Key Provisions Affecting Charities in Health-Care Measures

The House of Representatives and Senate this month begin negotiations to merge their bills to overhaul the health-care system. Among the provisions that would affect nonprofit organizations, as both employers and health-care providers:

House (H.R. 3962)

Employer Responsibility

Employers with more than 50 full-time employees that do not offer health insurance must pay a $750 fee for each full-time worker who relies on subsidies to buy insurance. They must also pay fees starting at $400 for a full-time worker if they have waiting periods of more than 30 days before employees can enroll in insurance plans.

Employers with annual payrolls of at least $500,000 must offer health coverage to their employees or pay a tax of up to 8 percent of wages. They must pay at least 72.5 percent of the premium for individuals and 65 percent of the premium for families for the lowest-cost plan meeting minimum federal requirements.

Tax Credits for Small Organization

Small nonprofit groups and businesses -- those with fewer than 25 full-time employees and average wages below $50,000 -- may qualify for tax credits if they offer health coverage to employees. From 2010 through 2013, nonprofit groups will be eligible for up to 25 percent of the costs if they pay for at least 50 percent of the premiums (businesses get 35 percent). Starting in 2014, they will be eligible for tax credits if they buy insurance from new state exchanges, or insurance marketplaces. The nonprofit credits are applied to certain payroll taxes.

Credits apply only to for-profit employeers.

Nonprofit Hospitals

Nonprofit hospitals must conduct a community health needs assessment every three years and outline steps they will take to meet the identified needs.

They must widely publicize a financial-aid policy stating whether free or discounted care is available, limit charges to patients who qualify for assistance to the amount generally billed to insured patients, and make reasonable attempts to determine eligibility for financial assistance before undertaking extraordinary collection actions.

They must pay a $50,000 tax each year they fail to meet those requirements.

The Internal Revenue Service will review information about a hospital's community-benefit activities (such as offering full-time emergency care to all patients regardless of ability to pay) every three years to determine whether the institution remains eligible for a tax exemption.

The bill includes no similar requirements for nonprofit hospitals.

—Compiled by Suzanne Perry