PPE Deemed Reimbursable Under Certain Tax Favored Accounts

The Internal Revenue Service issued Announcement 2021-7, clarifying that amounts paid for certain personal protective equipment (PPE), such as masks, hand sanitizer and sanitizing wipes, used for the primary purpose of preventing the spread of the Coronavirus Disease 2019 (COVID-19 PPE) are treated as amounts paid for medical care under § 213(d) of the Internal Revenue Code (Code).

Since these expenses are classified as medical care under § 213(d) of the Internal Revenue Code (Code), these amounts are also eligible to be paid or reimbursed under:

• Health FSA
• Archer MSAs
• HRAs
• HSAs

However, if an amount is paid or reimbursed under any of the above accounts, or any other health plan, it will not be considered a deductible medical expense.

Group health plans, including health FSAs and HRAs, may be amended pursuant to the announcement to provide for reimbursements of expenses for COVID-19 PPE incurred for any period beginning on or after Jan. 1, 2020, provided certain requirements are satisfied.

Please see the IRS Announcement for complete details.

For questions, please contact your B&P Sales Rep - 888.722.3373.