The tax and spending bill signed into law by President Obama last week included a two year suspension of the medical device excise tax. After years of effort by industry to abolish the tax, proponents of the suspension speculate that it may represent a window to full repeal. 
 
Originally passed as part of the funding for the Affordable Care Act, the medical device excise tax has been controversial from the start.  Set at 2.3% of the sales price of taxable medical devices, the tax was assessed on any sales beginning in January of 2013, regardless of a company’s profitability. While certain “retail” devices such as eyeglasses, contact lenses, and hearing aids were exempt from the tax, it was applicable to a host of other products regularly used in healthcare. The Congressional Budget Office estimated that the tax would raise up to $29.1 billion over the course of a decade,1 though opponents of the tax argued the estimates were exaggerated. Many argued that the tax would be responsible for increasing the cost of medical goods and result in a loss of jobs in the medical device industry. At the same time, prior efforts to repeal the tax had been met with significant resistance as the levy represents a key part of the funding for expenditures under the Affordable Care Act.
 
The $1.8 trillion tax and spending bill signed into law by President Obama on December 18, 2015, included a provision that temporarily suspends the medical device tax for two years. Thus, sales of medical devices made between January 1, 2016, and December 31, 2017, will be exempt from the tax.