Tennessee Senate Bill SB0264

Tennessee 2025-2026 Regular Session

• Introduced: 1/23/25

Caption

AN ACT to amend Tennessee Code Annotated, Title 67, Chapter 4, relative to tax relief.

Summary

SB 264 creates a new part in Tennessee tax law authorizing TennCare to certify certain unreimbursed healthcare costs as charitable contributions for federal income tax purposes. The bill applies to eligible healthcare providers and group practices that participate in TennCare or a successor Medicaid program. For each calendar year, TennCare would calculate and certify the amount of “unreimbursed costs,” defined as the difference between 125% of the average federal Medicaid reimbursement rate and the actual TennCare reimbursement rate paid for services to TennCare recipients. To receive the certification, an eligible provider must pay TennCare a $25 annual fee by January 15, with group practices paying $25 per provider in the group. TennCare must then issue a statement of the total certified charitable contributions by January 31 of the following year. The bill also authorizes the division to adopt rules to implement the new program under the Uniform Administrative Procedures Act. The act takes effect immediately for rulemaking purposes, but otherwise applies beginning July 1, 2025, to charitable contributions made on or after that date.

Impact

The bill amends Title 67, Chapter 4 of the Tennessee Code by adding a new tax-relief mechanism tied to TennCare reimbursement levels. It does not change provider reimbursement rates directly, but it creates a state certification process that may help eligible healthcare providers claim federal charitable contribution deductions under 26 U.S.C. § 170 for amounts associated with unreimbursed TennCare care. The practical effect is to potentially reduce tax liability for participating providers and group practices while imposing a new administrative role on TennCare.

Sentiment

No committee transcripts or recorded votes were provided, so there is no direct evidence of debate, amendments, or formal support/opposition in the available record. Based on the bill text alone, the measure appears to be framed as a targeted tax-relief proposal for healthcare providers serving TennCare patients, suggesting a generally pro-provider policy intent. The absence of recorded opposition or vote history makes overall sentiment difficult to assess beyond the bill’s supportive framing.

Contention

The main policy issue is whether TennCare should certify unreimbursed provider costs as charitable contributions, which may raise questions about tax treatment, administrative burden, and the relationship between Medicaid reimbursement and charitable-deduction law. Potential points of contention include the definition of eligible providers, the exclusion of hospitals and other facilities from the definition of group practice, the $25 per-provider fee, and the use of a formula based on 125% of average federal Medicaid reimbursement. Without transcripts, it is not possible to identify specific legislators or stakeholder groups who raised objections, but the bill could draw scrutiny from tax administrators, TennCare officials, or parties concerned about precedent in converting unreimbursed care into deductible charitable contributions.