Illinois 2023-2024 Regular Session

Illinois House Bill HB5274 Compare Versions

Only one version of the bill is available at this time.

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1	1	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB5274 Introduced , by Rep. Dagmara Avelar SYNOPSIS AS INTRODUCED: 35 ILCS 200/15-86 Amends the Property Tax Code. Provides that, in order for free and discounted services to be credited as charity care for a hospital entity, the hospital entity's financial assistance policy shall require: (i) a patient whose income is less than or equal to 300% of the federal poverty level to receive 100% coverage of all care charges; (ii) a patient whose income is greater than 300% but less than or equal to 350% of the federal poverty level to receive at least 75% coverage of all care charges; and (iii) a patient whose income is greater than 350% but less than or equal to 400% of the federal poverty level to receive at least 50% coverage of all care charges. LRB103 36999 CES 67114 b A BILL FOR 103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB5274 Introduced , by Rep. Dagmara Avelar SYNOPSIS AS INTRODUCED: 35 ILCS 200/15-86 35 ILCS 200/15-86 Amends the Property Tax Code. Provides that, in order for free and discounted services to be credited as charity care for a hospital entity, the hospital entity's financial assistance policy shall require: (i) a patient whose income is less than or equal to 300% of the federal poverty level to receive 100% coverage of all care charges; (ii) a patient whose income is greater than 300% but less than or equal to 350% of the federal poverty level to receive at least 75% coverage of all care charges; and (iii) a patient whose income is greater than 350% but less than or equal to 400% of the federal poverty level to receive at least 50% coverage of all care charges. LRB103 36999 CES 67114 b LRB103 36999 CES 67114 b A BILL FOR
2	2	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB5274 Introduced , by Rep. Dagmara Avelar SYNOPSIS AS INTRODUCED:
3	3	35 ILCS 200/15-86 35 ILCS 200/15-86
4	4	35 ILCS 200/15-86
5	5	Amends the Property Tax Code. Provides that, in order for free and discounted services to be credited as charity care for a hospital entity, the hospital entity's financial assistance policy shall require: (i) a patient whose income is less than or equal to 300% of the federal poverty level to receive 100% coverage of all care charges; (ii) a patient whose income is greater than 300% but less than or equal to 350% of the federal poverty level to receive at least 75% coverage of all care charges; and (iii) a patient whose income is greater than 350% but less than or equal to 400% of the federal poverty level to receive at least 50% coverage of all care charges.
6	6	LRB103 36999 CES 67114 b LRB103 36999 CES 67114 b
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8	8	A BILL FOR
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10	10	HB5274 LRB103 36999 CES 67114 b
11	11	1 AN ACT concerning revenue.
12	12	2 Be it enacted by the People of the State of Illinois,
13	13	3 represented in the General Assembly:
14	14	4 Section 5. The Property Tax Code is amended by changing
15	15	5 Section 15-86 as follows:
16	16	6 (35 ILCS 200/15-86)
17	17	7 Sec. 15-86. Exemptions related to access to hospital and
18	18	8 health care services by low-income and underserved
19	19	9 individuals.
20	20	10 (a) The General Assembly finds:
21	21	11 (1) Despite the Supreme Court's decision in Provena
22	22	12 Covenant Medical Center v. Dept. of Revenue, 236 Ill.2d
23	23	13 368, there is considerable uncertainty surrounding the
24	24	14 test for charitable property tax exemption, especially
25	25	15 regarding the application of a quantitative or monetary
26	26	16 threshold. In Provena, the Department stated that the
27	27	17 primary basis for its decision was the hospital's
28	28	18 inadequate amount of charitable activity, but the
29	29	19 Department has not articulated what constitutes an
30	30	20 adequate amount of charitable activity. After Provena, the
31	31	21 Department denied property tax exemption applications of 3
32	32	22 more hospitals, and, on the effective date of this
33	33	23 amendatory Act of the 97th General Assembly, at least 20
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37	37	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB5274 Introduced , by Rep. Dagmara Avelar SYNOPSIS AS INTRODUCED:
38	38	35 ILCS 200/15-86 35 ILCS 200/15-86
39	39	35 ILCS 200/15-86
40	40	Amends the Property Tax Code. Provides that, in order for free and discounted services to be credited as charity care for a hospital entity, the hospital entity's financial assistance policy shall require: (i) a patient whose income is less than or equal to 300% of the federal poverty level to receive 100% coverage of all care charges; (ii) a patient whose income is greater than 300% but less than or equal to 350% of the federal poverty level to receive at least 75% coverage of all care charges; and (iii) a patient whose income is greater than 350% but less than or equal to 400% of the federal poverty level to receive at least 50% coverage of all care charges.
