The Internal Revenue Service (IRS) released Announcement 2021-7 on March 26, 2021. It states that amounts paid for personal protective equipment (PPE) for the primary purpose of preventing the spread of COVID-19 can be treated as a medical expense. PPE includes expenses such as face masks, hand sanitizer, and sanitizing wipes for use by the taxpayer, the taxpayer’s spouse, or the taxpayer’s dependent(s). These items are treated as amounts paid for medical care under § 213(d) of the Internal Revenue Code. Amounts associated with these types of expenses incurred on or after January 1, 2020, can be reimbursed by a Health Care flexible spending account (FSA), a health reimbursement arrangement (HRA) or a health savings account (HSA).

The announcement also includes when a plan amendment is required. For purposes of Employee Benefits Corporation clients, our BESTflex plan documents already reference Section 213(d) when identifying qualifying medical expenses, so no plan amendments are required. EBC HRA clients who include Section 213 expenses as an eligible expense do not need a plan amendment either due to the reference to Section 213.  These changes are automatically incorporated. No action is required by employers.

Employee Benefits Corporation participated in the Employer Council on Flexible Compensation (ECFC) Annual Conference last week that included meeting with members of Congress and the IRS and Treasury.  The approval of PPE as a qualified medical expense was included in those advocacy efforts.