102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
HB4184

 

Introduced 10/19/2021, by Rep. Michael J. Zalewski

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/223
35 ILCS 105/3-8
35 ILCS 110/3-8
35 ILCS 115/3-8
35 ILCS 120/2-9

    Amends the Illinois Income Tax Act. Extends the income tax credit for certain hospitals through taxable years ending on or before December 31, 2027 (currently, December 31, 2022). Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Provides that the credit for personal property sold to or used by certain hospitals is exempt from the Acts' automatic sunset provisions. Effective immediately.


LRB102 20291 HLH 29143 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB4184LRB102 20291 HLH 29143 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Income Tax Act is amended by
5changing Section 223 as follows:
 
6    (35 ILCS 5/223)
7    Sec. 223. Hospital credit.
8    (a) For tax years ending on or after December 31, 2012 and
9ending on or before December 31, 2027 December 31, 2022, a
10taxpayer that is the owner of a hospital licensed under the
11Hospital Licensing Act, but not including an organization that
12is exempt from federal income taxes under the Internal Revenue
13Code, is entitled to a credit against the taxes imposed under
14subsections (a) and (b) of Section 201 of this Act in an amount
15equal to the lesser of the amount of real property taxes paid
16during the tax year on real property used for hospital
17purposes during the prior tax year or the cost of free or
18discounted services provided during the tax year pursuant to
19the hospital's charitable financial assistance policy,
20measured at cost.
21    (b) If the taxpayer is a partnership or Subchapter S
22corporation, the credit is allowed to the partners or
23shareholders in accordance with the determination of income

 

 

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1and distributive share of income under Sections 702 and 704
2and Subchapter S of the Internal Revenue Code. A transfer of
3this credit may be made by the taxpayer earning the credit
4within one year after the credit is earned in accordance with
5rules adopted by the Department. The Department shall
6prescribe rules to enforce and administer provisions of this
7Section. If the amount of the credit exceeds the tax liability
8for the year, then the excess credit may be carried forward and
9applied to the tax liability of the 5 taxable years following
10the excess credit year. The credit shall be applied to the
11earliest year for which there is a tax liability. If there are
12credits from more than one tax year that are available to
13offset a liability, the earlier credit shall be applied first.
14In no event shall a credit under this Section reduce the
15taxpayer's liability to less than zero.
16(Source: P.A. 100-587, eff. 6-4-18.)
 
17    Section 10. The Use Tax Act is amended by changing Section
183-8 as follows:
 
19    (35 ILCS 105/3-8)
20    Sec. 3-8. Hospital exemption.
21    (a) Tangible Until July 1, 2022, tangible personal
22property sold to or used by a hospital owner that owns one or
23more hospitals licensed under the Hospital Licensing Act or
24operated under the University of Illinois Hospital Act, or a

 

 

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1hospital affiliate that is not already exempt under another
2provision of this Act and meets the criteria for an exemption
3under this Section, is exempt from taxation under this Act.
4    (b) A hospital owner or hospital affiliate satisfies the
5conditions for an exemption under this Section if the value of
6qualified services or activities listed in subsection (c) of
7this Section for the hospital year equals or exceeds the
8relevant hospital entity's estimated property tax liability,
9without regard to any property tax exemption granted under
10Section 15-86 of the Property Tax Code, for the calendar year
11in which exemption or renewal of exemption is sought. For
12purposes of making the calculations required by this
13subsection (b), if the relevant hospital entity is a hospital
14owner that owns more than one hospital, the value of the
15services or activities listed in subsection (c) shall be
16calculated on the basis of only those services and activities
17relating to the hospital that includes the subject property,
18and the relevant hospital entity's estimated property tax
19liability shall be calculated only with respect to the
20properties comprising that hospital. In the case of a
21multi-state hospital system or hospital affiliate, the value
22of the services or activities listed in subsection (c) shall
23be calculated on the basis of only those services and
24activities that occur in Illinois and the relevant hospital
25entity's estimated property tax liability shall be calculated
26only with respect to its property located in Illinois.

 

 

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1    (c) The following services and activities shall be
2considered for purposes of making the calculations required by
3subsection (b):
4        (1) Charity care. Free or discounted services provided
5    pursuant to the relevant hospital entity's financial
6    assistance policy, measured at cost, including discounts
7    provided under the Hospital Uninsured Patient Discount
8    Act.
9        (2) Health services to low-income and underserved
10    individuals. Other unreimbursed costs of the relevant
11    hospital entity for providing without charge, paying for,
12    or subsidizing goods, activities, or services for the
13    purpose of addressing the health of low-income or
14    underserved individuals. Those activities or services may
15    include, but are not limited to: financial or in-kind
16    support to affiliated or unaffiliated hospitals, hospital
17    affiliates, community clinics, or programs that treat
18    low-income or underserved individuals; paying for or
19    subsidizing health care professionals who care for
20    low-income or underserved individuals; providing or
21    subsidizing outreach or educational services to low-income
22    or underserved individuals for disease management and
23    prevention; free or subsidized goods, supplies, or
24    services needed by low-income or underserved individuals
25    because of their medical condition; and prenatal or
26    childbirth outreach to low-income or underserved persons.

 

 

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1        (3) Subsidy of State or local governments. Direct or
2    indirect financial or in-kind subsidies of State or local
3    governments by the relevant hospital entity that pay for
4    or subsidize activities or programs related to health care
5    for low-income or underserved individuals.
6        (4) Support for State health care programs for
7    low-income individuals. At the election of the hospital
8    applicant for each applicable year, either (A) 10% of
9    payments to the relevant hospital entity and any hospital
10    affiliate designated by the relevant hospital entity
11    (provided that such hospital affiliate's operations
12    provide financial or operational support for or receive
13    financial or operational support from the relevant
14    hospital entity) under Medicaid or other means-tested
15    programs, including, but not limited to, General
16    Assistance, the Covering ALL KIDS Health Insurance Act,
17    and the State Children's Health Insurance Program or (B)
18    the amount of subsidy provided by the relevant hospital
19    entity and any hospital affiliate designated by the
20    relevant hospital entity (provided that such hospital
21    affiliate's operations provide financial or operational
22    support for or receive financial or operational support
23    from the relevant hospital entity) to State or local
24    government in treating Medicaid recipients and recipients
25    of means-tested programs, including but not limited to
26    General Assistance, the Covering ALL KIDS Health Insurance

 

 

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1    Act, and the State Children's Health Insurance Program.
2    The amount of subsidy for purpose of this item (4) is
3    calculated in the same manner as unreimbursed costs are
4    calculated for Medicaid and other means-tested government
5    programs in the Schedule H of IRS Form 990 in effect on the
6    effective date of this amendatory Act of the 97th General
7    Assembly.
8        (5) Dual-eligible subsidy. The amount of subsidy
9    provided to government by treating dual-eligible
10    Medicare/Medicaid patients. The amount of subsidy for
11    purposes of this item (5) is calculated by multiplying the
12    relevant hospital entity's unreimbursed costs for
13    Medicare, calculated in the same manner as determined in
14    the Schedule H of IRS Form 990 in effect on the effective
15    date of this amendatory Act of the 97th General Assembly,
16    by the relevant hospital entity's ratio of dual-eligible
17    patients to total Medicare patients.
18        (6) Relief of the burden of government related to
19    health care. Except to the extent otherwise taken into
20    account in this subsection, the portion of unreimbursed
21    costs of the relevant hospital entity attributable to
22    providing, paying for, or subsidizing goods, activities,
23    or services that relieve the burden of government related
24    to health care for low-income individuals. Such activities
25    or services shall include, but are not limited to,
26    providing emergency, trauma, burn, neonatal, psychiatric,

