It’s one of the lesser-known provisions in the so-called “Affordable” Care Act, but it’s having a major impact on charitable hospitals. Obamacare actually levies massive amounts of red tape on hospitals that provide free health services to the poor and fines those that don’t comply.
from Daily Caller:
Charitable hospitals that treat uninsured Americans will be subjected to new levels of scrutiny of their nonprofit status and could face sizable new fines under Obamacare.
A new provision in Section 501 of the Internal Revenue Code, which takes effect under Obamacare, sets new standards of review and installs new financial penalties for tax-exempt charitable hospitals, which devote a minimum amount of their expenses to treat uninsured poor people. Approximately 60 percent of American hospitals are currently nonprofit.
Charity for the uninsured is one of the factors that could discourage enrollment in Obamacare, which requires all Americans to purchase health insurance or else face new taxes themselves from the IRS.
“It requires tax-exempt hospitals to do a community needs survey and file additional paperwork with the IRS every three years. This is to prove that the charitable hospital is still needed in their geographical area — ‘needed’ as defined by Obamacare and overseen by IRS bureaucrats,” said John Kartch, spokesman for Americans for Tax Reform.
“Failure to comply, or to prove this continuing need, could result in the loss of the hospital’s tax-exempt status. The hospital would then become a for-profit venture, paying income tax — hence the positive revenue score” for the federal government, Kartch said. “Obamacare advocates turned over every rock to find as much tax money as possible.”
Additionally, the rise in the number of insured Americans under Obamacare will make it more difficult for tax-exempt hospitals to continue meeting required thresholds for treating the uninsured, driving more hospitals into the for-profit category and yielding more taxable money for the federal government.
“The requirements generally apply to any section 501©(3) organization that operates at least one hospital facility,” according to a “Technical Explanation” report of new Obamacare provisions prepared by the congressional Joint Committee on Taxation (JCT) on March 21, 2010, the day Obamacare passed.
Obamacare’s new requirements could slam hospitals with massive $50,000 fines if they fail to meet bureaucrats’ standards.
It’s ironic isn’t it? The left’s chief complaint about the American healthcare system is that it’s “for profit,” but Obamacare will end up forcing non-profit hospitals to either go under or become for-profit institutions themselves.
From day 1, Obamacare has not been about improving healthcare or making it more affordable. It’s been about government control. Sadly, the American people are only now beginning to find out the truth about how devastatingly unaffordable the Affordable Care Act really is.
UPDATE: Its seems our humble blog has made the news with this story. The original photo that accompanied this article was of St. Jude Childrens Research Hospital in Memphis TN. However, I changed that photo after speaking with a spokesperson from St. Jude yesterday. He explained that, as a research hospital, St. Jude falls under a different subset of tax laws than 501C(3) non-profit hospitals.
News 3 in Memphis covered the story (emphasis mine):
Families never receive a bill from St. Jude for treatment.
Some bloggers say that is the sticking point that could hurt the hospital under the new Affordable Care Act.
A Forbes article says it will threaten the tax-exempt status of charity hospitals.
Website PoorRichardsNews says Obamacare will fine hospitals that provide free health services to the poor.
The article had St. Jude’s picture attached to it but the hospital asked them to remove it and sent WREG-TV this statement.
“Implementation of the Affordable Care Act does not impact the way in which St. Jude provides care,” wrote spokesperson, Carrie Strehlau.
She also said, “St. Jude anticipates no problems in meeting all requirements of ACA.”
The hospital says many of its services have never been covered by insurance and 75% of the funds needed to operate the hospital come from donors.
Hearing St. Jude’s fund are safe from any Obamacare sanctions is good news to Garza who calls the hospital a life line for her children, “For me the hospital is everything thank God for them.”
While St. Jude doesn’t anticipate any fines, the Affordable Care Act requires tax-exempt hospitals to do a community needs survey and file paperwork with the IRS every three years to show they are still needed.
If they don’t do this, then they face fines and losing their tax exempt status.
A few things about this:
First, at Poor Richard’s News, we always strive to be accurate. This is why I took the time to call St. Jude yesterday and speak to their spokesperson. I changed the photo when he explained some of the tax rules that apply to research hospitals like St. Jude. Quite honestly, I’m incredibly thankful that St. Jude won’t feel the brunt of these new rules. They’re one of the best medical institutions in the world, and I’m glad they don’t have new hoops to jump through.
Secondly, short of the original photograph (which has now been changed), I stand by the content of this article, and even News 3 in Memphis backs up the story. You can also read about it in Forbes Magazine. You can read research about it by tax lawyers. You can read a summery of the new regulations from the IRS.
Obamacare will levy fines on non-profit hospitals unless they prove every three years that they “that they are needed.” This is a backwards and, quite frankly, statist mentality towards charity. The new tax rules will increase the financial burden and red tape that charitable hospitals have to wade through in order to provide care to people in need.