News & Events

IRS Announcement 2021-7 Eligible Product List Changes

by Kristin Rutkowski | Mar 31, 2021

On Friday March 26th the Internal Revenue Service issued Announcement 2021-7 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 the Coronavirus Disease 2019 are treated as amounts paid for medical care under IRS Code §213(d) and therefore deductible pursuant to IRS rules.  The amounts paid for personal protective equipment are also eligible to be paid or reimbursed under health flexible spending arrangements (health FSAs), health reimbursement arrangements (HRAs), or health savings accounts (HSAs).  The notice had a retroactive start date of 1/1/2020. While SIGIS cannot affect past transactions, we are making changes as quick as possible for future transactions.

 

Our teams and business partners are working to identify changes to the eligibility criteria and the Eligible Product List.  In addition to our current normal monthly review, we are including a review of 272 items in these categories that were previously marked as ineligible.  Our goal is to have all of this reviewed and published by our next Eligible Product List date scheduled on 4/15/2021.

 

Upon merchants downloading the updated list with revised item eligibility, and processing those changes into their point of sale systems, consumers will be able to proceed through normal checkout lanes and use their health benefit cards for the purchase of these products.  In addition to processing the list, merchants that have private label items will need to update their internal eligibility flagging of products based on the revised list criteria document.

 

While the 4/15/2021 list publication will be a start, we expect large changes to be published in the following months as merchants and manufacturers submit items not currently in our database for eligibility review.  There will also be merchant responsibility to ensure their systems get updated with the item revisions.  The IRS put specific criteria out for these items, which will need to be met for them to be considered eligible.  Products that cannot demonstrate that they meet the criteria will not be included on the SIGIS list. Please refer to CDC guidelines and https://www.irs.gov/pub/irs-drop/a-21-07.pdf for details.

 

SIGIS and our business partners have the highest priority on this change.  We expect it will take some time for all the products to be identified and updated in every merchant’s system.  Consumer experience will be inconsistent across items and products in the near future but should improve quickly.  It will be important, that consumers, plan administrators, manufacturers, point of sale vendors and merchants work together and provide mutual understanding while this change gets rolled out.

 

Future communication will be provided as needed.