By: HUB’s EB Compliance Team

In Announcement 2021-7, the IRS stated that personal protective equipment (“PPE”), such as masks, hand sanitizer, and sanitizing wipes, that were primarily purchased to prevent the spread of COVID-19 will be considered “medical care” for tax purposes under Section 213(d) of the tax code. The Announcement confirms that health flexible spending arrangements (“FSAs”), health reimbursement arrangements (“HRAs”), and health savings accounts (“HSAs”) may permit these reimbursements.

Equipping Your Plan Document

Since the announcement says COVID-19 PPE is a medical expense under Section 213(d), Health FSAs and HRAs that say they reimburse for all permitted expenses under Section 213(d) of the tax code may not need to be amended. However, some health FSA and HRA plan documents list the permitted reimbursable expenses or might have other exclusions that would make COVID-19 PPE not reimbursable. In that case, the plan can be amended to add COVID-19 PPE as a permitted expense. This comes with a few requirements:

  1. It only applies to COVID-19 PPE expenses incurred on or after January 1, 2020. Presumably, if a plan has extended a run-out period for 2020 claims that has not expired (and potentially could be extended), then this could be used now. Extending the run-out period would allow people to submit claims for COVD-19 PPE expenses in 2020.  Of course, an employer that does not want to reach back into the prior year could allow reimbursements for these expenses as of a later date.
  2. There’s a deadline. The amendment must be adopted by the earlier of December 31, 2022 or the end of the calendar year after the plan year for which it is effective. This means, for example, that an employer with a calendar year health FSA that wanted to offer this reimbursement for 2020 expenses could has to amend by December 31, 2021.  On the other hand, an employer with a calendar year health FSA that wanted to offer this for 2021 would have to amend by December 31, 2022.  This is a limited ability to retroactively amend.
  3. The plan must be operated properly. In other words, if an employer is going to amend retroactively, it has to be reimbursing COVID-19 PPE expenses as of the effective date of the amendment. The point of this requirement is to make sure the plan reimbursement rules are applied consistently. This is intended to prevent an employer from playing games, like retroactively amending its plan if it only reimbursed one person’s COVID-19 PPE expense by accident and didn’t offer the benefit to everyone.

Protecting Against Other Concerns

If an employer is planning to implement this (or if its plan document already allows for this reimbursement), there are a few items to consider. First, review your plan document to determine if it needs to be amended (or potentially already allows for this).

Second, if you are going to make any change in your plan documents, whether extending the runout period or amending to add this new reimbursement feature, confirm with your FSA or HRA administrator that they can handle any changes you intend to make. If you think your plan document already provides for this reimbursement, you should make sure your administrator agrees.

Third, be sure to communicate this to your employees. Even if you think no amendment is required, it may be a good idea to communicate this to employees so they are aware of this opportunity. Note that for HSAs, employees are responsible for maintaining their own receipts to demonstrate that the expenses were proper, so employers generally should not have to make any changes to plan documents. However, employers may want to mention HSAs in their communications.

If you have any questions, please contact your HUB Advisor. You can also view more compliance articles in our Compliance Directory.


Neither Hub International Limited nor any of its affiliated companies is a law or accounting firm, and therefore they cannot provide legal or tax advice. The information herein is provided for general information only, and is not intended to constitute legal or tax advice as to an organization’s specific circumstances. It is based on Hub International's understanding of the law as it exists on the date of this publication. Subsequent developments may result in this information becoming outdated or incorrect and Hub International does not have an obligation to update this information. You should consult an attorney, accountant, or other legal or tax professional regarding the application of the general information provided here to your organization’s specific situation in light of your organization’s particular needs.