Purpose

• To create a sales and use tax exemption for certain health-related purchases.
• To expand exemptions to cover additional purchases made by public and private health plans.
• To amend Minnesota law (Minnesota Statutes 2024 section 297A.67) by adding a new subdivision that defines and protects this exemption.

Main provisions

• Adds a new subdivision (7b) to Minnesota Statutes 2024 section 297A.67 titled Health care materials.
• Health care materials are exempt from sales and use taxes.
• Definition of health care materials: “Health care materials means nondurable disposable health care materials prescribed by a physician that are primarily and customarily used to serve a medical purpose and generally not used by an individual in the absence of illness or injury and not used repeatedly by different individuals.”
• The term “prescribed” for these materials uses the meaning given in subdivision 7 of the same section.
• The exemption applies to purchases that are prescribed for medical use and are not routinely used by individuals who are healthy, nor reused by different people.

Significant changes to existing law

• Introduces a new tax-exemption category specifically for health care materials, defined as nondurable disposable items prescribed by a physician for medical use.
• Expands the scope to include “additional purchases made by public and private health plans,” reducing or removing sales and use tax on these items when they meet the definition.
• Creates a new subdivision (7b) within the existing statutory framework to formalize this exemption.

How this would operate (practical impact)

• Consumers and health plans would pay no (or less) sales/use tax on defined health care materials that are prescribed for medical use.
• Items qualifying as health care materials must be nondurable, disposable, and prescribed by a physician, and must be used for medical purposes rather than for general or personal use.

Notes on definitions and references

• The key definition hinges on: nondurable disposable health care materials, prescribed by a physician, used primarily for a medical purpose, not used by a healthy person, and not reused among different individuals.
• The concept of “prescribed” refers to the meaning in subdivision 7 of section 297A.67.

Relevant Terms

• sales and use tax exemption
• health care materials
• nondurable disposable health care materials
• prescribed by a physician
• primary medical purpose
• absence of illness or injury
• not used repeatedly by different individuals
• Minnesota Statutes 2024 section 297A.67
• subdivision 7
• subdivision 7b
• public health plans
• private health plans