 

 

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1    rehabilitation, or other special services; providing
2    medical education; and conducting medical research or
3    training of health care professionals. The portion of
4    those unreimbursed costs attributable to benefiting
5    low-income individuals shall be determined using the ratio
6    calculated by adding the relevant hospital entity's costs
7    attributable to charity care, Medicaid, other means-tested
8    government programs, Medicare patients with disabilities
9    under age 65, and dual-eligible Medicare/Medicaid patients
10    and dividing that total by the relevant hospital entity's
11    total costs. Such costs for the numerator and denominator
12    shall be determined by multiplying gross charges by the
13    cost to charge ratio taken from the hospital's most
14    recently filed Medicare cost report (CMS 2252-10
15    Worksheet, Part I). In the case of emergency services, the
16    ratio shall be calculated using costs (gross charges
17    multiplied by the cost to charge ratio taken from the
18    hospital's most recently filed Medicare cost report (CMS
19    2252-10 Worksheet, Part I)) of patients treated in the
20    relevant hospital entity's emergency department.
21        (7) Any other activity by the relevant hospital entity
22    that the Department determines relieves the burden of
23    government or addresses the health of low-income or
24    underserved individuals.
25    (d) The hospital applicant shall include information in
26its exemption application establishing that it satisfies the

 

 

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1requirements of subsection (b). For purposes of making the
2calculations required by subsection (b), the hospital
3applicant may for each year elect to use either (1) the value
4of the services or activities listed in subsection (e) for the
5hospital year or (2) the average value of those services or
6activities for the 3 fiscal years ending with the hospital
7year. If the relevant hospital entity has been in operation
8for less than 3 completed fiscal years, then the latter
9calculation, if elected, shall be performed on a pro rata
10basis.
11    (e) For purposes of making the calculations required by
12this Section:
13        (1) particular services or activities eligible for
14    consideration under any of the paragraphs (1) through (7)
15    of subsection (c) may not be counted under more than one of
16    those paragraphs; and
17        (2) the amount of unreimbursed costs and the amount of
18    subsidy shall not be reduced by restricted or unrestricted
19    payments received by the relevant hospital entity as
20    contributions deductible under Section 170(a) of the
21    Internal Revenue Code.
22    (f) (Blank).
23    (g) Estimation of Exempt Property Tax Liability. The
24estimated property tax liability used for the determination in
25subsection (b) shall be calculated as follows:
26        (1) "Estimated property tax liability" means the

 

 

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1    estimated dollar amount of property tax that would be
2    owed, with respect to the exempt portion of each of the
3    relevant hospital entity's properties that are already
4    fully or partially exempt, or for which an exemption in
5    whole or in part is currently being sought, and then
6    aggregated as applicable, as if the exempt portion of
7    those properties were subject to tax, calculated with
8    respect to each such property by multiplying:
9            (A) the lesser of (i) the actual assessed value,
10        if any, of the portion of the property for which an
11        exemption is sought or (ii) an estimated assessed
12        value of the exempt portion of such property as
13        determined in item (2) of this subsection (g), by
14            (B) the applicable State equalization rate
15        (yielding the equalized assessed value), by
16            (C) the applicable tax rate.
17        (2) The estimated assessed value of the exempt portion
18    of the property equals the sum of (i) the estimated fair
19    market value of buildings on the property, as determined
20    in accordance with subparagraphs (A) and (B) of this item
21    (2), multiplied by the applicable assessment factor, and
22    (ii) the estimated assessed value of the land portion of
23    the property, as determined in accordance with
24    subparagraph (C).
25            (A) The "estimated fair market value of buildings
26        on the property" means the replacement value of any

 

 

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1        exempt portion of buildings on the property, minus
2        depreciation, determined utilizing the cost
3        replacement method whereby the exempt square footage
4        of all such buildings is multiplied by the replacement
5        cost per square foot for Class A Average building
6        found in the most recent edition of the Marshall &
7        Swift Valuation Services Manual, adjusted by any
8        appropriate current cost and local multipliers.
9            (B) Depreciation, for purposes of calculating the
10        estimated fair market value of buildings on the
11        property, is applied by utilizing a weighted mean life
12        for the buildings based on original construction and
13        assuming a 40-year life for hospital buildings and the
14        applicable life for other types of buildings as
15        specified in the American Hospital Association
16        publication "Estimated Useful Lives of Depreciable
17        Hospital Assets". In the case of hospital buildings,
18        the remaining life is divided by 40 and this ratio is
19        multiplied by the replacement cost of the buildings to
20        obtain an estimated fair market value of buildings. If
21        a hospital building is older than 35 years, a
22        remaining life of 5 years for residual value is
23        assumed; and if a building is less than 8 years old, a
24        remaining life of 32 years is assumed.
25            (C) The estimated assessed value of the land
26        portion of the property shall be determined by

 

 

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1        multiplying (i) the per square foot average of the
2        assessed values of three parcels of land (not
3        including farm land, and excluding the assessed value
4        of the improvements thereon) reasonably comparable to
5        the property, by (ii) the number of square feet
6        comprising the exempt portion of the property's land
7        square footage.
8        (3) The assessment factor, State equalization rate,
9    and tax rate (including any special factors such as
10    Enterprise Zones) used in calculating the estimated
11    property tax liability shall be for the most recent year
12    that is publicly available from the applicable chief
13    county assessment officer or officers at least 90 days
14    before the end of the hospital year.
15        (4) The method utilized to calculate estimated
16    property tax liability for purposes of this Section 15-86
17    shall not be utilized for the actual valuation,
18    assessment, or taxation of property pursuant to the
19    Property Tax Code.
20    (h) For the purpose of this Section, the following terms
21shall have the meanings set forth below:
22        (1) "Hospital" means any institution, place, building,
23    buildings on a campus, or other health care facility
24    located in Illinois that is licensed under the Hospital
25    Licensing Act and has a hospital owner.
26        (2) "Hospital owner" means a not-for-profit

 

 

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1    corporation that is the titleholder of a hospital, or the
2    owner of the beneficial interest in an Illinois land trust
3    that is the titleholder of a hospital.
4        (3) "Hospital affiliate" means any corporation,
5    partnership, limited partnership, joint venture, limited
6    liability company, association or other organization,
7    other than a hospital owner, that directly or indirectly
8    controls, is controlled by, or is under common control
9    with one or more hospital owners and that supports, is
10    supported by, or acts in furtherance of the exempt health
11    care purposes of at least one of those hospital owners'
12    hospitals.
13        (4) "Hospital system" means a hospital and one or more
14    other hospitals or hospital affiliates related by common
15    control or ownership.
16        (5) "Control" relating to hospital owners, hospital
17    affiliates, or hospital systems means possession, direct
18    or indirect, of the power to direct or cause the direction
19    of the management and policies of the entity, whether
20    through ownership of assets, membership interest, other
21    voting or governance rights, by contract or otherwise.
22        (6) "Hospital applicant" means a hospital owner or
23    hospital affiliate that files an application for an
24    exemption or renewal of exemption under this Section.
25        (7) "Relevant hospital entity" means (A) the hospital
26    owner, in the case of a hospital applicant that is a

