Final answer:
Withdrawals from an HSA for non-qualified medical expenses are penalized unless the individual is 65 or older. Before age 65, there is a 20% penalty in addition to taxes. After 65, only taxes apply if the expenses are not qualified.
Step-by-step explanation:
The Health Savings Account (HSA) is a type of savings account that allows individuals to save for qualified medical expenses tax-free. If HSA funds are used for non-qualified medical expenses, there is a penalty. The age for avoiding the penalty for non-qualified medical expenses is 65 years old. Before reaching the age of 65, withdrawals made for purposes other than qualified medical expenses are subject to both taxes and a 20% penalty. After age 65, HSA funds may be used for any purpose without incurring the 20% penalty; however, if the expenses are not qualified medical expenses, the withdrawal will be taxed as income.