41	41	LRB103 36999 CES 67114 b LRB103 36999 CES 67114 b
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43	43	A BILL FOR
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68	68	1 other hospitals are awaiting rulings on applications for
69	69	2 property tax exemption.
70	70	3 (2) In Provena, two Illinois Supreme Court justices
71	71	4 opined that "setting a monetary or quantum standard is a
72	72	5 complex decision which should be left to our legislature,
73	73	6 should it so choose". The Appellate Court in Provena
74	74	7 stated: "The language we use in the State of Illinois to
75	75	8 determine whether real property is used for a charitable
76	76	9 purpose has its genesis in our 1870 Constitution. It is
77	77	10 obvious that such language may be difficult to apply to
78	78	11 the modern face of our nation's health care delivery
79	79	12 systems". The court noted the many significant changes in
80	80	13 the health care system since that time, but concluded that
81	81	14 taking these changes into account is a matter of public
82	82	15 policy, and "it is the legislature's job, not ours, to
83	83	16 make public policy".
84	84	17 (3) It is essential to ensure that tax exemption law
85	85	18 relating to hospitals accounts for the complexities of the
86	86	19 modern health care delivery system. Health care is moving
87	87	20 beyond the walls of the hospital. In addition to treating
88	88	21 individual patients, hospitals are assuming responsibility
89	89	22 for improving the health status of communities and
90	90	23 populations. Low-income and underserved communities
91	91	24 benefit disproportionately by these activities.
92	92	25 (4) The Supreme Court has explained that: "the
93	93	26 fundamental ground upon which all exemptions in favor of
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104	104	1 charitable institutions are based is the benefit conferred
105	105	2 upon the public by them, and a consequent relief, to some
106	106	3 extent, of the burden upon the state to care for and
107	107	4 advance the interests of its citizens". Hospitals relieve
108	108	5 the burden of government in many ways, but most
109	109	6 significantly through their participation in and
110	110	7 substantial financial subsidization of the Illinois
111	111	8 Medicaid program, which could not operate without the
112	112	9 participation and partnership of Illinois hospitals.
113	113	10 (5) Working with the Illinois hospital community and
114	114	11 other interested parties, the General Assembly has
115	115	12 developed a comprehensive combination of related
116	116	13 legislation that addresses hospital property tax
117	117	14 exemption, significantly increases access to free health
118	118	15 care for indigent persons, and strengthens the Medical
119	119	16 Assistance program. It is the intent of the General
120	120	17 Assembly to establish a new category of ownership for
121	121	18 charitable property tax exemption to be applied to
122	122	19 not-for-profit hospitals and hospital affiliates in lieu
123	123	20 of the existing ownership category of "institutions of
124	124	21 public charity". It is also the intent of the General
125	125	22 Assembly to establish quantifiable standards for the
126	126	23 issuance of charitable exemptions for such property. It is
127	127	24 not the intent of the General Assembly to declare any
128	128	25 property exempt ipso facto, but rather to establish
129	129	26 criteria to be applied to the facts on a case-by-case
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140	140	1 basis.
141	141	2 (b) For the purpose of this Section and Section 15-10, the
142	142	3 following terms shall have the meanings set forth below:
143	143	4 (1) "Hospital" means any institution, place, building,
144	144	5 buildings on a campus, or other health care facility
145	145	6 located in Illinois that is licensed under the Hospital
146	146	7 Licensing Act and has a hospital owner.
147	147	8 (2) "Hospital owner" means a not-for-profit
148	148	9 corporation that is the titleholder of a hospital, or the
149	149	10 owner of the beneficial interest in an Illinois land trust
150	150	11 that is the titleholder of a hospital.
