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ADA, coalition support tax reform for the Indian Health Service

Scholarships, student loan repayments at issue

November 22, 2019

By Jennifer Garvin

Washington — The American Dental Association and American Indians/Alaska Native Health Partners are urging legislators to support legislation to improve tax provisions for providers who receive student loan repayments and scholarships from the Indian Health Service.

S 2871, the Indian Health Service Health Professions Tax Fairness Act of 2019, was introduced by Sens. Lisa Murkowski, R-Alaska, and Mark Udall, D-Colo. It would amend the tax code to allow health care professionals who receive student loan repayments and scholarships from the Indian Health Service to enjoy the same tax-free status as providers who receive loan repayments from the National Health Service Corps.

“The loan repayment program has proven to be the IHS’s best recruitment and retention tool to ensure an adequate health workforce to serve in remote IHS locations,” the partners wrote in a Nov. 20 letter to members of the Senate.

The coalition explained that right now, IHS uses a large portion of its resources — 25 percent of its Health Professions’ account — to pay the taxes that are assessed on its loan recipients.  

“Making the IHS loan repayments and scholarships tax-free would save the agency over $9.1 million and would fund an additional 190 awards without increasing the Service’s annual appropriation.”

IHS reports 1,330 vacancies

The American Indians/Alaska Native Health Partners added that IHS currently has more than 1,330 vacancies for health care professionals, including dentists, dental hygienists, physicians, nurses, pharmacists, physician assistants, dietitians and nurse practitioners. In 2018 the agency had 844 requests for loan repayment that could not be fulfilled due to a lack of funding. IHS also approved 426 new scholarship applicants but was only able to meet 155 new awards.

“The IHS Health Professions Scholarship Program and the Loan Repayment Program play a significant role in the recruitment and retention of the health care professionals needed to fill these vacancies,” the coalition said.

The American Indians/Alaska Native Health Partners concluded by noting that the legislation has received bipartisan endorsement from both the Obama and Trump administrations and pointed out that President Donald Trump’s 2020 budget noted the discrepancy between IHS and National Health Service Corps.

“This disparate tax treatment of IHS-funded scholarship and loan repayment awards increases the overall tax bracket for the participants and creates a financial disincentive for those otherwise willing to serve American Indian and Alaska Native patients by working in Indian health facilities,” it said.