAs are available only to individuals with high-deductible health plans, while FSAs are available to all employees.

B) Contributions to HSAs are available for immediate use at the beginning of the plan year, while contributions to FSAs are tax-deductible.

C) Funds in HSAs can be rolled over from year to year, while funds in FSAs generally cannot be carried over.

D) Contributions to FSAs are tax-deductible, while contributions to HSAs are not.

Please choose the correct option and provide a brief explanation of your choice.