151	151	12 (3) "Hospital affiliate" means any corporation,
152	152	13 partnership, limited partnership, joint venture, limited
153	153	14 liability company, association or other organization,
154	154	15 other than a hospital owner, that directly or indirectly
155	155	16 controls, is controlled by, or is under common control
156	156	17 with one or more hospital owners and that supports, is
157	157	18 supported by, or acts in furtherance of the exempt health
158	158	19 care purposes of at least one of those hospital owners'
159	159	20 hospitals.
160	160	21 (4) "Hospital system" means a hospital and one or more
161	161	22 other hospitals or hospital affiliates related by common
162	162	23 control or ownership.
163	163	24 (5) "Control" relating to hospital owners, hospital
164	164	25 affiliates, or hospital systems means possession, direct
165	165	26 or indirect, of the power to direct or cause the direction
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176	176	1 of the management and policies of the entity, whether
177	177	2 through ownership of assets, membership interest, other
178	178	3 voting or governance rights, by contract or otherwise.
179	179	4 (6) "Hospital applicant" means a hospital owner, or
180	180	5 hospital affiliate, or a clinic affiliated with a hospital
181	181	6 or hospital system that files an application for a
182	182	7 property tax exemption pursuant to Section 15-5 and this
183	183	8 Section.
184	184	9 (7) "Relevant hospital entity" means (A) the hospital
185	185	10 owner, in the case of a hospital applicant that is a
186	186	11 hospital owner, and (B) at the election of a hospital
187	187	12 applicant that is a hospital affiliate, either (i) the
188	188	13 hospital affiliate or (ii) the hospital system to which
189	189	14 the hospital applicant belongs, including any hospitals or
190	190	15 hospital affiliates that are related by common control or
191	191	16 ownership.
192	192	17 (8) "Subject property" means property for which a
193	193	18 hospital applicant files an application for an exemption
194	194	19 pursuant to Section 15-5 and this Section.
195	195	20 (9) "Hospital year" means the fiscal year of the
196	196	21 relevant hospital entity, or the fiscal year of one of the
197	197	22 hospital owners in the hospital system if the relevant
198	198	23 hospital entity is a hospital system with members with
199	199	24 different fiscal years, that ends in the year for which
200	200	25 the exemption is sought.
201	201	26 (c) A hospital applicant satisfies the conditions for an
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212	212	1 exemption under this Section with respect to the subject
213	213	2 property, and shall be issued a charitable exemption for that
214	214	3 property, if the value of services or activities listed in
215	215	4 subsection (e) for the hospital year equals or exceeds the
216	216	5 relevant hospital entity's estimated property tax liability,
217	217	6 as determined under subsection (g), for the year for which
218	218	7 exemption is sought. For purposes of making the calculations
219	219	8 required by this subsection (c), if the relevant hospital
220	220	9 entity is a hospital owner that owns more than one hospital,
221	221	10 the value of the services or activities listed in subsection
222	222	11 (e) shall be calculated on the basis of only those services and
223	223	12 activities relating to the hospital that includes the subject
224	224	13 property, and the relevant hospital entity's estimated
225	225	14 property tax liability shall be calculated only with respect
226	226	15 to the properties comprising that hospital. In the case of a
227	227	16 multi-state hospital system or hospital affiliate, the value
228	228	17 of the services or activities listed in subsection (e) shall
229	229	18 be calculated on the basis of only those services and
230	230	19 activities that occur in Illinois and the relevant hospital
231	231	20 entity's estimated property tax liability shall be calculated
232	232	21 only with respect to its property located in Illinois.
233	233	22 Notwithstanding any other provisions of this Act, any
234	234	23 parcel or portion thereof, that is owned by a for-profit
235	235	24 entity whether part of the hospital system or not, or that is
236	236	25 leased, licensed or operated by a for-profit entity regardless
237	237	26 of whether healthcare services are provided on that parcel
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248	248	1 shall not qualify for exemption. If a parcel has both exempt
249	249	2 and non-exempt uses, an exemption may be granted for the
250	250	3 qualifying portion of that parcel. In the case of parking lots
251	251	4 and common areas serving both exempt and non-exempt uses those
252	252	5 parcels or portions thereof may qualify for an exemption in
253	253	6 proportion to the amount of qualifying use.
