Looking for a silver lining to the coronavirus pandemic? Good luck. There is nothing redeeming about the lousy virus that has turned life upside down.
But as Mom always told us, you have to take those lemons and make lemonade. And the IRS has just given us the perfect opportunity to squeeze a little juice from the pandemic, albeit in a modest way.
If you purchased face masks or other protective products in the past year — and who didn’t? — those purchases are now eligible for reimbursement as medical expenses under the following plans:
- Health savings account (HSA)
- Health flexible spending arrangement (health FSA)
- Archer medical savings account (Archer MSA)
- Health reimbursement arrangement (HRA)
The IRS announced on Friday:
“The Internal Revenue Service issued Announcement 2021-7 today clarifying that the purchase of personal protective equipment, such as masks, hand sanitizer and sanitizing wipes, for the primary purpose of preventing the spread of coronavirus are deductible medical expenses.”
This isn’t the first time in the pandemic era that the federal government has broadened the guidelines for what qualifies as a medical expense for the plan types mentioned above.
Last year, the Coronavirus Aid, Relief, and Economic Security (CARES) Act expanded the list of qualified medical expenses for those plans to include menstrual care products and over-the-counter products and medications.
For more, check out the IRS website.
Don’t have a health savings account? Maybe it’s time to start one if you have a high-deductible health insurance plan and otherwise qualify.
As we have pointed out in the past, there are few tax breaks as generous as an HSA. You can take a deduction for your contributions, the money grows tax-free, and you won’t owe taxes when you withdraw it if you spend it on qualified medical expenses.
In short, you will never owe taxes on this money in most cases.
If we’ve piqued your interest and you want to look for an HSA provider, consider Money Talks News partner Lively. MTN contributor Miranda Marquit talks about her experience with Lively in “3 Ways a Health Savings Account Can Improve Your Finances.”