 

 

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1    hospital owner, and (B) at the election of a hospital
2    applicant that is a hospital affiliate, either (i) the
3    hospital affiliate or (ii) the hospital system to which
4    the hospital applicant belongs, including any hospitals or
5    hospital affiliates that are related by common control or
6    ownership.
7        (8) "Subject property" means property used for the
8    calculation under subsection (b) of this Section.
9        (9) "Hospital year" means the fiscal year of the
10    relevant hospital entity, or the fiscal year of one of the
11    hospital owners in the hospital system if the relevant
12    hospital entity is a hospital system with members with
13    different fiscal years, that ends in the year for which
14    the exemption is sought.
15    (i) It is the intent of the General Assembly that any
16exemptions taken, granted, or renewed under this Section prior
17to the effective date of this amendatory Act of the 100th
18General Assembly are hereby validated.
19    (j) It is the intent of the General Assembly that the
20exemption under this Section applies on a continuous basis. If
21this amendatory Act of the 102nd General Assembly takes effect
22after July 1, 2022, any exemptions taken, granted, or renewed
23under this Section on or after July 1, 2022 and prior to the
24effective date of this amendatory Act of the 102nd General
25Assembly are hereby validated.
26    (k) This Section is exempt from the provisions of Section

 

 

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13-90.
2(Source: P.A. 99-143, eff. 7-27-15; 100-1181, eff. 3-8-19.)
 
3    Section 15. The Service Use Tax Act is amended by changing
4Section 3-8 as follows:
 
5    (35 ILCS 110/3-8)
6    Sec. 3-8. Hospital exemption.
7    (a) Tangible Until July 1, 2022, tangible personal
8property sold to or used by a hospital owner that owns one or
9more hospitals licensed under the Hospital Licensing Act or
10operated under the University of Illinois Hospital Act, or a
11hospital affiliate that is not already exempt under another
12provision of this Act and meets the criteria for an exemption
13under this Section, is exempt from taxation under this Act.
14    (b) A hospital owner or hospital affiliate satisfies the
15conditions for an exemption under this Section if the value of
16qualified services or activities listed in subsection (c) of
17this Section for the hospital year equals or exceeds the
18relevant hospital entity's estimated property tax liability,
19without regard to any property tax exemption granted under
20Section 15-86 of the Property Tax Code, for the calendar year
21in which exemption or renewal of exemption is sought. For
22purposes of making the calculations required by this
23subsection (b), if the relevant hospital entity is a hospital
24owner that owns more than one hospital, the value of the

 

 

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1services or activities listed in subsection (c) shall be
2calculated on the basis of only those services and activities
3relating to the hospital that includes the subject property,
4and the relevant hospital entity's estimated property tax
5liability shall be calculated only with respect to the
6properties comprising that hospital. In the case of a
7multi-state hospital system or hospital affiliate, the value
8of the services or activities listed in subsection (c) shall
9be calculated on the basis of only those services and
10activities that occur in Illinois and the relevant hospital
11entity's estimated property tax liability shall be calculated
12only with respect to its property located in Illinois.
13    (c) The following services and activities shall be
14considered for purposes of making the calculations required by
15subsection (b):
16        (1) Charity care. Free or discounted services provided
17    pursuant to the relevant hospital entity's financial
18    assistance policy, measured at cost, including discounts
19    provided under the Hospital Uninsured Patient Discount
20    Act.
21        (2) Health services to low-income and underserved
22    individuals. Other unreimbursed costs of the relevant
23    hospital entity for providing without charge, paying for,
24    or subsidizing goods, activities, or services for the
25    purpose of addressing the health of low-income or
26    underserved individuals. Those activities or services may

 

 

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1    include, but are not limited to: financial or in-kind
2    support to affiliated or unaffiliated hospitals, hospital
3    affiliates, community clinics, or programs that treat
4    low-income or underserved individuals; paying for or
5    subsidizing health care professionals who care for
6    low-income or underserved individuals; providing or
7    subsidizing outreach or educational services to low-income
8    or underserved individuals for disease management and
9    prevention; free or subsidized goods, supplies, or
10    services needed by low-income or underserved individuals
11    because of their medical condition; and prenatal or
12    childbirth outreach to low-income or underserved persons.
13        (3) Subsidy of State or local governments. Direct or
14    indirect financial or in-kind subsidies of State or local
15    governments by the relevant hospital entity that pay for
16    or subsidize activities or programs related to health care
17    for low-income or underserved individuals.
18        (4) Support for State health care programs for
19    low-income individuals. At the election of the hospital
20    applicant for each applicable year, either (A) 10% of
21    payments to the relevant hospital entity and any hospital
22    affiliate designated by the relevant hospital entity
23    (provided that such hospital affiliate's operations
24    provide financial or operational support for or receive
25    financial or operational support from the relevant
26    hospital entity) under Medicaid or other means-tested

 

 

HB4184- 17 -LRB102 20291 HLH 29143 b

1    programs, including, but not limited to, General
2    Assistance, the Covering ALL KIDS Health Insurance Act,
3    and the State Children's Health Insurance Program or (B)
4    the amount of subsidy provided by the relevant hospital
5    entity and any hospital affiliate designated by the
6    relevant hospital entity (provided that such hospital
7    affiliate's operations provide financial or operational
8    support for or receive financial or operational support
9    from the relevant hospital entity) to State or local
10    government in treating Medicaid recipients and recipients
11    of means-tested programs, including but not limited to
12    General Assistance, the Covering ALL KIDS Health Insurance
13    Act, and the State Children's Health Insurance Program.
14    The amount of subsidy for purposes of this item (4) is
15    calculated in the same manner as unreimbursed costs are
16    calculated for Medicaid and other means-tested government
17    programs in the Schedule H of IRS Form 990 in effect on the
18    effective date of this amendatory Act of the 97th General
19    Assembly.
20        (5) Dual-eligible subsidy. The amount of subsidy
21    provided to government by treating dual-eligible
22    Medicare/Medicaid patients. The amount of subsidy for
23    purposes of this item (5) is calculated by multiplying the
24    relevant hospital entity's unreimbursed costs for
25    Medicare, calculated in the same manner as determined in
26    the Schedule H of IRS Form 990 in effect on the effective

 

 

HB4184- 18 -LRB102 20291 HLH 29143 b

1    date of this amendatory Act of the 97th General Assembly,
2    by the relevant hospital entity's ratio of dual-eligible
3    patients to total Medicare patients.
4        (6) Relief of the burden of government related to
5    health care. Except to the extent otherwise taken into
6    account in this subsection, the portion of unreimbursed
7    costs of the relevant hospital entity attributable to
8    providing, paying for, or subsidizing goods, activities,
9    or services that relieve the burden of government related
10    to health care for low-income individuals. Such activities
11    or services shall include, but are not limited to,
12    providing emergency, trauma, burn, neonatal, psychiatric,
13    rehabilitation, or other special services; providing
14    medical education; and conducting medical research or
15    training of health care professionals. The portion of
16    those unreimbursed costs attributable to benefiting
17    low-income individuals shall be determined using the ratio
18    calculated by adding the relevant hospital entity's costs
19    attributable to charity care, Medicaid, other means-tested
20    government programs, Medicare patients with disabilities
21    under age 65, and dual-eligible Medicare/Medicaid patients
22    and dividing that total by the relevant hospital entity's
23    total costs. Such costs for the numerator and denominator
24    shall be determined by multiplying gross charges by the
25    cost to charge ratio taken from the hospital's most
26    recently filed Medicare cost report (CMS 2252-10

