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State Rep. Terri Collins, R-Decatur, prefiled HB86, which seeks to provide financial support for rural hospitals in Alabama through a new program. Nearly half of Alabama’s population lives in rural areas and relies on rural hospitals or other kinds of providers for care.
The bill would create the Rural Hospital Investment Program, which offers tax credits to individuals and entities that donate to qualifying rural hospitals. Hospitals can then use these donations to cover the costs of acute care services, operational expenses and facility maintenance or upgrades.
To be eligible for donations, a hospital must be a rural general acute care, critical access or rural emergency hospital, located in a rural area as defined by federal criteria. It must also provide care to “Medicare and Medicaid participants without discrimination” and “indigent patients, regardless of ability to pay.”
The bill would create the Rural Hospital Investment Program Board within the Office of the State Treasurer, with the support of the Department of Revenue. The board would include representatives from state agencies, the Alabama Hospital Association, legislative members, and the governor. Its responsibilities would include determining which hospitals are eligible, maintaining a list of these hospitals, and overseeing compliance with donation and reporting requirements.
The bill specifies that the designees or appointees must be inclusive and “reflect the racial, gender, geographic, rural, urban, and economic diversity of the state.”
Rural hospitals must also submit a written five-year plan to the board that outlines their financials and stability. The plan should detail how the hospital intends to use donations received through the program.
Tax credits are offered to qualifying donors, with different limits based on their filing status or entity type. Individuals can receive credits of up to $15,000 or $30,000, while businesses and pass-through entities may receive larger credits, capped at $450,000 or $500,000 depending on the structure. Donors can carry forward any unused credits for up to three years.
Tax credits are capped annually, starting at $20 million for the first year and increasing over time. Additionally, there are individual hospital contribution limits per year, ensuring no hospital receives more than a specified amount.
The tax credits provided by this program will not impact the distribution to the Alabama Special Mental Health Trust Fund, and they will be awarded on a first-come, first-served basis. The board may hire an Alabama-based company to develop marketing materials and a website for eligible rural hospitals and qualified donors.
Collins filed a similar bill last legislative session, but it did not pass.
The 2025 Legislative Session begins Feb. 4.
