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House passes bill repealing medical device tax

July 26, 2018

By Kelly Ganski

Washington — The House of Representatives this week passed bills that repeal the current medical device tax and increase the flexibility and dollar amount caps on health savings and flexible savings accounts.

The votes are a win for the ADA, which sent a letter of support July 20 to House Speaker Paul Ryan, R-Wis., Majority Leader Kevin McCarthy, R-Calif., and Majority Whip Steve Scalise, R-La., applauding their efforts to improve the tax system for health care providers and patients. HR 184 repeals the 2.3 percent medical device tax created by the Affordable Care Act.

"The dental manufacturing industry has estimated that the medical device tax would increase the cost of dental care by over $160 million annually resulting in harm to our patients and an increase in the overall cost of health care," ADA President Joseph P. Crowley and Executive Director Kathleen T. O'Loughlin wrote in the letter.

Drs. Crowley and O'Loughlin also urged the House Committee on Ways and Means in a July 10 letter to increase the flexibility of HSAs and FSAs and preserve the current tax exclusions for employer-provided medical and dental plans. Health savings accounts are tax-advantaged medical savings accounts that enable individuals to save for medical expenses and also reduce their taxable income. Flexible spending accounts are accounts that allow people to set tax-free dollars aside to pay for certain out-of-pocket health care costs.

HR 6311, the Increasing Access to Lower Premium Plans and Expanding Health Savings Accounts Act of 2018, allows individuals to carry over unspent FSA balances into the following calendar year as long as it does not exceed three times the FSA contributions limit.

The bill also increased HSA limits from $3,450 to $6,650 for individuals and from $6,900 to $13,300 for families. Taxpayers can use their HSA to cover costs that may be incurred during a period between when they establish a high deductible health plan and when they establish their HSA. Until now, the law only permitted HSAs to reimburse taxpayers for expenses incurred after the establishment of the HSA, regardless of when a high deductible plan was established.

HR 6199, the Restoring Access to Medication Act of 2018 allows certain over-the-counter medical products to be paid for through HSA funds. The Affordable Care Act had placed a prohibition on using HSAs for over-the-counter products. The ADA will continue to advocate to ensure that OTC oral health care products will also be allowable for purchase by HSA funds.
"Toothpaste, standard and powered toothbrushes, dental floss, interdental cleaners, oral irrigators and preventive and therapeutic mouth rinses are vital to maintaining oral health," Drs. Crowley and O'Loughlin wrote in the July 10 letter. "Science continues to demonstrate the relationship between oral health and overall health; therefore, allowing for reimbursement of these products will serve to reduce oral health care costs."

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