 

 

HB4184- 19 -LRB102 20291 HLH 29143 b

1    Worksheet, Part I). In the case of emergency services, the
2    ratio shall be calculated using costs (gross charges
3    multiplied by the cost to charge ratio taken from the
4    hospital's most recently filed Medicare cost report (CMS
5    2252-10 Worksheet, Part I)) of patients treated in the
6    relevant hospital entity's emergency department.
7        (7) Any other activity by the relevant hospital entity
8    that the Department determines relieves the burden of
9    government or addresses the health of low-income or
10    underserved individuals.
11    (d) The hospital applicant shall include information in
12its exemption application establishing that it satisfies the
13requirements of subsection (b). For purposes of making the
14calculations required by subsection (b), the hospital
15applicant may for each year elect to use either (1) the value
16of the services or activities listed in subsection (e) for the
17hospital year or (2) the average value of those services or
18activities for the 3 fiscal years ending with the hospital
19year. If the relevant hospital entity has been in operation
20for less than 3 completed fiscal years, then the latter
21calculation, if elected, shall be performed on a pro rata
22basis.
23    (e) For purposes of making the calculations required by
24this Section:
25        (1) particular services or activities eligible for
26    consideration under any of the paragraphs (1) through (7)

 

 

HB4184- 20 -LRB102 20291 HLH 29143 b

1    of subsection (c) may not be counted under more than one of
2    those paragraphs; and
3        (2) the amount of unreimbursed costs and the amount of
4    subsidy shall not be reduced by restricted or unrestricted
5    payments received by the relevant hospital entity as
6    contributions deductible under Section 170(a) of the
7    Internal Revenue Code.
8    (f) (Blank).
9    (g) Estimation of Exempt Property Tax Liability. The
10estimated property tax liability used for the determination in
11subsection (b) shall be calculated as follows:
12        (1) "Estimated property tax liability" means the
13    estimated dollar amount of property tax that would be
14    owed, with respect to the exempt portion of each of the
15    relevant hospital entity's properties that are already
16    fully or partially exempt, or for which an exemption in
17    whole or in part is currently being sought, and then
18    aggregated as applicable, as if the exempt portion of
19    those properties were subject to tax, calculated with
20    respect to each such property by multiplying:
21            (A) the lesser of (i) the actual assessed value,
22        if any, of the portion of the property for which an
23        exemption is sought or (ii) an estimated assessed
24        value of the exempt portion of such property as
25        determined in item (2) of this subsection (g), by
26            (B) the applicable State equalization rate

 

 

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1        (yielding the equalized assessed value), by
2            (C) the applicable tax rate.
3        (2) The estimated assessed value of the exempt portion
4    of the property equals the sum of (i) the estimated fair
5    market value of buildings on the property, as determined
6    in accordance with subparagraphs (A) and (B) of this item
7    (2), multiplied by the applicable assessment factor, and
8    (ii) the estimated assessed value of the land portion of
9    the property, as determined in accordance with
10    subparagraph (C).
11            (A) The "estimated fair market value of buildings
12        on the property" means the replacement value of any
13        exempt portion of buildings on the property, minus
14        depreciation, determined utilizing the cost
15        replacement method whereby the exempt square footage
16        of all such buildings is multiplied by the replacement
17        cost per square foot for Class A Average building
18        found in the most recent edition of the Marshall &
19        Swift Valuation Services Manual, adjusted by any
20        appropriate current cost and local multipliers.
21            (B) Depreciation, for purposes of calculating the
22        estimated fair market value of buildings on the
23        property, is applied by utilizing a weighted mean life
24        for the buildings based on original construction and
25        assuming a 40-year life for hospital buildings and the
26        applicable life for other types of buildings as

 

 

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1        specified in the American Hospital Association
2        publication "Estimated Useful Lives of Depreciable
3        Hospital Assets". In the case of hospital buildings,
4        the remaining life is divided by 40 and this ratio is
5        multiplied by the replacement cost of the buildings to
6        obtain an estimated fair market value of buildings. If
7        a hospital building is older than 35 years, a
8        remaining life of 5 years for residual value is
9        assumed; and if a building is less than 8 years old, a
10        remaining life of 32 years is assumed.
11            (C) The estimated assessed value of the land
12        portion of the property shall be determined by
13        multiplying (i) the per square foot average of the
14        assessed values of three parcels of land (not
15        including farm land, and excluding the assessed value
16        of the improvements thereon) reasonably comparable to
17        the property, by (ii) the number of square feet
18        comprising the exempt portion of the property's land
19        square footage.
20        (3) The assessment factor, State equalization rate,
21    and tax rate (including any special factors such as
22    Enterprise Zones) used in calculating the estimated
23    property tax liability shall be for the most recent year
24    that is publicly available from the applicable chief
25    county assessment officer or officers at least 90 days
26    before the end of the hospital year.

 

 

HB4184- 23 -LRB102 20291 HLH 29143 b

1        (4) The method utilized to calculate estimated
2    property tax liability for purposes of this Section 15-86
3    shall not be utilized for the actual valuation,
4    assessment, or taxation of property pursuant to the
5    Property Tax Code.
6    (h) For the purpose of this Section, the following terms
7shall have the meanings set forth below:
8        (1) "Hospital" means any institution, place, building,
9    buildings on a campus, or other health care facility
10    located in Illinois that is licensed under the Hospital
11    Licensing Act and has a hospital owner.
12        (2) "Hospital owner" means a not-for-profit
13    corporation that is the titleholder of a hospital, or the
14    owner of the beneficial interest in an Illinois land trust
15    that is the titleholder of a hospital.
16        (3) "Hospital affiliate" means any corporation,
17    partnership, limited partnership, joint venture, limited
18    liability company, association or other organization,
19    other than a hospital owner, that directly or indirectly
20    controls, is controlled by, or is under common control
21    with one or more hospital owners and that supports, is
22    supported by, or acts in furtherance of the exempt health
23    care purposes of at least one of those hospital owners'
24    hospitals.
25        (4) "Hospital system" means a hospital and one or more
26    other hospitals or hospital affiliates related by common

 

 

HB4184- 24 -LRB102 20291 HLH 29143 b

1    control or ownership.
2        (5) "Control" relating to hospital owners, hospital
3    affiliates, or hospital systems means possession, direct
4    or indirect, of the power to direct or cause the direction
5    of the management and policies of the entity, whether
6    through ownership of assets, membership interest, other
7    voting or governance rights, by contract or otherwise.
8        (6) "Hospital applicant" means a hospital owner or
9    hospital affiliate that files an application for an
10    exemption or renewal of exemption under this Section.
11        (7) "Relevant hospital entity" means (A) the hospital
12    owner, in the case of a hospital applicant that is a
13    hospital owner, and (B) at the election of a hospital
14    applicant that is a hospital affiliate, either (i) the
15    hospital affiliate or (ii) the hospital system to which
16    the hospital applicant belongs, including any hospitals or
17    hospital affiliates that are related by common control or
18    ownership.
19        (8) "Subject property" means property used for the
20    calculation under subsection (b) of this Section.
21        (9) "Hospital year" means the fiscal year of the
22    relevant hospital entity, or the fiscal year of one of the
23    hospital owners in the hospital system if the relevant
24    hospital entity is a hospital system with members with
25    different fiscal years, that ends in the year for which
26    the exemption is sought.

