Benefit News

IRS to Treat Face Masks and Other Personal Protective Equipment as Deductible Medical Expenses

March 31, 2021

The Internal Revenue Service has issued Announcement 2021-7, clarifying that amounts paid for certain personal protective equipment (PPE), such as masks, hand sanitizer and sanitizing wipes that are used for the primary purpose of preventing the spread of COVID-19 (COVID-19 PPEs), are deductible medical expenses.

Therefore, amounts paid for COVID-19 PPEs that are not compensated for by insurance or otherwise, are deductible, provided that the taxpayer’s total medical expenses exceed 7.5% of adjusted gross income.

Tax-favored Accounts

Amounts paid for COVID-19 PPEs are also eligible to be paid or reimbursed under:

  • Health flexible spending arrangements (FSAs);
  • Archer medical savings accounts (Archer MSAs);
  • Health reimbursement arrangements (HRAs); or
  • Health savings accounts (HSAs).

However, if an amount is paid or reimbursed under any of the above accounts, or any other health plan, it will not be considered a deductible medical expense.

Plan Amendments

Group health plans (including health FSAs and HRAs) may be amended pursuant to the announcement to provide for reimbursements of expenses for COVID-19 PPEs incurred for any period beginning on or after January 1, 2020, if:

  • The amendment is adopted by the last day of the first calendar year following the plan year in which it is effective;
  • The plan is operated consistently with the amendment terms until the amendment is adopted; and
  • No amendment with a retroactive effect is adopted after December 31, 2022.

For additional information, please contact your Burnham Consultant or Burnham, A Baldwin Risk Partner at 949‐833‐2983 or

Burnham Benefits does not engage in the practice of law and this publication should not be construed as the providing of legal advice or a legal opinion of any kind. The consulting advice we provide is intended solely to assist in assessing its compliance with the Patient Protection and Affordable Care Act and other applicable federal and state law requirements, and is based on Burnham Benefit’s interpretation of federal guidance in effect as of the date of this publication. To the best of our knowledge, the information provided herein, and assumptions relied on, are reasonable and accurate as of the date of this publication. Furthermore, to ensure compliance with IRS Circular 230, any tax advice contained in this publication is not intended to be used, and cannot be used, for purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another person any tax-related matter.

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