2021 Texas Legislature Amends Texas Tax Code To Define Medical And Dental Billing Service And Address Texas Comptroller Policy – Food, Drugs, Healthcare, Life Sciences



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2021 Texas Legislature Amends Texas Tax Code To Define Medical And Dental Billing Service And Address Texas Comptroller Policy


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The Texas Legislature in April passed H.B. 1445, which adopted
amendments to the Texas sales tax law regarding medical and dental
billing. Governor Greg Abbott on April 30, 2021, signed the bill,
which aims to clarify the state law that has been in force since
1987.

The new legislation contains a revision to Section 151.0039(b)
of the Texas Tax Code to specifically exclude, as a
potential taxable insurance service, (i) “medical or
dental billing services
” which are (ii)
performed before the original submission of
either a (1) “medical or dental insurance claim related to
health or dental insurance coverage
,” or (2) “a
claim related to health or dental coverage made to a medical
assistance program funded by the federal government, a state
government, or both
.”

In addition, the term “medical or dental billing
service
” is now specifically defined in the Texas Tax Code under Section 151.0039(c), as a
service “assigning codes for the preparation of a medical
or dental claim, verifying medical or dental insurance eligibility,
preparing a medical or dental claim form for filing, and filing a
medical or dental claim
.”

This new statute therefore overrules a previous Texas
Comptroller Letter 201911003L, which would have abruptly caused
such pre-claim medical billing services to be subject Texas sales
tax. Comptroller Glenn Hegar postponed this policy to give the
Texas Legislature time to react. H.B. 1445 takes effect January 1,
2022.

The new Texas statute therefore now specifically defines medical
billing services when it was previously undefined, providing much
needed certainty on the treatment of a critical part of healthcare
delivery. Representatives of virtually all Texas medical and dental
associations actively supported this bill.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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