In some rather odd timing, the IRS has just announced that purchases of personal protective equipment (PPE) can be treated as a reimbursable medical expense under §213, retroactive to PPE purchased on/after January 1, 2020.
Health savings accounts (HSAs) will automatically be eligible for this expanded definition of reimbursable expenses, but employers can decide whether to expand PPE to be reimbursable from health reimbursement arrangements (HRAs) and flexible spending accounts (FSAs). Amendments can be retroactive if “adopted not later than the last day of the first calendar year beginning after the end of the plan year in which the amendment is effective.” However, retroactive amendments will not be allowed any later than December 31, 2022. For example, an employer with a calendar year plan that will retroactively amend the 2020 plan to allow reimbursement of PPEs from the HRA or FSA must be amended by December 31, 2021, but a calendar year plan that will retroactively amend the 2021 plan (not the 2020 plan) must be amended by December 31, 2022. PPE includes expenses like “masks, hand sanitizer and sanitizing wipes, for the primary purpose of preventing the spread of the Coronavirus Disease 2019.”
It’s difficult to imagine that employees will have receipts to submit to their HSA, HRA, or FSA for reimbursement of PPE purchased in-store, but perhaps online orders could more easily have a receipt tracked down and submitted. Most 2020 plan years should not be completely closed to new receipt submissions yet because of the Outbreak Period extensions allowing up to a year after your usual timely claim filing deadline to still submit claims, but third party administrators of these plans may still have difficulty administering these new reimbursements, so it’s worth discussing with them before making a decision for your own plan.
IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information.
This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.