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Money-saving and spending strategies for 2021

2020 was a doozy, so here’s to preparing for what’s to come in 2021. Let’s talk tactics to help get ahead when you use your tax-savvy health savings account (HSA).

There’s no doubt about it: 2020 has been a tough year. A culmination of the pandemic, the economy, much political unrest, and a plethora of natural disasters has left many Americans’ mental health and finances alike feeling beaten down—and folks are feeling eager to turn the page in 2021.

While there is still a great deal of uncertainty, it may help to focus on what you can control. The rising cost of healthcare, for instance, may be a growing concern, but there are things you can do to make it more affordable. One strategy is being proactive with your health savings account (HSA). Here’s how we suggest doing just that.

Know the 2021 HSA contribution limits

2020 $3,550 $7,100
2021 $3,600 $7,200


As you think about your budget, consider how much you want to contribute to your HSA in 2021. Annual contribution limits have increased for 2021 by $50 for individual plans and $100 for family plans.

Additionally, you’ll have until the 2021 tax-filing deadline of April 15, 2022 to add to your 2021 contributions, so you may want to pick one of these savings tactics in order max out your account for the year (note: these calculations are based on an individual account).

  • Contribute $300 per month through December 31, 2021
  • Contribute $225 per month through April 15, 2022
  • Reduce monthly contributions with lump-sum deposits (tax refund, bonuses, etc.)

Tip: If you’re between 55 and 64, you’re eligible to contribute another $1,000 on top of the individual limit!

New HSA-eligible expenses for 2021

One of the biggest perks of your HSA is that it offers you the ability to make contributions before paying taxes on that money. Because the money goes into your account pre-tax, you’re basically getting a discount every time you spend the funds.

Another benefit is there is no deadline to use the money in your HSA. As long as you’re spending funds on qualified medical expenses, you can make withdrawals anytime, totally tax and penalty-free.

While it can the tough to keep track of everything the IRS considers a “qualified medical expense,” there are some new eligible expenses to have on your radar before swiping your health savings account card:

Over-the-counter (OTC) medicines – Thanks to the Coronavirus Aid, Relief and Economic Security (CARES) Act, you can spend HSA funds on OTC drugs like pain relievers, allergy medications, and plenty of others from your local drugstore.   

Menstrual care products – Another category of qualified medical expenses are menstrual care products. The CARES Act has also made it possible to use your HSA to pay for products like tampons, pads, liners, cups, sponges, and more.

Telehealth – Congress also recognized the importance of being able to visit a doctor without having to go to the doctor’s they included a temporary expansion (let’s hope it becomes permanent!) to include monthly telehealth subscriptions like Teladoc as a qualifying HSA expense.

It’s important to save copies of your itemized receipts, regardless of which medical expenses fo which you use your health savings account. You need to keep track of that paperwork for your tax return—and Starship makes it easy by enabling you to update receipts directly through the Starship app.

Build an emergency fund for healthcare

If your income hasn’t been impacted by the coronavirus pandemic—and you have some wiggle room in your monthly budget—you may consider trying to grow your HSA balance. Another tax benefit of this account is tax-free growth. So if you don’t need the money right now, you may decide to invest your balance.

There are a few strategies you may consider if you opt for this route:

Cash in your health expense receipts – As you pay for qualified medical expenses out-of-pocket, you should save the receipts. Here’s why: there is no deadline to cash them in.

Save your money for future expenses – If you’re expecting to pay for a costly surgery within the next few years, you could continue paying for your current medical expenses out-of-pocket. This may allow you balance to grow in the meantime.

Invest your money for retirement – If you can afford to leave your HSA alone for many years, you could invest the money for healthcare expenses in retirement. As long as you are eligible (have an eligible high deductible health plan (HDHP)), you can continue making contributions and your balance may have decades to grow.

Be proactive with your HSA for 2021

If there’s anything 2020 taught us, it’s that we can’t always know what’s around the corner. But we can still prepare for the unexpected. While the future at large may be uncertain, we can start taking small steps to build a secure financial future. 

Any amount of savings can make a difference. If you can’t afford to max out your HSA in 2021, contribute as much as you can. When an unexpected medical expense arises, you’ll be grateful the money is there.