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* Ron Shinkman over at Fierce Health Finance read the bill which raises cigarette taxes and gives non-profit hospitals some concrete guidelines on what they have to do to maintain their property tax exemptions and also gives for-profit hospitals ways to reduce their taxes. He doesn’t think much of it…
The charity care provisions of the bill are meant to provide dollar-for-dollar offsets against property tax exemptions not-for-profit providers in Illinois enjoy. Many industry observers say the Illinois bill could serve as a nationwide blueprint for other hospitals falling short on their charity care obligations. However, it’s more like a terrific linguistic design for a colander or sieve. Here’s why:
• Hospitals could make in-kind or financial contributions to their own affiliated facilities or another provider to offset the tax burden.
• Hospitals could make donations of any sort of supply to offset the tax burden.
• Hospitals could argue that any effort they make in terms of community outreach or education could be used to offset the tax burden.
• For-profit hospitals could use charity care to offset their property tax burden.
• For the purpose of tax assessment, the hospital buildings could be depreciated based on age. If they’re more than 40 years old, they are essentially deemed worthless for tax purposes.My house celebrates its 52nd birthday this year. I suspect asking for a tax exemption based on its age would receive a less than amused response.
Then again, there’s little to find amusing in a bill that pumps steroids into every sleight-of-hand hospitals use to make it seem they’re generous with uninsured patients.
The hospitals did do well. No doubt. We’ve talked about this before. They had to give up some things, though, including a guarantee for providing “free care,” and took a hit on their state reimbursement rate. There’s also a bill to place a limit on putting people in jail over failing to pay their bills, and the hospitals had been among the worst abusers of this loophole. Shinkman doesn’t mention that stuff.
posted by Rich Miller
Wednesday, Jun 13, 12 @ 11:28 am
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A 40 year old commercial building sounds pretty much worthless to me, assuming 40 years of public use and traffic. Technology has changed quite a bit since 1972. The underlying land might have some value, but is not subject to depreciation.
Comment by Backwards Wednesday, Jun 13, 12 @ 1:38 pm
I really don’t see a reason why for-profit hospitals should not get a benefit for charity work if not-for-profits do. Seems to me the benefit to society is about the same, there.
Comment by cermak_rd Wednesday, Jun 13, 12 @ 2:15 pm
Cermak - the legislation gives an income tax credit for charity care to the for-profit hospitals.
Comment by Just the Facts Wednesday, Jun 13, 12 @ 2:52 pm
hope this helps hospitals understand exactly how to calculate. that there was confusion over this matter is a statement about government and not a good one.
Comment by amalia Wednesday, Jun 13, 12 @ 6:47 pm