This bill establishes minimum training hour requirements for recipients of Health Profession Opportunity Grants and excludes stipends from those demonstration projects from federal income tax.
Jimmy Panetta
Representative
CA-19
The Health CARE Training Act establishes new minimum training hour requirements for participants in federally funded health profession demonstration projects starting in late 2025. Additionally, this bill ensures that cash stipends and emergency assistance provided through these specific health workforce projects will be excluded from federal income tax for recipients. This exclusion also removes the reporting requirement for the entities distributing those funds.
New Training Act Makes Healthcare Stipends Tax-Free Starting October 2025, Cuts IRS Paperwork
The Health Career Advancement and Remuneration Exclusion for Training Act—or the Health CARE Training Act—is an update to how certain federal healthcare training programs operate, bringing a couple of key changes that matter to both trainees and the organizations running the programs.
The "What": Tax Relief for Healthcare Trainees
Starting October 1, 2025, if you’re enrolled in a health professions workforce demonstration project funded by a federal grant, any cash stipend or emergency assistance you receive will no longer count as taxable income for federal purposes (Section 3). This is a big deal. Right now, that money counts as income, meaning a chunk of it goes to the IRS. By making these payments tax-free, the bill immediately increases the net value of that assistance for trainees. Imagine you’re training to be a medical assistant or a dental hygienist; this means more money stays in your pocket to cover rent, childcare, or transportation while you’re upgrading your skills. On the administrative side, the organizations handing out this cash also get a break: they won’t have to file the usual information returns (like 1099s) with the IRS for these specific payments, simplifying their compliance and paperwork.
Standardizing the Training Clock
Beyond the tax benefits, the Act aims to standardize the quality of training received through Health Profession Opportunity Grants (Section 2). If a training program is trying to get you a recognized post-secondary credential—the kind of certification you need to land a job or get a promotion—it must now provide a minimum number of training hours. The bill sets two scenarios for determining this minimum:
- State Standard: The program must provide at least the number of hours required by the State where the project is happening for that specific certification.
- HHS Standard: If the State hasn’t set a specific hour requirement for that skill level, the Secretary of Health and Human Services (HHS) gets to decide the minimum hours necessary to actually achieve the required skill level.
This provision, also effective October 1, 2025, is designed to ensure that grant money isn't just funding short, inadequate training courses. It forces programs to meet a baseline of rigor, which is good news for employers and patients who rely on well-trained healthcare workers. However, it does grant the Secretary of HHS significant authority to set those minimum hours when state standards are missing. This means the quality bar could vary depending on how HHS interprets what's “necessary,” a detail that organizations running these programs will need to watch closely to avoid unexpected compliance burdens.