The Lowdown on the Medical Device Tax

June 6, 2013

The Medical Device Tax has been a part of dental business operations for three months. More and more questions and comments seem to be surfacing regarding this tax. 

The Medical Device Tax has been a part of dental business operations for three months. More and more questions and comments seem to be surfacing regarding this tax. 

Thanks to the advocacy, vigilance and efforts of many dental professional groups, most notably the National Association of Dental Laboratories, the final ruling states that dental labs not registered with the FDA are not required to collect the tax. 

But, they will pay the tax to those FDA registered manufacturers of the materials used in the fabrication of restorations. Ironically, this tax was created to help fund the Health Care and Education Reconciliation Act, and even though there are no dental care benefits included in this health care plan, the dental profession will contribute.

Laboratories began receiving notices of the 2.3% increases from these manufacturers during the final weeks of 2012. The tax took effect on January 1, the same day most of those same manufacturers’ price increases took effect. 

Dental lab owners are now concerned regarding the decision to “pass on” these increases to their clients. The recession, combined with additional regulations and  state sales tax increases create quite a financial juggling act for dental lab owners as they consider “What is a good business practice?” Do they increase their fees to cover the tax and all additional increases or do they just pass on a portion of the increases?  If they do, do they risk losing a client to a lab that has not yet passed on these additional expenses? Others say they will wait a few months before increasing their fees while still others haven’t taken the time to think about their decision.  

Major supply houses say the price increases continue to appear and they estimate that by June all prices will be increased to cover the 2.3%.

A few optimistic owners are of the opinion that there is still a chance the Health Care Act will be repealed. Congressional offices report the chances for repeal are remote, especially because bills dealing with the repeal are not being given a floor vote.

Dental lab owners are seeing these price increases on the invoices they pay. Whether they choose to increase the fees on the invoices they create is yet another dental lab owner’s business decisionws

Carol J. Pilmer graduated as a dental assistant from Elkhart University, Elkhart Ind., and spent the first 10 years in the clinical environment. She has been co-owner of R Dental Ceramics, Solana Beach, Calif., for 35 years and can be reached at rdental@sbcglobal.net

This article originally appeared in the March 2013 issue of Dental Lab Products. To read more great articles like this every month, click here to subscribe.

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