MONTGOMERY, Ala. — 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.
The bill is just the latest effort to aid the state’s rural hospitals, which in recent years have struggled to remain afloat financially; some have shuttered services, and others have closed indefinitely, such as Thomasville Regional Medical Center in Clarke County. Of the state’s 52 rural hospitals, more than have are at risk of closing, and 19 are at an immediate risk of closing, according to a report from the Center for Healthcare Quality and Payment Reform.
“When Thomasville closed, the rural hospital in West Alabama, that is what encouraged me to refile the bill early because this could have helped that and prevented that,” Collins told Alabama Daily News. “Before any others close, I would really 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. Collins said that she was hopeful the reduced cap would make the bill more palatable for lawmakers this time around.
“We capped it a lot more so that it starts at $20 million and it increases $5 million to $25 million, and then (to) $30 million, and then we sunset it, so if it’s not helpful to the hospitals, if it’s costing more money, (it can be allowed to expire),” Collins said. “Once we see how those credits roll in and which budgets they actually hit, that’s going to be helpful to us.”
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, making the program more flexible for corporations and business owners.
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 really worked on the language and we got it a lot better this time, 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 after the 2025 session begins Tuesday.
Approximately 8.6% of Alabama’s population, or around 421,000, lack health insurance, often leading to hospitals eating the cost of patients who cannot pay for medical services. The percentage of uninsured Alabamians in rural areas is even greater, according to Ted Hosp, vice president of government relations for Blue Cross and Blue Shield of Alabama, who said one in five patients who walk into a rural hospital are uninsured.
The 2025 legislative session starts Tuesday.