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Charity Care Tax Exemptions

Was talking with a colleague about health care reform this weekend and an interesting question came up.

If exemption from federal income and/or state property taxes for non-profit hospitals is based upon providing “charity care” to their surrounding communities, how will hospitals qualify for income tax and property tax exemptions if health care coverage becomes “universal” and there is no longer a need for “charity care”? With declining revenues, requiring hospitals to pay income and property taxes would probably bankrupt some smaller institutions and inner-city hospitals.

We weren’t the first ones to consider the issue – a good discussion is here.

Still, there aren’t any answers out there.

No comments

  1. Unless you assume that all procedures and all care will be covered under a single-payer program, there will always be room for hospitals to do charitable work in the community.

    To use the most common scare tactic used against a single payer system, some care might be “rationed” based on being too experimental or too risky to justify the cost. What is to stop the hospitals from providing these kinds of services as a charitable act, therefore preserving their tax-free status?

    The only difference is that hospitals now are basically forced into doing “charity” every time they treat someone who is uninsured.

    Personally, I think extending “above and beyond” treatments on a case by case basis is a far better use for a hospital’s charitable trusts than covering every visit by an ODing crack head who will never, ever pay a bill.

  2. It would be up to the IRS to interpret the new law.

    Part of our charity care is the write off for the undercompensated care provided to Medicaid (Medi-Cal in CA.) population. They don’t even recognize common CPT codes for office procedures. We get paid $3 for a Wound treatment visit with a debridement, dressings, and nursing care.

    I just don’t know if the IRS will allow it as a write off if EVERYONE falls to that fee schedule, which Obamacare likely will be!

  3. Catholic hospitals will instantly cease to exist as there will be a mandate for the provision of abortion and birth control services. That’s quite a chunk of charity hospital services (relax, I know they’re also run for profit)….about 1,000 hospitals. Will they close or become property of the US government? Where’s the money going to come from to buy them? Hmm.

  4. I was the controller of a 501 (c) 3 community health clinic. I live in NY, and charities do not get property tax breaks. Only churches do…

    The fact that a hospital or health care clinic writes off “charity care” is not the ruler by which a hospital can be a non-profit. Nor is it defined by have a financial loss. Non-profits survive by making a surplus. This surplus is then re-invested into the agency… not lining the pockets of the owners.

    Non-profits do not pay income taxes on their surplus (ask a CPA about limits and guidelines) and do not pay sales tax in many states.

  5. We have a great Catholic hospital system in our area.

    It would be so wrong to force a catholic hospital to allow abortions. What about freedom to choose how a business is operated,etc.?

    It seems the would be enforcers of the Obama health care plan haven’t taken into account the domino effects..long term.

    For the life of me…I do NOT understand how they could possibly think it is alright to pass such a monumental plan..WITHOUT… and here’s a novel idea (no pun intended) actually READING it!

    Republican, democrat, alien or amoeba… I don’t care… *anyone* promoting this without KNOWING what is in there and the consequences…should be voted out of office.

    WC.. Sorry about being a bit off track.. but I also just want to add..that after watching the news on various stations, youtubes, reading on line, etc… I am really ANGRY and UPSET about the government officials stating that the public who are coming out in droves are angry mobs,insinuating they could be dangerous among other derogatory remarks. And Nazi symbols? But give me a break! Elderly people are coming out and people of all political persuasions are coming out to these town halls to ask questions. Valid questions inspired by valid concerns based upon the little information we do have on the health care plan that would be shoved down our throats… without anyone really knowing what it is.

    This post here is another example of chain reactions.

    Is it better to throw up a shack to live in built in a couple of days or to build a home with a strong foundation from which to build upon.

    I am happy to see people aren’t being complacent… like lemmings going over a cliff. They are paying attention and they are letting our government know of their dissatisfaction.

    Americans are FREE to express their opinions.

    Government officials would do well to remember they were voted into office by the public and work for the good of the country and it’s people instead of self serving agendas.

    And this new mantra about blaming the insurance companies is disingenuous. I’ve read enough blogs to know that the insurance companies are not fair with physicians and patients… and *reform* is needed. But you don’t throw the baby out with the bathwater… well unless Pete Stark is in said bath water… we could make that exception.

  6. Bad debt, i.e. those who do not pay their bill and do not apply for and/or meet charity care guidleines, cannot be counted as charity. I have been in this business over 20 years, and I can tell y ou less than 1 in 10 patients who might qualify apply for assitance. The remaining 9 just ignore the bill completely forever.

  7. How do the hospitals get away with charging list plus to those without insurance as it is? I thought the rationale for the tax exemption was to enable compensation for the uninsured. But I could be wrong.

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