Medical Device Tax Repeal – July 24, 2018
This past July, the House voted to repeal the excise tax on medical devices, a tax that had impacted the industry directly for three years after its implementation in 2013 and left an uncertainty overhanging thereafter.
The 2.3 percent tax on sales of medical devices was instated to help cover the costs associated with the Affordable Care Act; a deflection tactic to avoid adding to the deficit. To avoid passing the cost down to the consumer, medical device companies took the hit on devices and supplies such as pacemakers, dental instruments and artificial joints. It did not apply to public consumption of medical necessities like wheelchairs, hearing aids or contact lenses.
While no one in the industry was thrilled about the tax upfront, the impact was greater on some device makers more so than others. Larger companies were able to plan more efficiently, but small, newer innovators were sharply impacted with direct costs eating away at cashflow and funding. In December of 2015, the industry got a reprieve from the tax, with a two-year break, extending the break another two years down the road in January of 2017. Albeit good news, this left uncertainty for the long haul if the tax were to come back, hindering growth, innovation and investors alike nationwide. An end to the tax was finalized on July 24 this year.
The headline came with a sigh of relief and a breath of fresh air to medical device companies. There is no more financial obligation to the tax and uncertainty of how its return could impact the development of their business. Breathe medical device companies. Expand, grow, invest, and innovate!
If this recent outcome has changed your hiring process, reach out to us to learn more strategies to overcome this new change.
Tyler Cook, Business Development
3 years in Business Development in the Staffing Industry