According to the IRS, amounts paid for personal protective equipment (PPE) used primarily to prevent the spread of COVID-19, including things like masks, hand sanitizer, sanitizing wipes, and other things, can be treated as medical care costs under Sec. 213(d). Because of this, if a taxpayer is not reimbursed by their insurance or a separate party for costs spent on COVID-19 PPE used by the taxpayer, the taxpayers spouse, or the taxpayers dependents, those costs are deductible under Sec. 213(a) if the taxpayer’s total medical expenses exceed 7.5% of adjusted gross income.
Another option for taxpayers is to have PPE costs reimbursed under health flexible spending arrangements (health FSAs), Archer medical savings accounts (Archer MSAs), health reimbursement arrangements (HRAs), or health savings accounts (HSAs). But if an amount is covered in any way by a health FSA, Archer MSA, HRA, HSA, or any other health plan, it is no longer deductible under Sec. 213.
If the terms of a group health plan such as FSAs or HRAs do not allow for COVID-19 PPE reimbursements, they may be amended under this announcement to provide for reimbursements of expenses for COVID-19 PPE incurred for any period beginning on or after Jan. 1, 2020, and that amendment will not be treated as causing a failure of any reimbursement to be excludable from income under Sec. 105(b) or as causing a Sec. 125 cafeteria plan to fail to meet the Sec. 125 requirements.
However, a group health plan may only make an amendment under the announcement if the amendment is adopted before 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 Dec. 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.
As always if you have any questions about your deductions or whether or not something counts, make sure to reach out to us at 540-250-3198 or visit us online at www.swvatax.com.