Tax Law

Proposed Regs Clarify Charitable Hospital Organization Requirements

The Patient Protection and Affordable Care Act added IRC Section 501(r), which imposes detailed conditions on a hospital organization seeking exemption under IRC Section 501(c)(3). In addition to satisfying the requirements of IRC Section 501(c)(3), hospital organizations must also meet the:

The IRS published proposed regulations (77 FR 38148, REG-130266-11), providing guidance on the additional IRC Section 501(r) requirements for charitable hospital organizations.

The proposed regulations prescribe information that a hospital must include in its financial assistance policy and the methods a hospital facility must use to widely publicize its financial assistance policy. The proposed regulations also describe what a hospital facility must include in its emergency medical care policy. Prop Treas Reg § 1.501(r)-4.
The proposed regulations under
IRC Section 501(r)(5) describe how a hospital determines the maximum amounts billed to individuals who have insurance coverage and the amounts the hospital can charge financial assistance policy-eligible individuals for emergency care and other medically necessary care. Prop Treas Reg § 1.501(r)-5.

The proposed regulations under IRC Section 501(r)(6) describe the actions that are considered "extraordinary collection actions" and the "reasonable efforts" a hospital facility must make to determine financial assistance policy eligibility before engaging in those actions. Prop Treas Reg § 1.501(r)-6.
The proposed regulations do not provide guidance on the community health needs assessment requirements described in
IRC Section 501(r)(3) or on the consequences described in IRC Sections 501(r)(1) and 501(r)(2)(B) for failing to satisfy IRC Section 501(r) requirements. Treasury and the IRS intend to issue additional proposed regulations addressing these requirements.

The IRC Section 501(r)(3) requirements apply to tax years beginning after March 23, 2012. The proposed regulations under IRC Sections 501(r)(4) through 501(r)(6) apply for tax years beginning on or after the date these rules are published in the Federal Register as final or temporary regulations. Prop Treas Reg § 1.501(r)-7.


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