Community Benefit Analysis on Federal Tax-Exemption for Charitable Organizations

The Federal Disaster Assistance Nonprofit Fairness Act of 2013 (H.R. 592), is a bill that would correct this and allow relief funding to go these organizations. So far the bill has passed the House by a large margin. The bill is also being criticized by it’s opponents for it’s use of taxpayer money to help tax-exempt organizations as well as violating the principle of separation of church and state.

The Internal Revenue Service (IRS) recently released its report to Congress on government-owned and private tax-exempt and taxable hospitals as mandated by Section 9007(e)(1) of the Affordable Care Act (ACA). The ACA requires the IRS to annually submit to Congress a report providing data with respect to private tax-exempt, taxable, and government-owned hospitals regarding (1) the levels of charity care provided; (2) bad debt expenses; (3) unreimbursed costs for services provided with respect to means-tested government programs; and (4) unreimbursed costs for services provided with respect to non-means-tested government programs. The ACA also requires the report to include information with respect to private tax-exempt hospitals regarding costs incurred for community benefit activities.

This benefits the hospitals because managers and physicians cannot afford to provide free medical services to uninsured patients without any coverage. The organizations will soon lose profit from using many expensive technologies and medical machines if they help patients at no cost especially emergency situations. They cannot deny services after the patients admitted to the hospital with no insurance. It is against the law. However, the reforms from ACA still cause some difficulty for health services organizations because these changes make consumers in charge of their healthcare. There are three key ethical issues I might face in the future are providing equal access to care, balancing quality of care, and maintaining the finance of the organization. Since President Obama expects all organizations to lower their costs for their services along with quality of care, this makes managers to feel unfair for those who get same high quality of care services but pay more than others like commercial insurances. This brings up the principle of justice. Managers have to find way to maintain their business and maintain good services for patients and families. In addition, there are guidelines that help dealing with these ethical issues in the

Department of Health & Human Services, 2015). These provisions were aimed at providing new protections for health insurance consumers, lowering the cost and improving the quality of health care, and increasing access to health insurance and affordable care. While many of the ACA’s provisions had implications for community health centers, the ones that impacted them most directly were the expansion of Medicaid and availability of subsidized health insurance through exchanges and the creation of the Community Health Center Fund, which allocated $11 billion in new funding through fiscal year 2015 for operations, capital projects, and expansion of services to enable community health centers to serve an anticipated 20 million newly insured patients (National Association of Community Health Centers, n.d.; “Valley Community Healthcare,” 2015).

Public not-for-profit hospitals are dependent upon tax-based support for their government sponsors and from patient revenues. Capital budgeting can be financed through government bonds that must be voted upon during elections. Under these circumstances, it is difficult to maintain current equipment and capital

According to the American Hospital Association the cost of equipment, services, and information services has risen drastically. A huge problem for hospitals now is that there has been an enormous increase in patients who have Medicare or Medicaid. The Hospital Association states that “60% of all admissions. Neither program fully reimburses the cost of hospital care.” Not only is the hospital not getting paid the full amount through the health insurance, but they have also seen a jump in people who do not have insurance and cannot pay for their hospital expenses this averages out to about six percent of hospital expenses. Hospitals must assume these costs as a part of their charity pay. These costs are then calculated and increase the costs of health care for people who pay for it, in order to cover these costs.

The Hospital Fairness and Transparency Act, state of Massachusetts, I feel it is important for communities’ to be aware, and to ensure their taxpayer dollars are instead dedicated to safe patient care and necessary services in the Commonwealth, and in other states as well. I find it admirable that Advocates actually provided legislators with a list of hospitals with funds stored in offshore accounts and will urge legislators to demand greater transparency by passing the HPTFA. Today communities are asking more questions related to healthcare facilities finances in their communities. Massachusetts health care costs

The Non-profit hospitals were established for charitable purposes and tend to be larger, and are more likely to be teaching hospitals. They also are responsible and accountable to the communities they serve. They are governed by leaders of the communities they serve. Earnings received from the non-profit hospitals are reinvested to improve quality and care provided at the hospitals, and also invested in community programs, such as providing no fee or discounted fees to the uninsured and low income for health care services. Non-Profit healthcare organizations mission is to serve communities by providing healthcare without regard for a

“The U.S. spends nearly twice as much money per capita on health care as other developed nations, yet the metrics show that Americans end up with worse care and poorer health.” (Hill) The rising cost of healthcare has pushed some non-profits to become for-profit organizations.

