Week of May 12, 2025

The new law of Indiana triggers the debate about hospital tax exceptions

The exemptions of taxes were recently checked for many health organizations. For this purpose, the governor of Indiana signed a law that is revoked the tax exemption status for hospitals and health systems if their aggregated patient fees exceed the average prices of the state, which effectively limits patients.

Take a step back to understand how we came here in 2020. The value of tax exemptions for non -profit hospitals was estimated at 28 billion US dollars, with $ 14.4 billion in federal exceptions and $ 13.7 billion in state and local exceptions.

At the same time, the value of the charity was $ 16 billion, which highlighted a gap between tax advantages and free or reduced supply of $ 12 billion for patients. Recent data show that non -profit hospitals have steadily increased their community advantage over the past ten years and significantly exceeds the financial value they receive from tax exemptions. Despite improvements, a difference between the charity, a partial amount of the community advantage and the value of tax exemption will continue.

In the meantime, the medical debt has increased. A Gallup survey showed that 12% of the US -growing people lent an estimated 74 billion US dollar last year to cover health costs for themselves or a household member.

According to the US Census Bureau, the average medical debt per budget in 2021 increased to $ 18,600, compared to $ 12,430 in 2017. The inequality between tax exemptions and charity in conjunction with increasing medical debt has attracted the attention of the federal and state legislators.

The federal legislators have long focused on hospitals that justify their tax-released status and offer the charity organization, enact various laws such as IRC 501 (R) and IRS compliance initiatives. At the beginning of this year, the tax exemption was highlighted on the reconciliation report of the committee of the committee. Despite the ongoing examination, however, no new laws or instructions in relation to hospitals and reporting on community advantages have passed – until now with an announcement by Indiana.

At least 25 countries currently require reporting on the services in the municipality, with at least five minimum thresholds impressive. The new law of Indiana could signal a more comprehensive trend of control over charity organizations and medical costs to ensure that hospitals justify their tax exemptions through the services of the municipality or the reduced patient costs.

Take away

This development is affected for non -profit hospitals that strive to ensure high -quality care in relation to close operational margins and reimbursement pressure. In order to position yourself better for future laws, hospitals can satisfy public data from the price transparency and form 990 in order to measure their performance against peers and to work for rational price studies.

By taking over these measures, non -profit hospitals can not only demonstrate their commitment to transparency and communal advantages, but also strengthen their case for maintaining the tax -fighting status in an increasingly tested health landscape.

Learn more about what happens in our health care system in our industry prospects.