 

 

HB4184- 25 -LRB102 20291 HLH 29143 b

1    (i) It is the intent of the General Assembly that any
2exemptions taken, granted, or renewed under this Section prior
3to the effective date of this amendatory Act of the 100th
4General Assembly are hereby validated.
5    (j) It is the intent of the General Assembly that the
6exemption under this Section applies on a continuous basis. If
7this amendatory Act of the 102nd General Assembly takes effect
8after July 1, 2022, any exemptions taken, granted, or renewed
9under this Section on or after July 1, 2022 and prior to the
10effective date of this amendatory Act of the 102nd General
11Assembly are hereby validated.
12    (k) This Section is exempt from the provisions of Section
133-75.
14(Source: P.A. 99-143, eff. 7-27-15; 100-1181, eff. 3-8-19.)
 
15    Section 20. The Service Occupation Tax Act is amended by
16changing Section 3-8 as follows:
 
17    (35 ILCS 115/3-8)
18    Sec. 3-8. Hospital exemption.
19    (a) Tangible Until July 1, 2022, tangible personal
20property sold to or used by a hospital owner that owns one or
21more hospitals licensed under the Hospital Licensing Act or
22operated under the University of Illinois Hospital Act, or a
23hospital affiliate that is not already exempt under another
24provision of this Act and meets the criteria for an exemption

 

 

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1under this Section, is exempt from taxation under this Act.
2    (b) A hospital owner or hospital affiliate satisfies the
3conditions for an exemption under this Section if the value of
4qualified services or activities listed in subsection (c) of
5this Section for the hospital year equals or exceeds the
6relevant hospital entity's estimated property tax liability,
7without regard to any property tax exemption granted under
8Section 15-86 of the Property Tax Code, for the calendar year
9in which exemption or renewal of exemption is sought. For
10purposes of making the calculations required by this
11subsection (b), if the relevant hospital entity is a hospital
12owner that owns more than one hospital, the value of the
13services or activities listed in subsection (c) shall be
14calculated on the basis of only those services and activities
15relating to the hospital that includes the subject property,
16and the relevant hospital entity's estimated property tax
17liability shall be calculated only with respect to the
18properties comprising that hospital. In the case of a
19multi-state hospital system or hospital affiliate, the value
20of the services or activities listed in subsection (c) shall
21be calculated on the basis of only those services and
22activities that occur in Illinois and the relevant hospital
23entity's estimated property tax liability shall be calculated
24only with respect to its property located in Illinois.
25    (c) The following services and activities shall be
26considered for purposes of making the calculations required by

 

 

HB4184- 27 -LRB102 20291 HLH 29143 b

1subsection (b):
2        (1) Charity care. Free or discounted services provided
3    pursuant to the relevant hospital entity's financial
4    assistance policy, measured at cost, including discounts
5    provided under the Hospital Uninsured Patient Discount
6    Act.
7        (2) Health services to low-income and underserved
8    individuals. Other unreimbursed costs of the relevant
9    hospital entity for providing without charge, paying for,
10    or subsidizing goods, activities, or services for the
11    purpose of addressing the health of low-income or
12    underserved individuals. Those activities or services may
13    include, but are not limited to: financial or in-kind
14    support to affiliated or unaffiliated hospitals, hospital
15    affiliates, community clinics, or programs that treat
16    low-income or underserved individuals; paying for or
17    subsidizing health care professionals who care for
18    low-income or underserved individuals; providing or
19    subsidizing outreach or educational services to low-income
20    or underserved individuals for disease management and
21    prevention; free or subsidized goods, supplies, or
22    services needed by low-income or underserved individuals
23    because of their medical condition; and prenatal or
24    childbirth outreach to low-income or underserved persons.
25        (3) Subsidy of State or local governments. Direct or
26    indirect financial or in-kind subsidies of State or local

 

 

HB4184- 28 -LRB102 20291 HLH 29143 b

1    governments by the relevant hospital entity that pay for
2    or subsidize activities or programs related to health care
3    for low-income or underserved individuals.
4        (4) Support for State health care programs for
5    low-income individuals. At the election of the hospital
6    applicant for each applicable year, either (A) 10% of
7    payments to the relevant hospital entity and any hospital
8    affiliate designated by the relevant hospital entity
9    (provided that such hospital affiliate's operations
10    provide financial or operational support for or receive
11    financial or operational support from the relevant
12    hospital entity) under Medicaid or other means-tested
13    programs, including, but not limited to, General
14    Assistance, the Covering ALL KIDS Health Insurance Act,
15    and the State Children's Health Insurance Program or (B)
16    the amount of subsidy provided by the relevant hospital
17    entity and any hospital affiliate designated by the
18    relevant hospital entity (provided that such hospital
19    affiliate's operations provide financial or operational
20    support for or receive financial or operational support
21    from the relevant hospital entity) to State or local
22    government in treating Medicaid recipients and recipients
23    of means-tested programs, including but not limited to
24    General Assistance, the Covering ALL KIDS Health Insurance
25    Act, and the State Children's Health Insurance Program.
26    The amount of subsidy for purposes of this item (4) is

 

 

HB4184- 29 -LRB102 20291 HLH 29143 b

1    calculated in the same manner as unreimbursed costs are
2    calculated for Medicaid and other means-tested government
3    programs in the Schedule H of IRS Form 990 in effect on the
4    effective date of this amendatory Act of the 97th General
5    Assembly.
6        (5) Dual-eligible subsidy. The amount of subsidy
7    provided to government by treating dual-eligible
8    Medicare/Medicaid patients. The amount of subsidy for
9    purposes of this item (5) is calculated by multiplying the
10    relevant hospital entity's unreimbursed costs for
11    Medicare, calculated in the same manner as determined in
12    the Schedule H of IRS Form 990 in effect on the effective
13    date of this amendatory Act of the 97th General Assembly,
14    by the relevant hospital entity's ratio of dual-eligible
15    patients to total Medicare patients.
16        (6) Relief of the burden of government related to
17    health care. Except to the extent otherwise taken into
18    account in this subsection, the portion of unreimbursed
19    costs of the relevant hospital entity attributable to
20    providing, paying for, or subsidizing goods, activities,
21    or services that relieve the burden of government related
22    to health care for low-income individuals. Such activities
23    or services shall include, but are not limited to,
24    providing emergency, trauma, burn, neonatal, psychiatric,
25    rehabilitation, or other special services; providing
26    medical education; and conducting medical research or

 

 

HB4184- 30 -LRB102 20291 HLH 29143 b

1    training of health care professionals. The portion of
2    those unreimbursed costs attributable to benefiting
3    low-income individuals shall be determined using the ratio
4    calculated by adding the relevant hospital entity's costs
5    attributable to charity care, Medicaid, other means-tested
6    government programs, Medicare patients with disabilities
7    under age 65, and dual-eligible Medicare/Medicaid patients
8    and dividing that total by the relevant hospital entity's
9    total costs. Such costs for the numerator and denominator
10    shall be determined by multiplying gross charges by the
11    cost to charge ratio taken from the hospital's most
12    recently filed Medicare cost report (CMS 2252-10
13    Worksheet, Part I). In the case of emergency services, the
14    ratio shall be calculated using costs (gross charges
15    multiplied by the cost to charge ratio taken from the
16    hospital's most recently filed Medicare cost report (CMS
17    2252-10 Worksheet, Part I)) of patients treated in the
18    relevant hospital entity's emergency department.
19        (7) Any other activity by the relevant hospital entity
20    that the Department determines relieves the burden of
21    government or addresses the health of low-income or
22    underserved individuals.
23    (d) The hospital applicant shall include information in
24its exemption application establishing that it satisfies the
25requirements of subsection (b). For purposes of making the
26calculations required by subsection (b), the hospital

