Illinois Gov. Pat Quinn Signs Medicaid, Hospital Tax-Exemption Laws
signed a slew of bills into law, including reforms that will restructure the state Medicaid program and lay out guidelines for hospital property tax exemptions.
In total, there will be $1.6 billion in Medicaid cuts and $1.1 billion in new Medicaid revenue for a total impact of $2.7 billion. Included in the new Medicaid revenue streams are a $1-per-pack cigarette tax and an increase in dollar-for-dollar federal matching funds.
Senate Bill 2194 (pdf) provided for the cigarette tax and Medicaid matches from the federal government. SB 2194 also established new guidelines for how hospitals can qualify for property tax exemptions through new definitions of charity care.
According to the new law, tax-exempt (non-profit) hospitals can keep their exemption if their uncompensated care figures equal or exceed the estimated property tax liability, which is determined by the fair market value from an impartial third party. The following services and activities now count toward a hospital's property tax exemption:
• Charity care, which is defined as the free or discounted services provided to those in need of financial assistance.
• Health services to low-income and underserved patients or subsidizing goods for the purpose of addressing the health of low-income and underserved patients. For example, hospitals can make financial or in-kind donations to other hospitals, clinics or local programs or pay for healthcare professionals who care for low-income or underserved patients, and those activities would count toward the tax exemption.
• Direct or indirect financial or in-kind subsidies of state or local governments.
Several other activities would count toward a non-profit hospital's tax-exemption, including anything the state determines addresses the health of the indigent population. Investor-owned, or for-profit, hospitals are also eligible for income tax credits for the lesser of property tax paid or charity care provided.
The definitions of charity care for tax exemptions are much broader now, and the Illinois Hospital Association approved of the final legislation, for which it lobbied heavily, according to a Bloomberg Businessweek report.
Gov. Quinn said the new laws "saved" Medicaid. "One of our most important missions in Springfield this year was to save Medicaid from the brink of collapse," Gov. Quinn said. "I applaud the members of our working group and of the General Assembly, who worked together in a bipartisan manner to tackle a grave crisis. As a result, we preserved our healthcare program that millions of our most vulnerable rely upon."
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