You can use FSA and HSA funds to buy an eye mask, but not masks to protect against coronavirus

Masks are the barrier that can help us from contracting a virus that has so far killed 379,000 people in the United States.

The Centers for Disease Control and Prevention recommends the use of masks — non-valved multi-layer cloth masks in particular — to limit the spread of the coronavirus, which is says is “transmitted predominantly by respiratory droplets generated when people cough, sneeze, sing, talk or breathe.”

Yet the rules for two key tax-advantaged programs to help people pay for health and medical expenses haven’t caught up with these dreadful times.

You can use funds in your health savings account (HSA) or flexible spending account (FSA) to buy anti-itch insect gel. But paper and cloth masks are not broadly accepted as eligible for purchase with FSA or HSA funds to protect against the coronavirus, which in one day killed 4,000 people last week. Hand sanitizer and surface cleaners used to prevent the spread of the virus are also ineligible.

With an FSA and HSA, you can set aside money, pretax, to pay for certain qualified health expenses, including medical products such as a thermometer for yourself or dependents.

The contribution limit for an employee who chooses to participate in an FSA is $2,750 for 2021. Contributions are not subject to federal income tax, Social Security tax or Medicare tax. People decide how much they want to contribute.

Health savings accounts are linked to high-deductible health plans (HDHP), and like FSAs, they can also be used for various out-of-pocket expenses. The maximum amount you’re allowed to contribute to an HSA for 2021 is $3,600 as an individual or $7,200 as a family. People 55 or older can contribute an extra $1,000 annually to an HSA.

“We think masks should be eligible,” said Rachel Rouleau, vice president of compliance for Health-E Commerce, the parent brand of FSAstore.com and HSAstore.com, online marketplaces where people can purchase eligible products from their health-care spending accounts. “The IRS gives the guidance based on the law. And the IRS has not come out and given any guidance on masks to date.”

Rouleau said it’s possible some benefits administrators may approve the reimbursements for masks.

“You could probably go to your doctor and get something called a letter of medical necessity, which would support maybe a potential medical condition that you have now, which would require that you have the mask,” Rouleau said.

However, even with such a letter, the benefits administrator may deny your claim.

Stephen Brooks from Rockville, Md., said he was denied reimbursement from his HSA to cover what he spent on masks.

“The CDC is telling me I need to wear a mask to protect my health, but the IRS is saying I can’t use my HSA funds, even though the masks are for medical purposes,” Brooks said. “It’s ridiculous.”

“Keep in mind that, even if it is permissible, a given FSA and HSA is not duty-bound to cover every allowable expense,” said IRS spokesman Eric Smith, who said he couldn’t provide a specific answer to the mask issue.

Rouleau said the IRS could provide guidance that would allow people to use the funds in their FSA or HSA to purchase masks and other personal protective equipment, or Congress could enact legislation.

Last year, a bill before Congress would have allowed people to use their HSAs or FSAs to purchase face masks, hand sanitizer and disinfectant products to protect themselves against the coronavirus. But the bill did not pass.

Health-E Commerce has created the Tax-Free Better campaign (taxfreebetter.com/take-action) to advocate for further expansion of expenses covered under FSAs and HSAs, including masks and PPE. People can sign a petition or contact their congressional representative.

“We think that masks should qualify as certainly prevention right now,” Rouleau said. “The CDC is obviously recommending them, people are expected to wear them, and it seems like it should really be a qualified medical expense. But without IRS guidance, we can’t sell them on our website and we can’t tell people that they’re broadly eligible.”

If there was ever a time to expand the rules, it should be now, to help people cover the costs of masks or cleaning supplies that we know can limit the spread of the coronavirus.