Masks, Hand Sanitizer, and other PPE Now Eligible Medical ExpensesMarch 30, 2021 Alert
The IRS announced that personal protective equipment, if purchased for the purpose of preventing the spread of COVID-19 can be reimbursed as a Section 213(d) medical expense under a health FSA, HRA, Archer MSA, or HSA.
PPE Eligible for Reimbursement
On March 26, 2021, the IRS released Announcement 2021-7. The announcement provides that amounts paid for personal protective equipment for the primary purpose of preventing the spread of the Coronavirus Disease 2019 are amounts paid for medical care under § 213(d) of the Internal Revenue Code. As a result, these amounts are qualified medical expenses eligible to be paid or reimbursed without being included in gross income under health flexible spending arrangements (health FSAs), Archer medical savings accounts (Archer MSAs), health reimbursement arrangements (HRAs), or health savings accounts (HSAs).
The IRS announcement also provides that plans 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.
Plan administrators should review their plan documents and consult with their TPAs to determine the next steps.
Thank you for choosing Paylocity as your Payroll Tax and HCM partner. This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.