IRS Allows Face Masks and Other Personal Protective Equipment as Qualified Expenses
The IRS issued an announcement on March 26, 2021 clarifying that personal protective equipment, such as masks, hand sanitizer and sanitizing wipes, purchased on or after January 1, 2020, are qualified medical expenses if used for the primary purpose of preventing the spread of coronavirus. This will permit these expenses to be paid tax-free with Health Savings Accounts (HSAs), Archer Medical Savings Accounts (MSAs), health Flexible Spending Accounts (FSAs), and Health Reimbursement Arrangements (HRAs). These expenses are also now deductible as a medical expense for taxpayers that itemize deductions. Employers, plan sponsors and plan administrators are permitted to amend their plans to include these expenses.
Everyone should keep in mind that the IRS guidance is narrower than it may appear at first look. Since the personal protective equipment is specific to COVID-19 prevention, the equipment must follow the guidelines from the Centers for Disease Control and Prevention (CDC) as to what is “preventive.” For example, disposable masks must be made of multiple layers of non-woven material and include a nose wire. Cloth masks must be made of multiple layers of tightly woven breathable fabric which should block light when held up to a bright light source as well as include a nose wire. Gaiters, face shields, and masks with exhalation valves or vents are not eligible.
Hand sanitizers must be at least 60 percent alcohol (often listed on the label as ethanol, ethyl alcohol, isopropanol, or 2-propanol). Other sanitizing, antiseptic or antibacterial hand cleanser such as benzalkonium chloride are excluded, as are household wipes, sprays, and similar items.