Known as Obamacare, the Affordable Health Care Act places a tax on a variety of services, items and businesses. The Medical Device Tax has come under fire from a variety of companies and individuals who claim it will accomplish everything from the loss of jobs to the stagnation of innovation, and take away medical devices from the elderly and infirm.
Obamacare does place a tax on medical devices, but the tax is levied against companies that make them, not against the people that use them.
The 2.3 percent excise tax is on the sale of the devices, not profits, and was actually cut in half from an original figure of 4.6. The tax went into effect on Jan. 1, 2013.
Who Pays the Tax And Why?
The tax affects devices that include defibrillators, dialysis machines, heart monitors and pacemakers. Fearing outsourcing of production and a loss of potential revenue, the Act covers all device manufacturers, regardless of where the equipment is actually made.
The law is only supposed to apply to devices that require the approval of, or referral by, a physician.
Those include many high-dollar tests conducted with MRIs, lasers and similar equipment.
Selling Devices Over-The-Counter
The Act says devices sold over-the-counter directly to consumers are exempt. Those devices include common items like contact lenses, eyeglasses and hearing aids.
Even though some devices can be sold directly to consumers, such as blood pressure and glucose monitors, many insurance companies won’t cover the cost unless it’s accompanied by a doctor’s prescription.
Patients would have to pay for the equipment out of their own pocket and the cost wouldn’t count toward the individual’s deductible.
Obamacare’s device tax may not be applied when patients purchase any of the devices, but individuals will most likely experience overall increases on retail prices.
In medical facilities, patients will be billed more to use the machines.
Insurance companies may or may not pay the increased costs, but will most likely pass it on to patients in the form of deductibles.
Efforts to Repeal The Tax
Many in the House have voiced their intent to repeal the tax.
They cited the law as economically harmful, with the potential for a loss of life if device manufacturers reduced production or if medical facilities refused to purchase devices due to cost increases.
House officials claim the tax would stifle research and development, and would adversely affect start-up companies that might not be able to afford another tax as the cost of doing business.
Confusion surrounds many of the Obamacare taxes and many individuals were highly concerned that they would be denied medical devices they count on through the inability to afford another tax.