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Writer's pictureSarah Borders

Tax-Free PPE?

Updated: May 4, 2023


The IRS recently issued Announcement 2021-7 called which allows amounts paid for personal protective equipment (PPE) such as masks, hand sanitizer, and sanitizing wipes, for the primary purpose of preventing the spread of COVID-19 now treated as medical care expenses under § 213(d) of the Internal Revenue Code.


Because COVID-19 PPE costs are now considered to be 213(d) medical expenses, they are also eligible to be paid or reimbursed tax free by a health FSA, HRA or HSA.


This amendment is optional for employers who sponsor a health FSA or HRA, but those deciding to include COVID-19 PPE as a reimbursable expense must amend the plan document. The amendment can be adopted retroactively for expenses incurred on or after January 1, 2020. The adoption date must not be later than the last day of the first calendar year beginning after the end of the plan year in which the plan allows reimbursement of COVID-19 PPE expenses. For example, a calendar year health FSA or HRA that allows reimbursement of COVID-19 for the 2021 plan year would need to adopt an amendment no later than December 31, 2022.


While the IRS announcement does not require a specific disclosure to employees, employers should alert third party administrators and vendors to facilitate this change to their plans and amend the plan documents.


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