The End of Free Diabetes Test Supplies?

Free diabetes test supplies, including blood glucose meters and test strips may become a thing of the past under new medical devices tax.

Diabetics in the United States looking for free test supplies and blood glucose meters, which have been commonplace in the medical industry here for many years, may be in for a rude awakening after January 1, 2013.

On that date, a little known provision of the 2010 Affordable Care Act, also known as Obamacare, kicks-in. The provision will levy a 2.3% tax on the sale or import of ALL medical devices in the United States. This includes a great number of medical devices and supplies that diabetics depend on for their care every single day. It will include test strips and blood glucose meters, lab equipment purchased by their physicians, hospitals and health care clinics and much more. The tax will be levied directly upon the manufacturer, who in turn must pass on these charges to suppliers, who in the end will pass on the cost of the tax directly to consumers.

It is important to note that the new tax, while intended to help fund Obamacare, will be imposed on absolutely everyone directly or indirectly. Even those with private insurance (or no insurance) will end up paying higher prices. This is an important consideration when you take into account that Obamacare will still leave tens of millions of Americans without any health insurance coverage at all. Mostly the growing lower-middle class (the working poor) who are currently unable to afford insurance, yet don’t qualify for existing state aid or future benefits under the Affordable Care Act, will be the hardest hit. Consumers paying 100% of their medical expenses out of pocket will obviously suffer the most.

Because of the way most medical device manufacturers currently do business, that is by giving-away free or highly-subsidized blood glucose test meters knowing that they can not be used without their own, proprietary test strips, another problem arises. Meter manufacturers can afford to do this currently because the actual manufacturing cost of free meters are written-off on their corporate taxes as a promotional expense. The actual cost of a meter may be many times what they charge, but since there is currently no tax on giving-away free meters, the manufacturer can write-off the entire amount as a tax deductible expense. The new provision will place a direct tax on the gross sales of all of the company’s devices, regardless of whether the company makes a profit on the item or not, and regardless of whether the item is charged for or is “given away”. Obviously, the government is not going to buy into the manufacturer’s claim that these meters are actually “free”. They will imply some sort of value to meters and test strips, most likely based upon what they cost to manufacture. The IRS will find a way to tax these devices whether they are given-away or not. This inevitably means that giving-away free meters will be much more expensive.

No matter what kind of health care coverage a diabetic has now, or may have in the future, the new provision will definitely increase your expenses when it comes to maintaining and monitoring your blood glucose levels. Those with private insurance will see their rates go up as a result. Those with no insurance will see higher out-of-pocket expenses. Those who qualify under federal or state programs for aid will see their income taxes increase, as the government itself will not be immune to paying more to manufacturers due to increased costs caused by the taxes they levy.

It is also entirely likely that the “good old days” of diabetics being offered free blood glucose monitors through advertising and at Doctor’s offices may quickly be coming to an end. Just to add to the problems for many diabetics, a number of states and local jurisdictions across the country have recently enacted legislation to raise sales taxes. Depending on where you live, you could see an additional 1% to even 5% increase in your out-of-pocket expenses for common items such as blood glucose test strips. In many localities across the country, sales taxes are already above 10% when state, county and city taxes are added together. With many states dealing with spiraling deficits, and a growing number of cities and counties declaring bankruptcy: adding additional burdens that taxes must be raised to pay for, the cost of being a diabetic will likely continue to skyrocket in the United States for some time to come.

Questions associated with this article:

Where can I find free diabetic testing supplies?
Where can I get free test strips?
Will the cost of my diabetic test supplies be increasing?
When will new taxes on diabetic test supplies go into effect?
Will diabetics see their out-of-pocket expenses increase?

Further Reading:

The Little-Known Provision Of Obamacare That Could Have A Big, Bad ImpactWBUR Radio

Non-partisan Group: It is one (tax) that is expected to cost tens of thousands of jobs and billions of dollars of lost U.S. GDP.NASDAQ News

Regardless, You’ll Pay MoreThe National Review