The government grant will go to people who suffer hair loss due to illness, and will include hair loss resulting from cancer and forms of alopecia.
People with alopecia could spend upwards of 1,000 euro a year on headpieces and wigs.
The Minister for Social Protection Heather Humphreys said the 500 euro grant will go some way to helping people buy hairpieces.
Paddy Pender, of Alopecia Ireland, said wearing wigs helps people with alopecia mix with others in “a more normal way”.
“I would go through at least one wig a year, most people go through many more because they wear them when they go out,” Ms Pender said.
“It helps us to get out and about and helps us to mix and mingle with others in a more normal way, because our normal is bald which can be fashionable, but most of the time it is not.
“Being bald is very uncomfortable, it brings lots of other problems with it.
The wigs help us go out and feel normal but it is an extra expense.
“There is a lot of taboo around it and we would like people to come forward and acknowledge they have it and share what it is like. We have support groups around the country.
“It’s not just about the person, it’s about the family as well. We saw the whole furore around Will Smith. It has a knock-on effect on the family life and that may driven him to do what he did. It wasn’t right but at the same time I can see why families would be upset with unwanted comments and ridicule.
“The wigs help us go out and feel normal but it is an extra expense.”
Ms Humphreys said people needed financial relief from having to buy wigs.
“I said we need to change this, we need to recognise that alopecia is a life-long condition and we should be doing something about it so we looked at extending the benefits treatment scheme that we have,” the Fine Gael minister added.
They will be treated the same as those who get benefits for dental treatment, for hearing aids or for eye tests.
“We will provide a grant for people who have alopecia to help them towards the purchase of a hair piece, or a head covering of 500 euro.
“They will be treated the same as those who get benefits for dental treatment, for hearing aids or for eye tests.
“It’s an important step that we recognise this life-long condition and there is also a certain taboo around alopecia as well, some people are afraid to talk about it or afraid to say they have this condition.
“So, we want to give them support.”