The Health Investment Zones Act of 2026 authorizes the Department of Health and Human Services to designate contiguous geographic areas as Health Investment Zones (HIZs) where measurable health disparities exist, and to support those areas with a package of federal incentives. Eligible applicants—coalitions led by community nonprofits or local government with health providers—must submit plans to reduce disparities and may request grants, subgrants, and use of several newly authorized financial incentives.
The statute pairs place‑based designation with revenue and payment tools: amendments to the Work Opportunity Credit and a new 25G wage credit for HIZ workers, Medicare add‑on payments for services furnished in HIZs, grants and subgrants (including a cap on subgrants), and a student loan repayment program for practitioners. Designations run for 10 years from the first designation and HHS must report to Congress on program outcomes after that period.
The package is designed to shift provider capacity and delivery models toward underserved communities, but it also creates administrative and measurement responsibilities for federal agencies, employers, and providers.
At a Glance
What It Does
The bill tasks HHS with soliciting applications, selecting contiguous areas that meet specified health‑disparity metrics, and designating them as Health Investment Zones. It creates four incentive streams—tax changes to add HIZ workers to the Work Opportunity Credit and a new 30% wage credit (section 25G), Medicare add‑on payments for services in HIZs, discretionary grants and capped subgrants for capital and programs, and a practitioner loan repayment program.
Who It Affects
Community‑based nonprofits and local governments that form coalitions with hospitals, FQHCs, clinics and social service organizations; Medicare‑participating providers and freestanding clinics; employers that hire certified HIZ workers; and the Treasury and HHS as program administrators. State health planners and workforce programs will also intersect with the incentives.
Why It Matters
By bundling tax, direct payment, and grant incentives within geographically defined zones, the bill explicitly attempts to change where providers practice and what services are delivered—linking federal fiscal tools to local health equity goals. That makes this a test case in using Medicare and tax policy to influence regional healthcare capacity and social‑determinants interventions.
More articles like this one.
A weekly email with all the latest developments on this topic.
What This Bill Actually Does
The Act creates a two‑step place‑based program. First, HHS solicits applications and designates contiguous areas as Health Investment Zones if they demonstrate measurable disparities—examples include average income below 150% of the Federal Poverty Line, above‑average SNAP participation, lower life expectancy, elevated low birth weight rates, or Health Professional Shortage Area status.
Applicants must be community nonprofits or local governments that apply in coalition with health providers and social service organizations and must submit an operational plan targeting specific health conditions (cardiovascular disease, asthma, diabetes, behavioral health, maternal/birth health, or obesity).
Second, the statute layers incentives aligned with those plans. On the tax side, the bill amends the Work Opportunity Credit to cover ‘qualified Health Investment Zone workers’ and creates a new Section 25G allowing a 30% credit on wages for workers whose principal employment is inside a HIZ.
Medicare payments under Title XVIII get additional add‑ons for services furnished in HIZs—generally an extra 10% of the payment amount, plus an extra 5% for freestanding physician offices or FQHCs and targeted 10% increases for preventive and care management services specified by code. HHS can award grants to the lead applicants and allow subgrants to practitioners; subgrants are capped at the lesser of $5 million or 50% of relevant capital or leasehold costs.
The bill also establishes a loan repayment program that can pay up to $10,000 per year and up to $100,000 total for eligible practitioners who commit to full‑time service in a HIZ, for up to 10 years.Operational rules and limits are embedded: HHS must publish designee information, prioritize applications with strong local support, sustainability plans and integration with state health improvement processes, and consider geographic diversity (including rural outreach). Tax and payment provisions take effect for wages and services provided after enactment, and loan payments coordinate with existing federal forgiveness programs to avoid double payments.
HHS must report to Congress 10 years after the first designation on incentive use and measurable impacts—provider recruitment, health outcomes, costs, and changes in primary care access and ER utilization. The bill authorizes whatever sums are necessary for the 10‑year window but leaves precise funding levels to future appropriation actions.
The Five Things You Need to Know
HHS must solicit applications within 1 year of enactment and designate Health Investment Zones under submitted applications within 2 years of enactment.
