Bill would provide tax parity to Indian Health Service scholarship and loan program recipients

WASHINGTON –U.S. Senators Tom Udall (D-N.M.), vice chairman of the Senate Committee on Indian Affairs, and Lisa Murkowski (R-Alaska)introduced the Indian Health Service Health Professions Tax Fairness Act to help address health care provider shortages at the Indian Health Service (IHS).  

The legislation would exempt IHS' scholarship and loan repayment programs, two key employee recruitment and retention tools, from federal income tax requirements, allowing the service to better leverage its existing funding.

“Medical provider shortages pose a serious risk to the health and safety of families in Indian Country. As vice chairman of the Senate Committee on Indian Affairs, I am proud to work with Senator Murkowski to introduce legislation that will make sure that the resources Congress provides to tackle this shortage can stretch further. And, by freeing up more funding for scholarship and loan repayment programs, this bill will support more Native youth studying to work in the health care field,” said Udall. “I will always fight to ensure that Indian Country gets the resources it needs for the health and wellness of all Native communities.”

“I have been working hard to move legislation that will help ensure greater access to comprehensive and affordable healthcare, in Alaska and across the nation. But the vacancy rates for doctors, nurses, and other medical workers in Alaska is a real challenge,” said Murkowski. “Through Indian Health Services initiatives such as the Health Professions Scholarship Program and the Loan Repayment Program, we’ve seen a great number of Native students who have been able to receive the support they need to pursue good career--but there’s still a great need to be met. I’m proud to support this bill alongside Senator Udall that will help open the door for more Alaska Native students to fill those positions and provide the best possible care for their communities.”

Recent estimates indicate IHS has over 1500 health care provider vacancies.  However, IHS must currently use 25 percent of its scholarship and loan repayment funding to pay taxes on the recruitment programs.  If passed, the savings made possible by this bill would allow IHS to award nearly 200 additional loan repayment benefits and scholarships each year.

Congress made similar scholarship and loan repayment programs offered by the National Health Service Corps and the U.S. Army permanently tax exempt in 2012.

This legislation is supported by the National Congress of American Indians (NCAI), the National Indian Health Board (NIHB), and the National Council of Urban Indian Health (NCUIH).

“Currently, Indian Health Service health professionals do not receive the same tax treatment as other public sector health professionals for scholarships and loan repayment programs,” said Kevin J. Allis, Chief Executive Officer of NCAI. “This disparity in tax treatment makes it harder for IHS and tribal nations to recruit and retain quality health care professionals across Indian Country. The Indian Health Service Health Professions Tax Fairness Act is a positive step that will help improve the quality of care offered to American Indians and Alaska Natives by helping to bring more doctors, nurses, and other health professionals to tribal communities.”

“NIHB views this as a necessary and compassionate step towards addressing the desperate need for AI/AN health care providers in Indian Country,” said Stacy Bohlen, NIHB Executive Director. “The Indian Health Service has provider vacancy rates as high as 33 percent in some areas. Under the current system, incentives to recruit and retain providers become penalties because IHS loan repayment funds can be taxed by as much as 20 percent. Senator Udall’s bill provides much needed tax relief for these providers.”

“Student loans are a debilitating issue in this country and serious challenges exist in finding quality health care providers to serve American Indian and Alaska Native peoples,” said Francys Crevier, NCUIH Executive Director. “This bill will help by making the IHS repayment and scholarship programs tax exempt and assist in recruiting and retaining more doctors, nursing and health care professionals to fill critical vacancies in Indian Country”.

The full text of the legislation can be found HERE.

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