COVID-19 Home Testing Cost is an Eligible IRS Medical Expense

Employee benefit-related questions regarding nonprescription, over-the-counter personal protective equipment (PPE) have been a source of confusion since the start of the COVID-19 pandemic.

In an announcement this month, the Internal Revenue Service (IRS) emphasized home testing kits for COVID-19 are an eligible medical expense.

The IRS first announced in February eligible educators can deduct unreimbursed expenses for COVID-19 protective items such as hand sanitizer, sanitizing wipes, and masks to stop the spread of COVID-19 in the classroom through the educator expense deduction.

In late March the IRS clarified PPE purchases used for preventing the spread of the coronavirus are a deductible medical expense. The amount an individual pays can be reimbursed under health savings accounts (HSAs), health reimbursement arrangements (HRAs), health flexible spending arrangements (health FSAs), or Archer medical savings accounts (Archer MSAs). Any amount paid or reimbursed under one of these accounts or arrangements is not deductible for tax purposes under the medical expense or the educator expense deductions.

HR leaders may want to notify employees of this information through an HR newsletter, via their intranet, or through any other media used to communicate HR updates. For further guidance, see IRS topic number 502 and the online tool used to help taxpayers determine if their medical and dental expenses are deductible.