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.