IRS Makes Face Masks and Sanitizer Payable Under FSAs, HSAs or HRAs
March 31, 2021
IRS Makes Face Masks and Sanitizer Payable Under FSAs, HSAs or HRAs

The IRS cleared up an issue about benefit account reimbursements for nonprescription, over-the-counter personal protective equipment (PPE) that has been a source of confusion since the start of the COVID-19 pandemic.

In Announcement 2021-7, issued March 26, the IRS clarified that purchases of PPE such as face masks, hand sanitizer and sanitizing wipes, for the primary purpose of preventing the spread of coronavirus, "for use by the taxpayer, the taxpayer's spouse, or the taxpayer's dependents that are not compensated for by insurance" are deductible from income for tax purposes, "provided that the taxpayer's total medical expenses exceed 7.5 percent of adjusted gross income."

As tax-deductible expenses, the amounts paid for PPE are also eligible to be paid or reimbursed under health flexible spending arrangements (health FSAs), health savings accounts (HSAs) or health reimbursement arrangements (HRAs). However, if an amount is paid or reimbursed under a health FSA, HSA, HRA or any other health plan, it is not deductible for tax purposes.

Separately, the IRS delayed until May 17 the deadline to make 2020 prior-year contributions to HSAs and other individually owned tax-advantaged accounts (see the box below).

Back to previous page