An area is eligible if contiguous and shows documented disparities such as average income below 150% of the Federal Poverty Line, above‑average SNAP participation, lower life expectancy, higher low birth weight rates, or HPSA designation.
The bill adds HIZ workers to the Work Opportunity Credit and creates a new Section 25G credit that pays 30% of wages earned by workers whose principal place of employment is inside a HIZ.
Medicare providers receive an additional payment equal to 10% of the normal payment for items/services in a HIZ, with an extra 5% for freestanding offices/FQHCs and an extra 10% for annual wellness visits, diabetes self‑management, chronic care management, and certain cancer screenings.
Grants may fund subgrants to practitioners (cap: lesser of $5,000,000 or 50% of capital/leasehold costs), and the loan repayment program can pay up to $10,000/year and $100,000 total per practitioner for up to 10 years.
Section-by-Section Breakdown
Every bill we cover gets an analysis of its key sections.
Designation process and eligibility for Health Investment Zones
This section directs HHS to solicit applications within one year of enactment and to designate areas as Health Investment Zones within two years. It sets concrete eligibility metrics—contiguity plus one or more disparity indicators (income <150% FPL, SNAP participation, life expectancy, low birth weight, or HPSA)—and requires applicant coalitions led by nonprofits or local government. Practically, this creates an application gate that ties federal supports to place‑based plans and obliges applicants to show baseline disparities and a plan to address them.
Tax incentives: expands Work Opportunity Credit and creates Sec. 25G wage credit
The bill amends Section 51 of the Internal Revenue Code to add ‘qualified Health Investment Zone workers’ to the Work Opportunity Credit and inserts a new Section 25G granting a nonrefundable credit equal to 30% of wages for employees whose principal worksite is in a HIZ. The statutory text defines HIZ worker certification (local designated agency) and ties qualifying wages to work that promotes access to healthcare. The provision applies to wages paid after enactment, so employers and payroll administrators must create verification processes and coordinate with the designated local agency for certification.
Grant program and allowable uses, including capped practitioner subgrants
HHS may award grants to the applicant lead organization to carry out the HIZ plan; grantees may issue subgrants to Health Investment Zone practitioners. Allowed uses cover workforce supports, capacity building for non‑English speakers, mobile clinics, transportation, SDOH interventions (food, housing, recreation), and capital/equipment. Subgrants are limited to the lesser of $5 million or 50% of the equipment or capital/leasehold costs, which channels federal capital toward projects with additional local leverage or matching funds.
Practitioner student loan repayment program
HHS will run a loan repayment program for eligible HIZ practitioners that makes payments on federally funded loans for practitioners who commit to full‑time service in a HIZ. Payments are capped at $10,000 per year and $100,000 total, and HHS may not contract for repayments beyond 10 years per practitioner. The statute prohibits double‑counting: payments under this program count toward other federal loan forgiveness schedules but cannot duplicate payments issued by other federally supported loan programs for the same service.
Medicare add‑on payments for services furnished in HIZs
The Act amends Section 1833 of the Social Security Act to pay additional Medicare amounts for items and services furnished in HIZs: a baseline 10% add‑on, an extra 5% where the service is furnished at a freestanding physician office or FQHC, and targeted 10% boosts for annual wellness visits, diabetes self‑management training, chronic care management, and certain cancer screenings. The statute defines ‘freestanding’ by place‑of‑service codes and ownership exclusion (not hospital‑owned). These payment adjustments change the economics of furnishing Medicare services inside HIZs and may influence clinic ownership and site‑of‑care decisions.
Reporting to Congress after 10 years
HHS must produce a report 10 years after the first HIZ designation detailing the number and types of incentives used in each HIZ and evidence about outcomes: practitioner recruitment, health disparities, utilization (hospital admissions/readmissions), and changes in primary care and ER usage. The requirement focuses on attribution and outcome measurement, but places the burden of demonstrating impact on HHS and HIZ partners.
