Senate bill would tie tax incentives for doctors to Vital plan participation, hospital service
By THE STAR STAFF
A bill filed earlier this week by Senate President Thomas Rivera Schatz would overhaul Puerto Rico’s physician tax incentive program by requiring doctors who receive preferential tax treatment to participate in the government’s Vital health plan and maintain an active role in hospitals or primary health centers.
The measure, Senate Bill 1570, amends Puerto Rico’s Incentives Code to reshape the criteria for granting and maintaining tax decrees for physicians, while extending a preferential fixed income tax rate of 12% for qualified medical professionals for a 15-year period.
According to the bill’s preamble, the legislation seeks to address Puerto Rico’s persistent physician shortage, which lawmakers say has contributed to longer wait times for appointments and increased pressure on medical offices and emergency rooms. The proposal is intended to retain highly trained physicians, attract new doctors to the island, and improve access to healthcare services.
Under the measure, doctors seeking tax incentives would be required to provide medical services to beneficiaries of the government-run Vital health insurance program through a formal participation agreement.
The legislation would also require physicians to annually certify that they meet at least one of several practice-related requirements. Those include maintaining active hospital or community health center privileges and conducting at least five in-person patient admissions or consultations per week; practicing exclusively in hospital or federally qualified health center settings; working under contracts or franchises that provide services to hospitals; or serving in leadership and quality-improvement roles such as medical directors, department heads, or medical staff presidents.
A key provision would establish a new “specialists in shortage” designation. Under this system, the Puerto Rico Department of Health would identify medical specialties facing shortages using standardized criteria, including physician availability, patient wait times, access to hospital and diagnostic services, dependence on referrals outside a region, and the prevalence of conditions generating demand for specialized care.
The Department of Health would be required to divide Puerto Rico into health regions and prepare a written medical needs report identifying shortages and regional needs. Once specialties are designated as eligible, any physician in those fields could apply for incentives during an application window established by the department.
The bill would increase the tax rate applied to qualifying physicians’ eligible income from the current 4% rate established in the Incentives Code to a 12% fixed preferential rate. However, it would retain a tax exemption on eligible dividends of up to $250,000 annually.
The measure would also eliminate an existing requirement that physicians complete 180 hours of annual community service. In its place, lawmakers propose linking eligibility more directly to service in shortage specialties, underserved regions, hospitals, primary care centers and the Vital program.
The proposal expands eligibility for certain dental professionals, including faculty members at accredited dental schools and public-sector oral health providers, and allows qualified physicians to seek extensions of their tax decrees for an additional 15 years, potentially extending benefits to a total of 30 years.
Before any new tax decrees can be issued under the revised framework, the Puerto Rico Treasury Department, the Department of Economic Development and Commerce, and the Puerto Rico Fiscal Agency and Financial Advisory Authority would be required to identify funding sources or fiscal mitigation measures and certify compliance with the federal Puerto Rico Oversight, Management and Economic Stability Act, commonly known as PROMESA, and the island’s certified fiscal plan.
