Are You TaxingDurable Medical Equipment

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Correctly?

Durable Medical EquipmentMedical devices have vastly different tax rates depending on use, purpose, and of course, location.

The following slides will give a brief introduction to how these devices are taxed in the United States.

Nature of the Device What will this product be used for?

All can be subject to different tax rates.

• Oxygen delivery equipment• Enteral feeding systems• Kidney dialysis systems• Corrective eyeglasses • Hearing aids• Diabetic materials

Designed Use• Many states will exempt DME from sales tax if it is for home use.

• If the item will be worn on the body or in the body can also drive different results.

• Reusable or Disposable? That matters too!

PrescriptionThis table lists the states that exempt walkers in all situations.Connecticut Florida Illinois

Maine Massachusetts

Minnesota

Missouri New York Pennsylvania

Rhode Island Texas Vermont

Virginia Wisconsin

PrescriptionThis table lists the states that will exempt that same walker if it is prescribed by a medical professional.

Arizona Arkansas California

Colorado DC Georgia

Idaho Indiana Iowa

Kansas Kentucky Louisiana

Maryland Michigan Nebraska

New Jersey North Carolina North Dakota

Ohio South Dakota Tennessee

Utah West Virginia Wyoming

Identity of the Payer• Who is paying for this device? Medicare or Medicaid? Private Insurance? It all matters as far as taxability is concerned.

• In Oklahoma, Oxygen Delivery Equipment is tax exempt when purchased through Medicare, while in Mississippi, that device becomes exempt when purchased with any Health Insurance.

Identity of the Customer• Many states will exempt a

device going to an individual household, as opposed to an institution.

• Some states will grant exemptions to non-profit medical providers.

• Some states will even grant an exemption to certain for-profit hospitals.

• On 1/1/2013 the U.S. Federal Government began imposing a medical excise tax of 2.3% on qualifying medical devices.

• Exemptions from the MDET are available for devices generally purchased by individual consumers at retail, exports, and sales for re-manufacturing.

Medical Device Excise Tax (MDET)

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