 

 

HB4184- 31 -LRB102 20291 HLH 29143 b

1applicant may for each year elect to use either (1) the value
2of the services or activities listed in subsection (e) for the
3hospital year or (2) the average value of those services or
4activities for the 3 fiscal years ending with the hospital
5year. If the relevant hospital entity has been in operation
6for less than 3 completed fiscal years, then the latter
7calculation, if elected, shall be performed on a pro rata
8basis.
9    (e) For purposes of making the calculations required by
10this Section:
11        (1) particular services or activities eligible for
12    consideration under any of the paragraphs (1) through (7)
13    of subsection (c) may not be counted under more than one of
14    those paragraphs; and
15        (2) the amount of unreimbursed costs and the amount of
16    subsidy shall not be reduced by restricted or unrestricted
17    payments received by the relevant hospital entity as
18    contributions deductible under Section 170(a) of the
19    Internal Revenue Code.
20    (f) (Blank).
21    (g) Estimation of Exempt Property Tax Liability. The
22estimated property tax liability used for the determination in
23subsection (b) shall be calculated as follows:
24        (1) "Estimated property tax liability" means the
25    estimated dollar amount of property tax that would be
26    owed, with respect to the exempt portion of each of the

 

 

HB4184- 32 -LRB102 20291 HLH 29143 b

1    relevant hospital entity's properties that are already
2    fully or partially exempt, or for which an exemption in
3    whole or in part is currently being sought, and then
4    aggregated as applicable, as if the exempt portion of
5    those properties were subject to tax, calculated with
6    respect to each such property by multiplying:
7            (A) the lesser of (i) the actual assessed value,
8        if any, of the portion of the property for which an
9        exemption is sought or (ii) an estimated assessed
10        value of the exempt portion of such property as
11        determined in item (2) of this subsection (g), by
12            (B) the applicable State equalization rate
13        (yielding the equalized assessed value), by
14            (C) the applicable tax rate.
15        (2) The estimated assessed value of the exempt portion
16    of the property equals the sum of (i) the estimated fair
17    market value of buildings on the property, as determined
18    in accordance with subparagraphs (A) and (B) of this item
19    (2), multiplied by the applicable assessment factor, and
20    (ii) the estimated assessed value of the land portion of
21    the property, as determined in accordance with
22    subparagraph (C).
23            (A) The "estimated fair market value of buildings
24        on the property" means the replacement value of any
25        exempt portion of buildings on the property, minus
26        depreciation, determined utilizing the cost

 

 

HB4184- 33 -LRB102 20291 HLH 29143 b

1        replacement method whereby the exempt square footage
2        of all such buildings is multiplied by the replacement
3        cost per square foot for Class A Average building
4        found in the most recent edition of the Marshall &
5        Swift Valuation Services Manual, adjusted by any
6        appropriate current cost and local multipliers.
7            (B) Depreciation, for purposes of calculating the
8        estimated fair market value of buildings on the
9        property, is applied by utilizing a weighted mean life
10        for the buildings based on original construction and
11        assuming a 40-year life for hospital buildings and the
12        applicable life for other types of buildings as
13        specified in the American Hospital Association
14        publication "Estimated Useful Lives of Depreciable
15        Hospital Assets". In the case of hospital buildings,
16        the remaining life is divided by 40 and this ratio is
17        multiplied by the replacement cost of the buildings to
18        obtain an estimated fair market value of buildings. If
19        a hospital building is older than 35 years, a
20        remaining life of 5 years for residual value is
21        assumed; and if a building is less than 8 years old, a
22        remaining life of 32 years is assumed.
23            (C) The estimated assessed value of the land
24        portion of the property shall be determined by
25        multiplying (i) the per square foot average of the
26        assessed values of three parcels of land (not

 

 

HB4184- 34 -LRB102 20291 HLH 29143 b

1        including farm land, and excluding the assessed value
2        of the improvements thereon) reasonably comparable to
3        the property, by (ii) the number of square feet
4        comprising the exempt portion of the property's land
5        square footage.
6        (3) The assessment factor, State equalization rate,
7    and tax rate (including any special factors such as
8    Enterprise Zones) used in calculating the estimated
9    property tax liability shall be for the most recent year
10    that is publicly available from the applicable chief
11    county assessment officer or officers at least 90 days
12    before the end of the hospital year.
13        (4) The method utilized to calculate estimated
14    property tax liability for purposes of this Section 15-86
15    shall not be utilized for the actual valuation,
16    assessment, or taxation of property pursuant to the
17    Property Tax Code.
18    (h) For the purpose of this Section, the following terms
19shall have the meanings set forth below:
20        (1) "Hospital" means any institution, place, building,
21    buildings on a campus, or other health care facility
22    located in Illinois that is licensed under the Hospital
23    Licensing Act and has a hospital owner.
24        (2) "Hospital owner" means a not-for-profit
25    corporation that is the titleholder of a hospital, or the
26    owner of the beneficial interest in an Illinois land trust

 

 

HB4184- 35 -LRB102 20291 HLH 29143 b

1    that is the titleholder of a hospital.
2        (3) "Hospital affiliate" means any corporation,
3    partnership, limited partnership, joint venture, limited
4    liability company, association or other organization,
5    other than a hospital owner, that directly or indirectly
6    controls, is controlled by, or is under common control
7    with one or more hospital owners and that supports, is
8    supported by, or acts in furtherance of the exempt health
9    care purposes of at least one of those hospital owners'
10    hospitals.
11        (4) "Hospital system" means a hospital and one or more
12    other hospitals or hospital affiliates related by common
13    control or ownership.
14        (5) "Control" relating to hospital owners, hospital
15    affiliates, or hospital systems means possession, direct
16    or indirect, of the power to direct or cause the direction
17    of the management and policies of the entity, whether
18    through ownership of assets, membership interest, other
19    voting or governance rights, by contract or otherwise.
20        (6) "Hospital applicant" means a hospital owner or
21    hospital affiliate that files an application for an
22    exemption or renewal of exemption under this Section.
23        (7) "Relevant hospital entity" means (A) the hospital
24    owner, in the case of a hospital applicant that is a
25    hospital owner, and (B) at the election of a hospital
26    applicant that is a hospital affiliate, either (i) the

 

 

HB4184- 36 -LRB102 20291 HLH 29143 b

1    hospital affiliate or (ii) the hospital system to which
2    the hospital applicant belongs, including any hospitals or
3    hospital affiliates that are related by common control or
4    ownership.
5        (8) "Subject property" means property used for the
6    calculation under subsection (b) of this Section.
7        (9) "Hospital year" means the fiscal year of the
8    relevant hospital entity, or the fiscal year of one of the
9    hospital owners in the hospital system if the relevant
10    hospital entity is a hospital system with members with
11    different fiscal years, that ends in the year for which
12    the exemption is sought.
13    (i) It is the intent of the General Assembly that any
14exemptions taken, granted, or renewed under this Section prior
15to the effective date of this amendatory Act of the 100th
16General Assembly are hereby validated.
17    (j) It is the intent of the General Assembly that the
18exemption under this Section applies on a continuous basis. If
19this amendatory Act of the 102nd General Assembly takes effect
20after July 1, 2022, any exemptions taken, granted, or renewed
21under this Section on or after July 1, 2022 and prior to the
22effective date of this amendatory Act of the 102nd General
23Assembly are hereby validated.
24    (k) This Section is exempt from the provisions of Section
253-55.
26(Source: P.A. 99-143, eff. 7-27-15; 100-1181, eff. 3-8-19.)
 

