Bill would extend sales-tax exemption to private health plans for certain medical goods

Senate File 268, introduced by Senator Nelson, would extend Minnesota’s sales-tax exemption for certain medical goods — currently applied to government‑paid public programs such as Medicare and Medicaid — to transactions billed through private health plans that do not otherwise pay sales tax.

Senator Nelson said the bill “would allow our private health plans to receive the same treatment that our Medicare, Medicaid, MA, government plans receive when it comes to taxation on certain goods prescribed by a physician.” He introduced an author’s A1 amendment, which the committee adopted by voice vote before testimony.

Industry witnesses described repeated audit disputes about which medical supplies are taxable when provided to patients in the home and billed to insurers. Ben Rachel, CEO of Corner Home Medical, said audits are “confusing,” and described a 2020 audit in which an initial assessment exceeded $100,000; after detailed review, his company paid $17,008, including a 10% penalty. “We certainly want to do right by the state and by the patients,” Rachel said, “but…95% of this work, these services and products are done for patients in the home.”

Bill Amberg, representing Corner Home Medical and the Midwest Association of Medical Equipment and Supplies (MAMES), said the contested items represent “less than 1% of all the products and services and supplies that are provided,” and that smaller durable‑medical‑equipment providers often lack the staff to contest large assessments.

Supporters said the bill aligns tax treatment across payer types and would remove an administrative burden that often falls on providers when insurers do not pay tax. The measure was laid over for possible inclusion; the committee adopted the A1 author’s amendment during the hearing.

No roll-call vote on the bill’s recommendation was recorded; the hearing record shows the committee laid the bill over for further consideration.