IRS Update: COVID-19 PPE may be considered a medical expense

Amounts Paid for Certain Personal Protective Equipment Treated as Medical Expenses

On Friday, March 26, 2021, the IRS released an update regarding the purchase of COVID-19 personal  protective equipment  (PPE) under §231(d ) of the tax code.  Click here for IRS  Announcement 2021-07.  This announcement notifies taxpayers that amounts paid for personal protective equipment (PPE), such as masks, hand sanitizer and sanitizing wipes, purchased for the primary purpose of preventing the spread of COVID-19 are to be treated as amounts paid for medical care.  Therefore, amounts paid by an individual for their own use, the taxpayer’s spouse, or the taxpayer’s dependents may now be reimbursed under a health flexible spending arrangement (Health FSA), health reimbursement arrangement (HRA) or health savings account (HSA).

Employer Impact:  If you sponsor a health FSA or an HRA, your plans may be amended to provide for reimbursements for COVID-19 PPE incurred for any period beginning on or after January 1, 2020.

If your plan documents already permit reimbursement of all §213(d) expenses, no amendment is necessary to allow for reimbursement of COVID-19 PPE expenses.

If your plans are more specific about what can be reimbursed, you can amend your plan documents.   Amendments must be adopted no later than the last day of the first calendar year beginning after the end of the plan year in which the amendment is effective.  (For example, if your health FSA plan year is 1/1/21 to 12/31/21, if an amendment is required, you would need to amend your plan documents by 12/31/22.)

 

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