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COVID-19 PPE is now FSA, HRA and HSA

On March 26, 2021 the IRS released guidance which allows Health Flexible Spending Arrangements (FSAs) and Health Reimbursement Arrangements (HRAs) to reimburse plan participants for amounts paid to purchase face masks and other personal protective equipment used to prevent COVID-19.  The guidance also allows owners of Health Savings Account (HSAs) to receive tax free disbursements from their account to cover the same expenses.

These new policies can be found in IRS Announcement 2021-7.  The IRS clarifies that the eligible expenses include “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….”  The announcement further clarifies that the new rule applies to expenses incurred as early as January 1, 2020.

If a Health FSA or HRA was written to exclude these items, the announcement allows the Plan Sponsor to adopt a retroactive amendment to make such expenses eligible so long as the amendment is written no later than December 31, 2022. 

Health FSA documents prepared by Admin America will not require an amendment to take advantage of this revised rule.  Our plans are already written to allow all expenses that are considered to be for medical care under Section 213(d) of the Internal Revenue Code (which now includes COVID related PPE as a result of this announcement).

Likewise, HRA documents that previously provided expense eligibility for all Section 213(d) medical care expenses will not need to be amended to take advantage of this new rule.  Plan Sponsors of other HRAs that would like to take advantage of this new rule by allowing Participants to be reimbursed for PPE expenses may contact an Admin America HRA administrator via e-mail at hra@adminamerica.com to request this change.

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Federal Income Tax Return Deadline Postponement Also Extends 2020 HSA Contribution Opportunities

In March, the IRS announced that Federal income tax returns and any tax payments in connection with those forms, with an original due date of April 15, 2021, are now due May 17, 2021.  The filing and payment extension for federal income tax returns automatically postpones to May 17, 2021, the deadline for making 2020 contributions to Health Savings Accounts (HSAs).  The extension is available to contributions made by individuals or employers.  If employer HSA contributions are made for a prior year, the employer must notify the HSA trustee or custodian and inform the employee of that designation.

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2021 HDHP and HSA Limit Update

Each year in May the IRS releases the inflation adjusted limits for High Deductible Health Plans (HDHPs) and Health Savings Accounts (HSAs) applicable for the following calendar year.  The limits announced last month for 2021 in IRS Revenue Procedure 2020-32 are as follows: 

2021 HSA Annual Contribution Limits+ :

  • Self-Only Coverage: $3,600
  • Family Coverage: $7,200

+     Individuals age 55 or older as of the last day of 2021 may contribute an additional $1,000 to their HSA Account for that year.

2021 HDHP Minimum Required Annual Deductibles:

  • Self-Only Coverage: $1,400
  • Family Coverage: $2,800

2021 HDHP Maximum Annual Out-of-Pocket Expense Limits:

  • Self-Only Coverage: $7,000
  • Family Coverage: $14,000


The IRS Revenue Procedure 2020-32 can be found online here.

If you have any questions about these changes or any other rules pertaining to Health Savings Accounts, please submit them to Admin America via our online Q&A forum.