AAHomecare to IRS: exempt HME

WASHINGTON, Aug. 8, 2012—Last Monday representatives from the American Association for Homecare (AAHomecare) met with U.S. Department of Treasury and IRS staff to discuss the medical device tax, which was included in the Patient Protection and Affordable Care Act (ACA).

The ACA imposes an excise tax of 2.3 percent of the sale price on the sale of any “taxable medical device” by the manufacturer, producer or importer of the device, beginning in 2013. It exempts eyeglasses, contact lenses, hearing aids and any other medical device determined by the secretary to be of a type that is generally purchased by the general public at retail for individual use.

While the proposed rule to implement the law, published on February 7, 2012, would exempt a number of HME devices from the tax, the association is concerned that respiratory devices may be included because of their FDA classification. For this reason AAHomecare asked the administration to expand the exemption in the proposed rule to include all HME devices and supplies.

But because all HME devices and supplies also qualify for the exemption under the proposed two-pronged test in the proposed rule, it offered an alternative recommendation that the IRS clarify how the factors under the test would apply to HME devices and supplies, especially respiratory HME devices and supplies. According to AAHomecare, the meeting was positive, and the administration staff seemed open to their suggestions.

AAHomecare believes all HME supplies should be exempt based on the statutory language and congressional intent. Since the passage of the ACA it has worked with its Manufacturer Device Tax Working Group on the exemption. Working with this group, it submitted comments to the Treasury and IRS, met with government staff who are writing the regulations, and testified at a device tax hearing. Go to www.aahomecare.org.