Definitions: Health Investment Zone and practitioner definitions
This section defines key program terms, including ‘Health Investment Zone’ and ‘Health Investment Zone practitioner.’ To qualify, practitioners must be licensed under state law, provide primary, behavioral, or dental care, and be Medicare or Medicaid participating providers. Those definitions determine who can receive subgrants, loan repayment, and wage/career incentives and will be central to certification and compliance.
Authorization of appropriations and program duration
The bill authorizes whatever sums are necessary to run the program for the period starting at enactment and ending on the last day of the 10‑year period that begins with the first HIZ designation. Practically, implementation depends on future appropriations, even though the statute sets the programmatic structure and the 10‑year designation horizon.
This bill is one of many.
Codify tracks hundreds of bills on Healthcare across all five countries.
Explore Healthcare in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Residents of designated Health Investment Zones — they gain targeted investments, increased local provider capacity, mobile clinics, transportation supports, and programs aimed explicitly at local drivers of poor health outcomes.
- Local clinics, freestanding physician offices and FQHCs in HIZs — they can receive grants or capped subgrants for capital and equipment and benefit from Medicare add‑on payments that improve reimbursement for in‑zone services.
- Health workforce entrants and incumbent practitioners — they become eligible for loan repayment (up to $10k/year, $100k total) and employers can claim wage‑related tax credits, improving recruitment and retention incentives.
- Community‑based organizations and local governments that lead coalitions — they can access grant funding to implement SDOH strategies and coordinate multi‑sector responses leveraging federal dollars.
- Employers that hire certified HIZ workers — they may claim expanded Work Opportunity Credit treatment and the new 25G wage credit, lowering hiring costs for positions located inside HIZs.
Who Bears the Cost
- Federal Treasury and Medicare Trust Funds — the bill expands tax expenditures (new and amended credits), increases Medicare payments, and authorizes grant and loan repayment spending, raising fiscal exposure during the 10‑year program window.
- HHS and CMS operational units — they must build application, certification, payment, monitoring and evaluation systems; administrative costs and technical complexity will fall to program offices unless appropriations include administrative funding.
- Hospital systems and hospital‑owned clinics outside HIZs — they may lose referrals or face competitive pressure if freestanding clinics in HIZs receive add‑ons and investment, and hospital‑owned outpatient sites are explicitly excluded from some add‑on eligibility.
- Employers and payroll administrators — they must implement certification verification for HIZ worker status and comply with new IRS rules to claim the wage credit, creating compliance and documentation burdens.
- State and local programs — to the extent applicants must integrate HIZ plans with state health improvement processes, states may be asked to coordinate or supply matching supports, stretching local planning resources.
Key Issues
The Core Tension
The central dilemma is whether concentrated federal carrots—tax credits and higher Medicare payments—can reliably change where clinicians practice and how care is delivered without producing market distortions or inefficient federal spending; the bill aims to drive equitable local change but relies on policies that are partially misaligned with the populations and services most affected by social determinants of health.
The Act creates strong financial incentives targeted to small geographies but leaves important operational details to HHS rulemaking and interagency coordination. Key implementation questions include how the designated local agency will certify a worker’s principal place of employment, how HHS will determine and publish HIZ boundaries (and resolve edge cases where populations cross borders), and how to avoid unintended provider displacement from neighboring communities.
The open authorization (“such sums as may be necessary”) plus multi‑modal spending (tax credits, Medicare add‑ons, grants, loan repayment) creates material fiscal exposure without built‑in spending caps or phased funding triggers.
Measuring impact presents another practical tension. The required report centers on attribution—did incentives cause recruitment and improved outcomes?—but the statute gives a single 10‑year reporting checkpoint rather than interim metrics.
That complicates course corrections. The use of Medicare payment levers to finance broader SDOH interventions may create misalignment: Medicare add‑ons only affect Medicare volumes and certain services, leaving non‑Medicare populations and non‑billable SDOH activities dependent on grants.
Finally, the bill’s eligibility metrics (income threshold, SNAP, life expectancy, low birth weight, HPSA) are sensible but susceptible to gaming at zone boundaries and may fail to capture dynamic demographic changes unless HHS builds periodic reassessment into its process.
Try it yourself.
Ask a question in plain English, or pick a topic below. Results in seconds.