Washington
The Senate Finance Committee Tuesday passed health-care legislation that would allow small charities to receive a tax credit to help them provide health insurance to their employees.
The bill — approved by a 14-9 vote, with support from one Republican, Olympia Snowe of Maine — would also require nonprofit hospitals to conduct “a community health needs assessment” at least once every three years and take other steps.
The legislation does not include two other measures affecting nonprofit work that had been proposed by committee members: a move to limit the tax break for charitable donations for some wealthier donors to pay for health-care changes, and a measure to alter how nonprofit groups justify their pay levels.
Senators will now merge the finance committee bill with another health-care bill adopted by the Health, Education, Labor and Pensions Committee before the issue goes to the full Senate for a vote.
The tax credit — proposed after nonprofit leaders complained that they were not covered by original language calling for a small-business income-tax credit — would allow eligible charities to reduce their payments for some payroll taxes.
Those include the payments they make to cover income taxes and Medicare taxes withheld from employee paychecks and the Medicare taxes they pay as employers.
The finance committee bill does not require that nonprofit hospitals provide a minimum annual level of charitable patient care, an idea that had been floated in May by Sens. Max Baucus, the Montana Democrat who chairs the committee, and Charles E. Grassley of Iowa, the committee’s senior Republican.
But it would require hospitals “to adopt, implement, and widely publicize” written financial-assistance policies.
They would also have to “bill patients who qualify for financial assistance no more than the amount generally billed” to patients who are insured and limit “extraordinary collection actions” against patients.
Deduction Provision Dropped
A handful of senators had proposed limiting the tax break for itemized deductions, including gifts to charity, to 35 percent of the dollars spent as a way to raise money to overhaul the health-care system — instead of letting it rise to 39.6 percent when the top tax bracket increases to that amount under White House proposals.
But those provisions were dropped while the committee members worked on the measure. The president has proposed a more drastic cap of 28 percent for couples earning more than $250,000 (individuals $200,000) starting in 2011.
Two measures related to nonprofit pay also were left out of the bill.
Senator Grassley had sought an amendment that he said would rein in charities that set overly high compensation for officials. His proposal would have eliminated a “safe harbor” provision in IRS rules that allows executive compensation to be deemed reasonable if charities follow certain steps.
Mr. Grassley also sought an amendment to the bill to clarify that the IRS has the right to ask about governance and management practices on the Form 990 informational tax return.
Though he withdrew his amendments before the bill was passed by the committee, an aide to the senator said Mr. Grassley reserves the right to propose them again later, either as part of the health-care bill or to another piece of legislation.
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