 

 

HB4184- 37 -LRB102 20291 HLH 29143 b

1    Section 25. The Retailers' Occupation Tax Act is amended
2by changing Section 2-9 as follows:
 
3    (35 ILCS 120/2-9)
4    Sec. 2-9. Hospital exemption.
5    (a) Tangible Until July 1, 2022, tangible personal
6property sold to or used by a hospital owner that owns one or
7more hospitals licensed under the Hospital Licensing Act or
8operated under the University of Illinois Hospital Act, or a
9hospital affiliate that is not already exempt under another
10provision of this Act and meets the criteria for an exemption
11under this Section, is exempt from taxation under this Act.
12    (b) A hospital owner or hospital affiliate satisfies the
13conditions for an exemption under this Section if the value of
14qualified services or activities listed in subsection (c) of
15this Section for the hospital year equals or exceeds the
16relevant hospital entity's estimated property tax liability,
17without regard to any property tax exemption granted under
18Section 15-86 of the Property Tax Code, for the calendar year
19in which exemption or renewal of exemption is sought. For
20purposes of making the calculations required by this
21subsection (b), if the relevant hospital entity is a hospital
22owner that owns more than one hospital, the value of the
23services or activities listed in subsection (c) shall be
24calculated on the basis of only those services and activities

 

 

HB4184- 38 -LRB102 20291 HLH 29143 b

1relating to the hospital that includes the subject property,
2and the relevant hospital entity's estimated property tax
3liability shall be calculated only with respect to the
4properties comprising that hospital. In the case of a
5multi-state hospital system or hospital affiliate, the value
6of the services or activities listed in subsection (c) shall
7be calculated on the basis of only those services and
8activities that occur in Illinois and the relevant hospital
9entity's estimated property tax liability shall be calculated
10only with respect to its property located in Illinois.
11    (c) The following services and activities shall be
12considered for purposes of making the calculations required by
13subsection (b):
14        (1) Charity care. Free or discounted services provided
15    pursuant to the relevant hospital entity's financial
16    assistance policy, measured at cost, including discounts
17    provided under the Hospital Uninsured Patient Discount
18    Act.
19        (2) Health services to low-income and underserved
20    individuals. Other unreimbursed costs of the relevant
21    hospital entity for providing without charge, paying for,
22    or subsidizing goods, activities, or services for the
23    purpose of addressing the health of low-income or
24    underserved individuals. Those activities or services may
25    include, but are not limited to: financial or in-kind
26    support to affiliated or unaffiliated hospitals, hospital

 

 

HB4184- 39 -LRB102 20291 HLH 29143 b

1    affiliates, community clinics, or programs that treat
2    low-income or underserved individuals; paying for or
3    subsidizing health care professionals who care for
4    low-income or underserved individuals; providing or
5    subsidizing outreach or educational services to low-income
6    or underserved individuals for disease management and
7    prevention; free or subsidized goods, supplies, or
8    services needed by low-income or underserved individuals
9    because of their medical condition; and prenatal or
10    childbirth outreach to low-income or underserved persons.
11        (3) Subsidy of State or local governments. Direct or
12    indirect financial or in-kind subsidies of State or local
13    governments by the relevant hospital entity that pay for
14    or subsidize activities or programs related to health care
15    for low-income or underserved individuals.
16        (4) Support for State health care programs for
17    low-income individuals. At the election of the hospital
18    applicant for each applicable year, either (A) 10% of
19    payments to the relevant hospital entity and any hospital
20    affiliate designated by the relevant hospital entity
21    (provided that such hospital affiliate's operations
22    provide financial or operational support for or receive
23    financial or operational support from the relevant
24    hospital entity) under Medicaid or other means-tested
25    programs, including, but not limited to, General
26    Assistance, the Covering ALL KIDS Health Insurance Act,

 

 

HB4184- 40 -LRB102 20291 HLH 29143 b

1    and the State Children's Health Insurance Program or (B)
2    the amount of subsidy provided by the relevant hospital
3    entity and any hospital affiliate designated by the
4    relevant hospital entity (provided that such hospital
5    affiliate's operations provide financial or operational
6    support for or receive financial or operational support
7    from the relevant hospital entity) to State or local
8    government in treating Medicaid recipients and recipients
9    of means-tested programs, including but not limited to
10    General Assistance, the Covering ALL KIDS Health Insurance
11    Act, and the State Children's Health Insurance Program.
12    The amount of subsidy for purposes of this item (4) is
13    calculated in the same manner as unreimbursed costs are
14    calculated for Medicaid and other means-tested government
15    programs in the Schedule H of IRS Form 990 in effect on the
16    effective date of this amendatory Act of the 97th General
17    Assembly.
18        (5) Dual-eligible subsidy. The amount of subsidy
19    provided to government by treating dual-eligible
20    Medicare/Medicaid patients. The amount of subsidy for
21    purposes of this item (5) is calculated by multiplying the
22    relevant hospital entity's unreimbursed costs for
23    Medicare, calculated in the same manner as determined in
24    the Schedule H of IRS Form 990 in effect on the effective
25    date of this amendatory Act of the 97th General Assembly,
26    by the relevant hospital entity's ratio of dual-eligible

 

 

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1    patients to total Medicare patients.
2        (6) Relief of the burden of government related to
3    health care. Except to the extent otherwise taken into
4    account in this subsection, the portion of unreimbursed
5    costs of the relevant hospital entity attributable to
6    providing, paying for, or subsidizing goods, activities,
7    or services that relieve the burden of government related
8    to health care for low-income individuals. Such activities
9    or services shall include, but are not limited to,
10    providing emergency, trauma, burn, neonatal, psychiatric,
11    rehabilitation, or other special services; providing
12    medical education; and conducting medical research or
13    training of health care professionals. The portion of
14    those unreimbursed costs attributable to benefiting
15    low-income individuals shall be determined using the ratio
16    calculated by adding the relevant hospital entity's costs
17    attributable to charity care, Medicaid, other means-tested
18    government programs, Medicare patients with disabilities
19    under age 65, and dual-eligible Medicare/Medicaid patients
20    and dividing that total by the relevant hospital entity's
21    total costs. Such costs for the numerator and denominator
22    shall be determined by multiplying gross charges by the
23    cost to charge ratio taken from the hospital's most
24    recently filed Medicare cost report (CMS 2252-10
25    Worksheet, Part I). In the case of emergency services, the
26    ratio shall be calculated using costs (gross charges

 

 

