Seyfarth Synopsis: Avid readers of Beneficially Yours may recall that just over a year ago we asked the pressing question of whether surgical mask purchases could be covered under a health care FSA, among other “novel” coronavirus questions — see what we did there? [Click here for our previous post.] The IRS has confirmed our ground-breaking declaration that masks purchased to prevent contracting the coronavirus could be reimbursable under your health care FSA.
The IRS has finally weighed in — Announcement 2021-7 — allowing personal protective equipment (PPE) to be treated as qualifying medical expenses under Internal Revenue Code Section 213. PPE includes such items as masks, hand sanitizers and sanitizing wipes for the primary purpose of preventing the spread of the virus that causes COVID-19. So, if these items are not otherwise covered by insurance or deducted on an individual’s tax return, they can be reimbursed under the individual’s health care flexible spending account (FSA), health care reimbursement account (HRA), health care savings account (HSA), or Archer medical savings account (MSA).
To the extent these health care arrangements have been permitting these reimbursements already, this announcement provides welcome confirmation. Other plan sponsors may want to use this opportunity to review the rules for their FSAs and HRAs to determine if they should be expanded to specifically allow for reimbursements for these PPE purposes. The IRS states that FSAs and HRAs may be amended for any period beginning on or after January 1, 2020, as long as the plan has been operated consistently and the amendment is in place before the end of the calendar year following the end of the year for which the change is effective. For example, by December 31, 2021 for a change effective January 1, 2020. No retroactive amendment may be adopted later than December 31, 2022.