Who Really Pays?
Pursuant to the federal health care legislation of March 2010, a new section 4191 was added to the Internal Revenue Code. This new code section provides for an excise tax of 2.3% on sales of medical devices other than eyeglasses, contact lenses, hearing aids, and other medical devices purchased, at retail, by the general public for individual use. In other words, Class I medical devices sold to the public are generally excluded from the excise tax. The application of this new excise tax takes effect for sales by the manufacturer, producer, or importer of medical devices after December 31, 2012.
An earlier version of the health care bill that was introduced by the Senate had a starting date in 2010 and it would have cost the medical device industry approximately $40 billion in excise tax over ten years. Several large medical device manufacturers and industry groups were able to influence members of Congress so that the final version of the law begins with medical device sales in 2013. Starting in 2013, the final version of this excise tax provision is expected to cost the medical device industry approximately $20 billion over ten years. Read more »