254	254	7 (d) The hospital applicant shall include information in
255	255	8 its exemption application establishing that it satisfies the
256	256	9 requirements of subsection (c). For purposes of making the
257	257	10 calculations required by subsection (c), the hospital
258	258	11 applicant may for each year elect to use either (1) the value
259	259	12 of the services or activities listed in subsection (e) for the
260	260	13 hospital year or (2) the average value of those services or
261	261	14 activities for the 3 fiscal years ending with the hospital
262	262	15 year. If the relevant hospital entity has been in operation
263	263	16 for less than 3 completed fiscal years, then the latter
264	264	17 calculation, if elected, shall be performed on a pro rata
265	265	18 basis.
266	266	19 (e) Services that address the health care needs of
267	267	20 low-income or underserved individuals or relieve the burden of
268	268	21 government with regard to health care services. The following
269	269	22 services and activities shall be considered for purposes of
270	270	23 making the calculations required by subsection (c):
271	271	24 (1) Charity care. Free or discounted services provided
272	272	25 pursuant to the relevant hospital entity's financial
273	273	26 assistance policy, measured at cost, including discounts
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284	284	1 provided under the Hospital Uninsured Patient Discount
285	285	2 Act, except that, in order for free and discounted
286	286	3 services to be credited under this paragraph (1), the
287	287	4 hospital entity's financial assistance policy shall
288	288	5 provide that: .
289	289	6 (A) patients whose income is less than or equal to
290	290	7 300% of the federal poverty level shall receive
291	291	8 assistance for the full amount of care charges;
292	292	9 (B) patients whose income is greater than 300% but
293	293	10 less than or equal to 350% of the federal poverty level
294	294	11 shall receive assistance for at least 75% of care
295	295	12 charges; and
296	296	13 (C) patients whose income is greater than 350% but
297	297	14 less than or equal to 400% of the federal poverty level
298	298	15 shall receive assistance for at least 50% of care
299	299	16 charges.
300	300	17 (2) Health services to low-income and underserved
301	301	18 individuals. Other unreimbursed costs of the relevant
302	302	19 hospital entity for providing without charge, paying for,
303	303	20 or subsidizing goods, activities, or services for the
304	304	21 purpose of addressing the health of low-income or
305	305	22 underserved individuals. Those activities or services may
306	306	23 include, but are not limited to: financial or in-kind
307	307	24 support to affiliated or unaffiliated hospitals, hospital
308	308	25 affiliates, community clinics, or programs that treat
309	309	26 low-income or underserved individuals; paying for or
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320	320	1 subsidizing health care professionals who care for
321	321	2 low-income or underserved individuals; providing or
322	322	3 subsidizing outreach or educational services to low-income
323	323	4 or underserved individuals for disease management and
324	324	5 prevention; free or subsidized goods, supplies, or
325	325	6 services needed by low-income or underserved individuals
326	326	7 because of their medical condition; and prenatal or
327	327	8 childbirth outreach to low-income or underserved persons.
328	328	9 (3) Subsidy of State or local governments. Direct or
329	329	10 indirect financial or in-kind subsidies of State or local
330	330	11 governments by the relevant hospital entity that pay for
331	331	12 or subsidize activities or programs related to health care
332	332	13 for low-income or underserved individuals.
333	333	14 (4) Support for State health care programs for
334	334	15 low-income individuals. At the election of the hospital
335	335	16 applicant for each applicable year, either (A) 10% of
336	336	17 payments to the relevant hospital entity and any hospital
337	337	18 affiliate designated by the relevant hospital entity
338	338	19 (provided that such hospital affiliate's operations
339	339	20 provide financial or operational support for or receive
340	340	21 financial or operational support from the relevant
341	341	22 hospital entity) under Medicaid or other means-tested
342	342	23 programs, including, but not limited to, General
343	343	24 Assistance, the Covering ALL KIDS Health Insurance Act,
344	344	25 and the State Children's Health Insurance Program or (B)
345	345	26 the amount of subsidy provided by the relevant hospital
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356	356	1 entity and any hospital affiliate designated by the
357	357	2 relevant hospital entity (provided that such hospital
358	358	3 affiliate's operations provide financial or operational
359	359	4 support for or receive financial or operational support
360	360	5 from the relevant hospital entity) to State or local
361	361	6 government in treating Medicaid recipients and recipients
362	362	7 of means-tested programs, including but not limited to
363	363	8 General Assistance, the Covering ALL KIDS Health Insurance
364	364	9 Act, and the State Children's Health Insurance Program.
