Purpose

• To change who is taxed under Minnesota’s gross receipts tax on hospitals and health care providers. It defines who counts as a health care provider and who is excluded from being taxed, with a specific provision that licensed chiropractors are not subject to the tax.

Key Definitions

• Health care provider: A person whose health care occupation is regulated by Minnesota and who provides any of a broad range of goods or services directly to a patient or consumer. This includes medical, surgical, optical/visual, dental, hearing, nursing, drugs, lab, diagnostic, or therapeutic services; services reimbursable under Minnesota’s Medical Assistance program (MA, chapter 256B); staff model health plan companies; ambulance services; sellers of hearing aids and related equipment or prescription eyewear; and a person who provides patient services and employs/contracts with a health care provider to supervise or oversee those services.
• Health care provider does not include a number of entities such as hospitals, most nursing homes, wholesale drug distributors, pharmacies, surgical centers, most transportation services (except licensed ambulance services), housing with services establishments, adult foster homes, certain day services, many home care and home health providers, and other listed facilities or entities.

Main Provisions

• The statute (Minnesota Statutes 2024 § 295.50, subd. 4) is amended to:
  • Redefine who qualifies as a health care provider for the purposes of the gross receipts tax.
  • List specific goods and services that count toward the health care provider definition (as described above).
  • Clarify that certain entities are not health care providers for the tax, despite operating in or around health care, including hospitals and numerous related organizations and facilities.

Significant Changes to Existing Law

• Hospitals are explicitly excluded from the definition of health care provider for the gross receipts tax (i.e., hospitals are not subject to the tax under this provider definition).
• A broad set of entities that might otherwise be considered health care-related are carved out and not taxed as health care providers (e.g., nursing homes, pharmacies, wholesale drug distributors, certain transportation and housing-with-services facilities, adult day programs, etc.).
• Chiropractors (licensed under sections 148.01 to 148.108) are excluded from being taxed as health care providers under this chapter.

Practical Impact / Who is Affected

• The pool of entities subject to the gross receipts tax on health care providers is narrowed.
• Hospitals, nursing homes, wholesale distributors, many home health and care facilities, and several other categories will not be taxed as health care providers under this definition.
• Chiropractors are specifically carved out and not taxed as health care providers under this provision.
• The bill clarifies which activities and organizations fall under the tax and which do not, potentially reducing the overall tax base.

Relevant Terms - gross receipts tax - health care provider - Minnesota Statutes 2024 section 295.50 subdivision 4 - regulated health care occupation - Medical Assistance program (MA), chapter 256B - staff model health plan company - ambulance service - hearing aids and related equipment - prescription eyewear - licensed chiropractors (sections 148.01 to 148.108) - hospitals - nursing homes - wholesale drug distributors - home health agencies - adult foster homes - housing with services establishments - day training and habilitation - adult day care centers

Relevant Terms (alternative/related concepts) - Medicaid (MA) - capacity to tax as a provider - healthcare tax base - entity exclusions from tax