Alabama Rep. Terri Collins, R-Decatur, has reintroduced a bill that would establish a tax credit program that could provide up to $30 million a year to the state’s struggling rural hospitals.
House Bill 86 would establish the Rural Hospital Investment Program, which would provide dollar-to-dollar tax credits for individuals and corporations that make donations to rural hospitals. If established, the tax credit program would have an annual statewide cap of $20 million for 2026, $25 million for 2027, and $30 million for 2028 and beyond.
19 of the 52 rural hospitals in Alabama are at an immediate risk of closing according the Center for Healthcare Quality and Payment Reform.
“The closure of Thomasville Regional Medical Center is what encouraged me to refile the bill early because this could have prevented that,” Collins said. “Before any others close, I would like for us to throw them a lifeline, so to speak.”
Annual tax credit recipient limits under the program would be capped at $15,000 for individuals, $450,000 for pass-through entities, and $500,000 for corporations. Hospitals would also be limited in the amount of donations that could receive under the program annually, which would be capped at $750,000 for 2026 and $1.25 million for 2028 and beyond. To be eligible for the program, hospitals must produce a five-year plan for financial sustainability, be located in a rural county and accept Medicaid and Medicare patients.
Collins introduced a similar bill last year that failed to make it out of a House committee. Her new version of the bill includes several changes that both reduce and increase its scope. The annual statewide cap, for instance, is reduced significantly under the new version of the bill, maxing out at $30 million compared to the former’s $80 million. The max annual cap for individual hospitals was also reduced from $2 million to $1.25 million.
Where Collins’ new version expands the bill’s scope is what sort of tax credits individuals and corporations may receive. Under the previous version, the tax credit would only apply to an individual or corporation’s state income tax liability, whereas HB86 expands the credit to apply to excise tax, utility tax and insurance premium tax liabilities.
Beyond the reduced annual statewide cap, Collins said that the recent closure of Thomasville Regional Medical Center, along with the dozens of other rural hospitals under threat of closure gave her hope that the bill would be received favorably this year.
“We worked on the language so the actual mechanics of the bill should be spelled out in the policy,” she said. “I also think because we’ve had one hospital close this fall, it’s a lot more important, and several others are really close.”
The bill has been assigned to the House Ways and Means Education Committee, and will be taken up during the 2025 session.
Approximately 8.6 percent of Alabama’s population, or around 421,000 people, lack health insurance, often leading to hospitals eating the cost of patients who can’t pay. The percentage of uninsured Alabamians in rural areas is even greater, according to Ted Hosp, vice president of government relations for BlueCross BlueShield of Alabama, who said one in five patients who walk into a rural hospital are uninsured.
