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Tax on Medical Devices by The Patient Protection & Affordable Care Act

Congress has approved a health care reconciliation package that supplements and modifies the Patient Protection and Affordable Care Act (the “Act”). The Act was signed into law on March 23, 201

  • Originally the Act was to impose an annual fee of 2.9% of the price of the device, on medical device manufacturers and importers beginning in 2011.

     
  • The reconciliation bill converts the fee on medical devices to an excise tax of 2.3% of the sales price of the device and delays the effective date until 2013.

     
  • The fees would generally apply to sales of any medical device intended for human use in the U.S. However, specific exclusions include, but are not limited to, hand-held surgical devices, eyeglasses, contact lenses, hearing aids, blood pressure monitors, pregnancy tests, certain bandages, and any other device deemed by the Secretary to be the type available for regular retail purposes.

     
  • Companies with less than $5 million in medical device sales (including affiliates under common control) during the calendar year will not be subject to a fee. Companies with medical device sales of $5-25 million will be subject to a fee on 50% of medical device sales and for companies with medical device sales over $25 million, 100% of excess sales will be taken into account.

     
  • Stay tuned for further updates...

Contact your EisnerAmper Tax Representative for more information.  

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