RHC Opportunities in the Inflation Reduction Act
Olivia Persinger, NARHC Intern
Have you considered buying an electric vehicle for your rural health clinic (RHC)? Do you have a sunny spot ripe for solar panels? If so, consider taking advantage of the benefits within the Inflation Reduction Act of 2022 (IRA). Signed into law in August of 2022 by President Biden, the IRA provides grants, tax credits, and loan programs intended to help providers and suppliers improve care, attain renewable infrastructure, and lower costs of energy. Through the provisions in this act, the health care sector, which accounts for 8.5% of the country’s carbon emissions, can assist in reducing the harm of climate change.
The IRA includes numerous grant programs and funding opportunities to invest in clean energy and emissions reduction. For example, RHCs can utilize programs such as The Rural Energy for America Program (REAP) to invest in zero-emissions or low-emissions energy generation. The REAP program provides up to $1,000,000 for “guaranteed loan financing and grant funding to agricultural producers and rural small businesses for renewable energy systems or to make energy efficiency improvements. Funds may be used for renewable energy systems as well as for the purchase, installation, and construction of energy efficiency improvements, such as high efficiency heating, ventilation, and air conditioning systems (HVAC); insulation; lighting; cooling or refrigeration units; doors and windows; and replacement of energy-inefficient equipment.”
Only for-profit RHCs are eligible for REAP as applicant requirements include being a rural small business in areas of 50,000 or less at the time of the application. Application materials may be obtained by contacting the Rural Development Energy Coordinator in your state, which can be found here: https://www.rd.usda.gov/files/RBS_StateEnergyCoordinators.pdf. In addition, applicants may obtain electronic grant applications for REAP from www.grants.gov.
Other key programs include IRA’s tax incentives which can also benefit RHCs who choose to make investments in energy generation equipment. Examples of these investments include commercial clean (electric or fuel cell) vehicles, vehicle refueling, and combined heat and power (CHP) systems through the Investment Tax Credit. Unlike the REAP program, which is only available to for-profit entities, tax-exempt RHCs can also benefit from these tax credits through new policy called “elective pay”. Through elective pay, tax-exempt and governmental entities that do not owe Federal income taxes are able to receive payments equal to the full value of the tax credits for building qualifying clean energy investments by filing a 990-T form to the Internal Revenue Service (IRS). For-profit RHCs can claim this investment credit by completing the 3468 form with their tax return form to the IRS. RHCs must begin construction before January 1, 2025, to be eligible.
Another credit available to RHCs is the Alternative Fuel Vehicle Refueling Property Credit which provides a tax credit for alternative fuel vehicle refueling and charging property in low-income and rural areas. Alternative fuels include electricity, ethanol, natural gas, hydrogen, biodiesel, etc. This credit may be used by RHCs if they build alternative refueling or recharging facilities during the tax year. You can take advantage of this credit through the 8911 form with your tax return form to the IRS. Instructions can be found here. This credit is available to RHCs from 2023 through 2032.
The Department of Health and Human Services (HHS) has created a Quickfinder for Leveraging the Inflation Reduction Act for the Health Sector. The Quickfinder focuses on the most relevant IRA provisions for the health sector and gives examples of real providers who have used these programs and/or made similar investments in the past. Ultimately, NARHC appreciates the various RHC-provisions included within the Inflation Reduction Act (IRA).
Please contact Sarah Hohman, NARHC Director of Government Affairs at Sarah.Hohman@narhc.org with any questions or other feedback.