I chose to compare IRS Forms 990s from the University Medical Muslim Association (UMMA) Clinic and the Inner-City Muslim Action Network (IMAN). These two clinics have a lot in common. They were both established by Muslim communities and serve the general public at little to no cost for medical care and community development. The mission for the UMMA Clinic is: To promote the well-being of the underserved by providing access to high-quality healthcare for all, regardless of ability to pay (University Medical Muslim Association, 2015). The IMAN Clinic’s mission is: IMAN is a community organization that fosters health, wellness and healing in the inner-city by organization for social change, cultivating the arts and operating a holistic health

In Massachusetts, the Massachusetts Health Care Reform Act had a considerable impact on hospitals and the health care system. Most community health centers were benefiting from coverage expansions and safety net hospitals were struggling financially due to the fact that the state put more funding towards insurance subsidies to expand coverage. Academic medical centers (AMC) were able to

Financing health services in the United States is very important and involves an excessive amount of health institutions and activities. Health services are supported by several methods to create revenue that most hospital, clinics, and treatment centers use for daily operational costs (World Health Organization, 2006). These methods are: general taxation of the state, county, or township/municipality, Medicare or Medicaid or other socialized health insurance plans, voluntary and private health insurance and lastly, donations to health charities accepted from non-profit organizations, donations

MD Anderson had operating profits of $531 million in FY 2010. This represented a profit margin of 26% on revenues of $2.05 billion. Stamford hospital is midsized nonprofit hospital located in Stamford, CT. It has revenues of nearly half a billion dollars. In fact, its revenues exceeded all money paid to the city of Stamford in taxes and fees. The hospital is a bigger business than its host city. Although the true cost of healthcare is difficult to calculate, many other hospitals throughout the United States are generating record profits and revenues. These profits and revenues are under heavy criticism because non-profit hospitals often outperform their for-profit counterparts. Many believe that unfair medical billing practices and skyrocketing prices contribute to these record profits at the expense of economically strapped patients. Non-profit entities enjoy tax-free status on the profits they generate. These profits are used by hospitals to expand their practices and buy out competitor hospitals, laboratories and other medically related cash generating businesses. Anti-trust laws must be enforced effectively to prevent these non-profit hospital systems from becoming monopolies within a geographic area and preventing healthy competition.

A not for profit organization is a corporation or an association that conducts business for the benefit of the general public without shareholders and without a profit motive (Legal, 2013).” There are immense community benefits as a not-for-profit generally accepts everyone regardless of ability to pay. Nonprofit organizations are granted tax-exempt status which helps them to provide services to the public and are expected to be effective managers of their finances as well as being efficient (Financial Management, 2010). In doing so, they can gain exemptions from federal and state incomes taxes and have the ability to solicit tax-deductible contributions (Financial Management, 2010). Organization must follow legal financial

Religious organizations are currently categorized as section 501(c)(3) organizations, putting them in the same tax bracket as nonprofit organizations and charities. They are not even required to apply for nonprofit status from the IRS; it is an automatic privilege. Religious organizations are exempt from paying federal income tax, and donations to these entities are tax deductible. In addition, clergy do not pay taxes on their housing allowance or parsonage. On the state level, religious organizations are exempt from property taxes ("Churches and Taxes," 2016). The Internal Revenue Service (IRS) officially offers these benefits to “churches”. However, under the IRS’s definition, all major religions classify as churches. The IRS classifies a church as having, among other requirements, a