The IRS has announced (Announcement 2021-7) that personal protective equipment (PPE) with the primary purpose of preventing the spread of COVID-19, including masks, hand sanitizer and sanitizing wipes, will be eligible medical expenses under Section 213(d) for tax preferred accounts and the itemized deduction.
Employers may adjust their plans to permit the payment or reimbursement of expenses for COVID-19 PPE through an employer sponsored health flexible spending arrangement (FSA), Archer medical savings account (MSA), health reimbursement arrangement (HRA), or health savings account (HSA). Individuals may also claim an itemized deduction for COVID-19 PPE used for themselves or a spouse or dependent, as long as the costs are not reimbursed by insurance and the taxpayer’s total medical expense exceed the 7.5% adjusted gross income floor.
Group health plans, including health FSAs and HRAs, which by their terms do not permit the reimbursement of expenses for COVID-19 PPE, may be amended pursuant to Announcement 2021-7 to provide for reimbursements of expenses for COVID-19 PPE incurred for any period beginning on or after Jan. 1, 2020. A retroactive amendment generally must be adopted by the last day of the first calendar year beginning after the end of the plan year in which the amendment is effective, but no later than Dec. 31, 2022.
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