IHC Health Plans, Inc. - Page 36

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          that covered medical expenses not reimbursed by Medicare.                   
          Geisinger HMO also enrolled a small number of Medicaid                      
          recipients.  Geisinger HMO planned to initiate a subsidized dues            
          program to assist enrollees who might be unable to continue to              
          pay their membership fees as the result of some financial                   
               At the conclusion of the administrative proceedings, the               
          Commissioner determined that Geisinger HMO did not qualify for              
          exemption as an organization described in section 501(c)(3) on              
          the grounds that:  (1) Geisinger HMO did not satisfy the criteria           
          for exemption outlined in Sound Health Association v.                       
          Commissioner, supra; and (2) Geisinger HMO was not an integral              
          part of its tax-exempt parent.                                              
               In Geisinger I, we held that the Commissioner erred in                 
          determining that Geisinger HMO did not qualify for exemption                
          pursuant to section 501(c)(3).  We based our holding largely on a           
          comparison of the Geisinger HMO with the organization in Sound              
          Health Association v. Commissioner, supra.  In particular, we               
          found that, like Sound Health Association, Geisinger HMO was                
          operated for the charitable purpose of promoting health insofar             
          as its class of possible enrollees was practically unlimited, it            
          had adopted a subsidized dues program for its enrollees, it                 
          offered health care services to Medicare recipients at a reduced            
          rate, and it was not operated for the private benefit of its                

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