The IRS has issued guidance clarifying that amounts paid for personal protective equipment—such as masks, hand sanitizer and sanitizing wipes—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 Code Sec. 213(d).
Therefore, amounts paid by an individual taxpayer for COVID-19 PPE for use by the taxpayer, the taxpayer’s spouse, or the taxpayer’s dependent(s) that are not compensated for, by insurance or otherwise, are deductible under Code Sec. 213(a) if the taxpayer’s total medical expenses exceed 7.5 percent of adjusted gross income.
Since amounts paid for COVID-19 PPE are medical care expenses under Code Sec. 213(d), they are also eligible to be paid or reimbursed under:
- health flexible spending arrangements (health FSAs),
- Archer medical savings accounts (Archer MSAs),
- health reimbursement arrangements (HRAs), or
- health savings accounts (HSAs).
Note, however, that amounts paid or reimbursed under one of these arrangements or accounts are not deductible under Code Sec. 213.
Group Health Plans
If COVID-19 PPE expenses may not be reimbursed under the terms of a group health plan (including a health FSA and an HRA), the plan can be amended under this IRS guidance to provide for reimbursements of expenses for COVID-19 PPE incurred for any period beginning on or after January 1, 2020. Such an amendment will not be treated as causing a failure of any reimbursement to be excludable from income under Code Sec. 105(b), or as causing a cafeteria plan to fail to meet the requirements of Code Sec. 125.
Group health plans can be amended under this IRS guidance if:
- the amendment is adopted no later than the last day of the first calendar year beginning after the end of the plan year in which the amendment is effective,
- no amendment with retroactive effect is adopted after December 31, 2022, and
- the plan is operated consistent with the terms of the amendment, including during the period beginning on the effective date of the amendment through the date the amendment is adopted.