On May 25, 2023, Senator Jeff Irwin (D-Ann Arbor) introduced Senate Bills 360¹ and 361², which would provide income tax credits to uncompensated preceptors for medical schools, Physician Assistant (PA) programs, or Advanced Practice Registered Nurse (APRN) programs. The proposed bills would provide a credit of $1000 to each preceptor for every 250-hour uncompensated rotation, with a maximum credit of $5000 per taxable year. These bills are among the many proposed preceptor tax credit programs in the United States. Over the past eight years, 29 states introduced bills to establish these programs.
Map of State Preceptor Compensation Programs
The proposed tax credit bills vary in every aspect, from the hour requirements for an eligible rotation to the occupation requirements for preceptors, the prospective healthcare fields of the precepted students, and the amount of money credited (per rotation and maximum allowed). As of October 2024, only six states have successfully passed legislation providing preceptor tax credits: Alabama, Colorado, Hawaii, Georgia, Maryland, and South Carolina.³
State | Passed Bill Names | Preceptor field eligibility | Student field eligibility | Rotation hour requirement | $ per rotation | $ maximum | Rural or Medically Underserved Area Requirement |
Alabama | HB23-133 | APRNs, Physicians, PAs, Dentists, Optometrists | Physician (Allopathic Medicine, Osteopathic medicine), Dentist, Optometrist, PAs, Anesthesia Assistant, NP, Nurse Midwife, Nurse Anesthetist | 160 hours | Physicians, Dentists, Optometrists - $500 PAs, APRNs - $425 | Physicians, Dentists, Optometrists - $6000 PAs, APRNs - $5100 | Yes |
Colorado | HB16-1142, HB19-1088, HB22-1005 | APRNs, Physicians, RNs, Dental Hygienists, Pharmacists, Psychologists, Social Workers, Counselors, Marriage and Family Therapists, Psychiatric Nurse Specialists | Primary Health Care | 20 business days | $1,000 | $1,000 | Yes |
Georgia | HB19-287 | APRNs, Physicians, PAs | APRNs, Physicians, PAs | 160 hours | Physicians - $500 (1-3), $1000 (4-10) APRNs, PAs - $375 (1-3), $750 (4-10) (based on number of rotations) | Physicians - $8500 APRNs, PAs - $6375 | No |
Hawaii | SB18-2298 | APRNs, Physicians, Pharmacists | APRNs, Physicians, Pharmacists | 80 hours | $1,000 | $5,000 | No |
Maryland | HB16-1494, HB17-683, HB21-1252, SB21-102, HB22-1208 | APRNs, Physicians, LPNs, RNs, NPs | Physicians, PAs, LPN, RN | 100 hours, 3 rotation minimum | $1,000 | $10,000 | Yes |
South Carolina | SB19-314 | Physicians, PAs, NPs | Physicians (Family Medicine, Internal Medicine, Pediatrics, Obstetrics and Gynecology, Emergency Medicine, Psychiatry, General Surgery), PAs, APRNs | 160 hours, 2 rotation minimum | Physicians - $750 (30-49%), $1000 (50% or more) PAs, NPs - $500 (30-49%), $750 (50% or more) (for 2024, based on % Medicaid, Medicare, self-pay patients) | Physicians - $3000 (30-49%), $4000 (50% or more) PAs, NPs - $2000 (30-49%), $3000 (50% or more) (for 2024, based on % Medicaid, Medicare, self-pay patients) | No |
With such variation in the enacted preceptor tax credit programs and even further variation among the other proposed bills across the country, it is crucial to measure their outcomes and assess their barriers to determine what aspects of tax credit programs work best in each state. Since enacting SB 2298 in 2018⁴ ⁵, Hawaii’s Preceptor Credit Assurance Committee (PCAC) has released an extensive report⁶ on the State’s preceptor tax credit program’s outcomes. The report shows promising data for preceptor tax credits. Since 2019, the program recorded an increase of 147 registered providers who precepted at least one rotation (a 72 percent increase). In the same time period, 65 novice preceptors recorded hours, and 57 received tax credits (a 533 percent increase).
Despite these increases, only 35 percent of all preceptors in Hawaii qualify for tax credits. In 2022, only 43 percent of available credits were issued, indicating a lack of utilization. The PCAC report’s recommendations include removing preceptor specialty requirements and expanding eligible provider professions, such as occupational therapy and social work, to potentially increase the number of credits issued and the number of students trained.
Except for Hawaii’s report, there is a lack of data on the other established programs. Some states have reporting requirements, but the requirements are severely limited in scope and mainly function to keep track of the allotted funds rather than measure the programs’ successes in increasing preceptorships.
MHC Insight’s Take
Based on the enacted and proposed preceptor tax credit legislation around the country and the Hawaii program’s impact report, the proposed Michigan bills have many potential gaps, such as few eligible occupations and a lack of geographical focus and reporting requirements. SB 360 and SB 361 do not include many professions mentioned in other bills, such as Pharmacists, Dentists, LPNs, Clinical Social Workers, and Mental Health Counselors. Measuring preceptor involvement in healthcare professions that have known shortages could be considered.
Some states proposed providing credits only for preceptorships in rural and underserved areas, which can consequently increase access to healthcare for areas of particular shortage. There is a wide variety of definitions for “qualifying rotations,” including the minimum number of hours, the amount of credit issued per rotation, the maximum number of rotations, and whether credits are issued by rotation or per student in each rotation. There is limited data on the ideal structure of this tax credit, and it likely depends on the preceptor needs in each state.
The Michigan bills do not have any reporting requirements, but research and data platforms could be utilized to track measurables regarding preceptor tax credits. For example, Michigan Health Council’s ACEMAPP software currently tracks preceptors and time on rotations. Implementing data collection and tracking would provide legislators with a better understanding of the best approach to expanding and improving training and clinical education for future healthcare workers.
Sources
¹ S.B. 360, 102nd Leg. Reg. Sess. (Mich. 2023). https://www.legislature.mi.gov/Bills/Bill?ObjectName=2023-SB-0360.
² S.B. 361, 102nd Leg. Reg. Sess. (Mich. 2023).
³ Smith, Tyler. “An Update on State Preceptor Tax Incentives: Where Do We Stand?” PAEA News (blog), October 28, 2023. https://paeaonline.org/resources/public-resources/paea-news/an-update-on-state-preceptor-tax-incentives-where-do-we-stand.
⁴ Haw. Rev. Stat. § 235-110.25 (2023). https://law.justia.com/codes/hawaii/title-14/chapter-235/section-235-110-25/.
⁵ Haw. Rev. Stat. § 321-2.7 (2023). https://law.justia.com/codes/hawaii/title-19/chapter-321/section-321-2-7/.
⁶ Reichhardt, Laura, and Kelley Withy. “Evaluation of Hawai’i Preceptor Tax Credit Program.” Program Evaluation. Hawai’i Department of Health, November 2023. https://preceptortaxcredit.hawaii.edu/wp-content/uploads/2024/04/PCAC-outcome-report-2019-2022-Addendums.pdf.
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