365	365	10 The amount of subsidy for purposes of this item (4) is
366	366	11 calculated in the same manner as unreimbursed costs are
367	367	12 calculated for Medicaid and other means-tested government
368	368	13 programs in the Schedule H of IRS Form 990 in effect on the
369	369	14 effective date of this amendatory Act of the 97th General
370	370	15 Assembly; provided, however, that in any event
371	371	16 unreimbursed costs shall be net of fee-for-services
372	372	17 payments, payments pursuant to an assessment, quarterly
373	373	18 payments, and all other payments included on the schedule
374	374	19 H of the IRS form 990.
375	375	20 (5) Dual-eligible subsidy. The amount of subsidy
376	376	21 provided to government by treating dual-eligible
377	377	22 Medicare/Medicaid patients. The amount of subsidy for
378	378	23 purposes of this item (5) is calculated by multiplying the
379	379	24 relevant hospital entity's unreimbursed costs for
380	380	25 Medicare, calculated in the same manner as determined in
381	381	26 the Schedule H of IRS Form 990 in effect on the effective
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392	392	1 date of this amendatory Act of the 97th General Assembly,
393	393	2 by the relevant hospital entity's ratio of dual-eligible
394	394	3 patients to total Medicare patients.
395	395	4 (6) Relief of the burden of government related to
396	396	5 health care of low-income individuals. Except to the
397	397	6 extent otherwise taken into account in this subsection,
398	398	7 the portion of unreimbursed costs of the relevant hospital
399	399	8 entity attributable to providing, paying for, or
400	400	9 subsidizing goods, activities, or services that relieve
401	401	10 the burden of government related to health care for
402	402	11 low-income individuals. Such activities or services shall
403	403	12 include, but are not limited to, providing emergency,
404	404	13 trauma, burn, neonatal, psychiatric, rehabilitation, or
405	405	14 other special services; providing medical education; and
406	406	15 conducting medical research or training of health care
407	407	16 professionals. The portion of those unreimbursed costs
408	408	17 attributable to benefiting low-income individuals shall be
409	409	18 determined using the ratio calculated by adding the
410	410	19 relevant hospital entity's costs attributable to charity
411	411	20 care, Medicaid, other means-tested government programs,
412	412	21 Medicare patients with disabilities under age 65, and
413	413	22 dual-eligible Medicare/Medicaid patients and dividing that
414	414	23 total by the relevant hospital entity's total costs. Such
415	415	24 costs for the numerator and denominator shall be
416	416	25 determined by multiplying gross charges by the cost to
417	417	26 charge ratio taken from the hospitals' most recently filed
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428	428	1 Medicare cost report (CMS 2252-10 Worksheet C, Part I). In
429	429	2 the case of emergency services, the ratio shall be
430	430	3 calculated using costs (gross charges multiplied by the
431	431	4 cost to charge ratio taken from the hospitals' most
432	432	5 recently filed Medicare cost report (CMS 2252-10 Worksheet
433	433	6 C, Part I)) of patients treated in the relevant hospital
434	434	7 entity's emergency department.
435	435	8 (7) Any other activity by the relevant hospital entity
436	436	9 that the Department determines relieves the burden of
437	437	10 government or addresses the health of low-income or
438	438	11 underserved individuals.
439	439	12 (f) For purposes of making the calculations required by
440	440	13 subsections (c) and (e):
441	441	14 (1) particular services or activities eligible for
442	442	15 consideration under any of the paragraphs (1) through (7)
443	443	16 of subsection (e) may not be counted under more than one of
444	444	17 those paragraphs; and
445	445	18 (2) the amount of unreimbursed costs and the amount of
446	446	19 subsidy shall not be reduced by restricted or unrestricted
447	447	20 payments received by the relevant hospital entity as
448	448	21 contributions deductible under Section 170(a) of the
449	449	22 Internal Revenue Code.
