IRS Provides Guidance on PPE as Reimbursable Medical Expenses

March 30, 2021

The IRS has issued Announcement 2021-7, indicating that amounts paid for personal protective equipment (PPE)—such as masks, hand sanitizer, and sanitizing wipes—that are primarily used to prevent the spread of COVID-19, are treated as amounts paid for medical care under Internal Revenue Code Section 213(d). As a result, these items are now eligible to be paid or reimbursed under health flexible spending accounts (health FSAs), health reimbursement arrangements (HRAs), and health savings accounts (HSAs).

Employers offering health FSAs, HRAs, and HSAs have the option to amend their plans to provide for reimbursement of COVID-19 PPE expenses incurred for any period beginning on or after January 1, 2020. Employers choosing to amend their plans must do so by the last day of the first calendar year beginning after the end of the plan year in which the amendment is effective. Retroactive amendments are not permitted after December 31, 2022.