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1    multiplied by the cost to charge ratio taken from the
2    hospital's most recently filed Medicare cost report (CMS
3    2252-10 Worksheet, Part I)) of patients treated in the
4    relevant hospital entity's emergency department.
5        (7) Any other activity by the relevant hospital entity
6    that the Department determines relieves the burden of
7    government or addresses the health of low-income or
8    underserved individuals.
9    (d) The hospital applicant shall include information in
10its exemption application establishing that it satisfies the
11requirements of subsection (b). For purposes of making the
12calculations required by subsection (b), the hospital
13applicant may for each year elect to use either (1) the value
14of the services or activities listed in subsection (e) for the
15hospital year or (2) the average value of those services or
16activities for the 3 fiscal years ending with the hospital
17year. If the relevant hospital entity has been in operation
18for less than 3 completed fiscal years, then the latter
19calculation, if elected, shall be performed on a pro rata
20basis.
21    (e) For purposes of making the calculations required by
22this Section:
23        (1) particular services or activities eligible for
24    consideration under any of the paragraphs (1) through (7)
25    of subsection (c) may not be counted under more than one of
26    those paragraphs; and

 

 

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1        (2) the amount of unreimbursed costs and the amount of
2    subsidy shall not be reduced by restricted or unrestricted
3    payments received by the relevant hospital entity as
4    contributions deductible under Section 170(a) of the
5    Internal Revenue Code.
6    (f) (Blank).
7    (g) Estimation of Exempt Property Tax Liability. The
8estimated property tax liability used for the determination in
9subsection (b) shall be calculated as follows:
10        (1) "Estimated property tax liability" means the
11    estimated dollar amount of property tax that would be
12    owed, with respect to the exempt portion of each of the
13    relevant hospital entity's properties that are already
14    fully or partially exempt, or for which an exemption in
15    whole or in part is currently being sought, and then
16    aggregated as applicable, as if the exempt portion of
17    those properties were subject to tax, calculated with
18    respect to each such property by multiplying:
19            (A) the lesser of (i) the actual assessed value,
20        if any, of the portion of the property for which an
21        exemption is sought or (ii) an estimated assessed
22        value of the exempt portion of such property as
23        determined in item (2) of this subsection (g), by
24            (B) the applicable State equalization rate
25        (yielding the equalized assessed value), by
26            (C) the applicable tax rate.

 

 

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1        (2) The estimated assessed value of the exempt portion
2    of the property equals the sum of (i) the estimated fair
3    market value of buildings on the property, as determined
4    in accordance with subparagraphs (A) and (B) of this item
5    (2), multiplied by the applicable assessment factor, and
6    (ii) the estimated assessed value of the land portion of
7    the property, as determined in accordance with
8    subparagraph (C).
9            (A) The "estimated fair market value of buildings
10        on the property" means the replacement value of any
11        exempt portion of buildings on the property, minus
12        depreciation, determined utilizing the cost
13        replacement method whereby the exempt square footage
14        of all such buildings is multiplied by the replacement
15        cost per square foot for Class A Average building
16        found in the most recent edition of the Marshall &
17        Swift Valuation Services Manual, adjusted by any
18        appropriate current cost and local multipliers.
19            (B) Depreciation, for purposes of calculating the
20        estimated fair market value of buildings on the
21        property, is applied by utilizing a weighted mean life
22        for the buildings based on original construction and
23        assuming a 40-year life for hospital buildings and the
24        applicable life for other types of buildings as
25        specified in the American Hospital Association
26        publication "Estimated Useful Lives of Depreciable

 

 

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1        Hospital Assets". In the case of hospital buildings,
2        the remaining life is divided by 40 and this ratio is
3        multiplied by the replacement cost of the buildings to
4        obtain an estimated fair market value of buildings. If
5        a hospital building is older than 35 years, a
6        remaining life of 5 years for residual value is
7        assumed; and if a building is less than 8 years old, a
8        remaining life of 32 years is assumed.
9            (C) The estimated assessed value of the land
10        portion of the property shall be determined by
11        multiplying (i) the per square foot average of the
12        assessed values of three parcels of land (not
13        including farm land, and excluding the assessed value
14        of the improvements thereon) reasonably comparable to
15        the property, by (ii) the number of square feet
16        comprising the exempt portion of the property's land
17        square footage.
18        (3) The assessment factor, State equalization rate,
19    and tax rate (including any special factors such as
20    Enterprise Zones) used in calculating the estimated
21    property tax liability shall be for the most recent year
22    that is publicly available from the applicable chief
23    county assessment officer or officers at least 90 days
24    before the end of the hospital year.
25        (4) The method utilized to calculate estimated
26    property tax liability for purposes of this Section 15-86

 

 

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1    shall not be utilized for the actual valuation,
2    assessment, or taxation of property pursuant to the
3    Property Tax Code.
4    (h) For the purpose of this Section, the following terms
5shall have the meanings set forth below:
6        (1) "Hospital" means any institution, place, building,
7    buildings on a campus, or other health care facility
8    located in Illinois that is licensed under the Hospital
9    Licensing Act and has a hospital owner.
10        (2) "Hospital owner" means a not-for-profit
11    corporation that is the titleholder of a hospital, or the
12    owner of the beneficial interest in an Illinois land trust
13    that is the titleholder of a hospital.
14        (3) "Hospital affiliate" means any corporation,
15    partnership, limited partnership, joint venture, limited
16    liability company, association or other organization,
17    other than a hospital owner, that directly or indirectly
18    controls, is controlled by, or is under common control
19    with one or more hospital owners and that supports, is
20    supported by, or acts in furtherance of the exempt health
21    care purposes of at least one of those hospital owners'
22    hospitals.
23        (4) "Hospital system" means a hospital and one or more
24    other hospitals or hospital affiliates related by common
25    control or ownership.
26        (5) "Control" relating to hospital owners, hospital

 

 

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1    affiliates, or hospital systems means possession, direct
2    or indirect, of the power to direct or cause the direction
3    of the management and policies of the entity, whether
4    through ownership of assets, membership interest, other
5    voting or governance rights, by contract or otherwise.
6        (6) "Hospital applicant" means a hospital owner or
7    hospital affiliate that files an application for an
8    exemption or renewal of exemption under this Section.
9        (7) "Relevant hospital entity" means (A) the hospital
10    owner, in the case of a hospital applicant that is a
11    hospital owner, and (B) at the election of a hospital
12    applicant that is a hospital affiliate, either (i) the
13    hospital affiliate or (ii) the hospital system to which
14    the hospital applicant belongs, including any hospitals or
15    hospital affiliates that are related by common control or
16    ownership.
17        (8) "Subject property" means property used for the
18    calculation under subsection (b) of this Section.
19        (9) "Hospital year" means the fiscal year of the
20    relevant hospital entity, or the fiscal year of one of the
21    hospital owners in the hospital system if the relevant
22    hospital entity is a hospital system with members with
23    different fiscal years, that ends in the year for which
24    the exemption is sought.
25    (i) It is the intent of the General Assembly that any
26exemptions taken, granted, or renewed under this Section prior

 

 

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1to the effective date of this amendatory Act of the 100th
2General Assembly are hereby validated.
3    (j) It is the intent of the General Assembly that the
4exemption under this Section applies on a continuous basis. If
5this amendatory Act of the 102nd General Assembly takes effect
6after July 1, 2022, any exemptions taken, granted, or renewed
7under this Section on or after July 1, 2022 and prior to the
8effective date of this amendatory Act of the 102nd General
9Assembly are hereby validated.
10    (k) This Section is exempt from the provisions of Section
112-70.
12(Source: P.A. 99-143, eff. 7-27-15; 100-1181, eff. 3-8-19.)
 
13    Section 99. Effective date. This Act takes effect upon
14becoming law.