450	450	23 (g) Estimation of Exempt Property Tax Liability. The
451	451	24 estimated property tax liability used for the determination in
452	452	25 subsection (c) shall be calculated as follows:
453	453	26 (1) "Estimated property tax liability" means the
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464	464	1 estimated dollar amount of property tax that would be
465	465	2 owed, with respect to the exempt portion of each of the
466	466	3 relevant hospital entity's properties that are already
467	467	4 fully or partially exempt, or for which an exemption in
468	468	5 whole or in part is currently being sought, and then
469	469	6 aggregated as applicable, as if the exempt portion of
470	470	7 those properties were subject to tax, calculated with
471	471	8 respect to each such property by multiplying:
472	472	9 (A) the lesser of (i) the actual assessed value,
473	473	10 if any, of the portion of the property for which an
474	474	11 exemption is sought or (ii) an estimated assessed
475	475	12 value of the exempt portion of such property as
476	476	13 determined in item (2) of this subsection (g), by:
477	477	14 (B) the applicable State equalization rate
478	478	15 (yielding the equalized assessed value), by
479	479	16 (C) the applicable tax rate.
480	480	17 (2) The estimated assessed value of the exempt portion
481	481	18 of the property equals the sum of (i) the estimated fair
482	482	19 market value of buildings on the property, as determined
483	483	20 in accordance with subparagraphs (A) and (B) of this item
484	484	21 (2), multiplied by the applicable assessment factor, and
485	485	22 (ii) the estimated assessed value of the land portion of
486	486	23 the property, as determined in accordance with
487	487	24 subparagraph (C).
488	488	25 (A) The "estimated fair market value of buildings
489	489	26 on the property" means the replacement value of any
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500	500	1 exempt portion of buildings on the property, minus
501	501	2 depreciation, determined utilizing the cost
502	502	3 replacement method whereby the exempt square footage
503	503	4 of all such buildings is multiplied by the replacement
504	504	5 cost per square foot for Class A Average building
505	505	6 found in the most recent edition of the Marshall &
506	506	7 Swift Valuation Services Manual, adjusted by any
507	507	8 appropriate current cost and local multipliers.
508	508	9 (B) Depreciation, for purposes of calculating the
509	509	10 estimated fair market value of buildings on the
510	510	11 property, is applied by utilizing a weighted mean life
511	511	12 for the buildings based on original construction and
512	512	13 assuming a 40-year life for hospital buildings and the
513	513	14 applicable life for other types of buildings as
514	514	15 specified in the American Hospital Association
515	515	16 publication "Estimated Useful Lives of Depreciable
516	516	17 Hospital Assets". In the case of hospital buildings,
517	517	18 the remaining life is divided by 40 and this ratio is
518	518	19 multiplied by the replacement cost of the buildings to
519	519	20 obtain an estimated fair market value of buildings. If
520	520	21 a hospital building is older than 35 years, a
521	521	22 remaining life of 5 years for residual value is
522	522	23 assumed; and if a building is less than 8 years old, a
523	523	24 remaining life of 32 years is assumed.
524	524	25 (C) The estimated assessed value of the land
525	525	26 portion of the property shall be determined by
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536	536	1 multiplying (i) the per square foot average of the
537	537	2 assessed values of three parcels of land (not
538	538	3 including farm land, and excluding the assessed value
539	539	4 of the improvements thereon) reasonably comparable to
540	540	5 the property, by (ii) the number of square feet
541	541	6 comprising the exempt portion of the property's land
542	542	7 square footage.
543	543	8 (3) The assessment factor, State equalization rate,
544	544	9 and tax rate (including any special factors such as
545	545	10 Enterprise Zones) used in calculating the estimated
546	546	11 property tax liability shall be for the most recent year
547	547	12 that is publicly available from the applicable chief
548	548	13 county assessment officer or officers at least 90 days
549	549	14 before the end of the hospital year.
550	550	15 (4) The method utilized to calculate estimated
551	551	16 property tax liability for purposes of this Section 15-86
552	552	17 shall not be utilized for the actual valuation,
553	553	18 assessment, or taxation of property pursuant to the
554	554	19 Property Tax Code.
555	555	20 (h) Application. Each hospital applicant applying for a
556	556	21 property tax exemption pursuant to Section 15-5 and this
557	557	22 Section shall use an application form provided by the
558	558	23 Department. The application form shall specify the records
559	559	24 required in support of the application and those records shall
560	560	25 be submitted to the Department with the application form. Each
561	561	26 application or affidavit shall contain a verification by the
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