Tuesday, February 28, 2012

Can Illinois Nonprofit Hospitals Keep Their Tax Exemptions?

Illinois governor Pat Quinn last year told the state to stop challenging nonprofit hospitals' property tax-exemptions so the state could come up with a solution.  The goal was to come up with guidelines for what would constitute appropriate levels of care by March 1.  With that deadline quickly approaching, details are emerging about potential proposals.

The Chicago Tribune reported yesterday that the state is considering competing proposals that would set up standards for how nonprofit hospitals could keep their tax exemptions.  This issue came to the forefront after the Illinois Department of Revenue denied three hospitals their tax exemption, citing a 2010 Illinois Supreme Court ruling that defined the amount of money that needed to be put into care.  Gov. Quinn later told the state to hold off on any further rulings so he could work with the hospital industry and legislators to find a compromise.

The first proposal was sent to the Governor's office on Feb. 17 by the Fair Care Coalition, a group of healthcare advocates.  Their plan states that each hospital would have to provide 6 percent of its total revenue for charitable benefits in order to keep tax exempt status.  Eighty percent of that would have to be in the form of free or discounted care for poor patients.  Failing to meet these standards would not only make hospitals ineligible for tax exemption, but would also make them pay into a pool of funds that would be distributed to nonprofit and public hospitals that met this criteria.  It seems unlikely the Illinois Hospital Association would agree to this proposal, as they have opposed similar measures in the past.

Another proposal came on Monday from the Civic Federation.  Under the Federation's proposal, hospitals would be required to provide charitable care and other benefits to the community equal or greater than the amount they would pay if they paid property taxes.

Gov. Quinn's March 1 deadline is only two days away.  It's not clear what will happen if a compromise is not reached before that date.  You can read the full story in The Chicago Tribune.

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