Internal Revenue Service Issues Proposed Regulations For Tax-Exempt Hospitals

Author:Mr John Schuring
Profession:Dickinson Wright PLLC

The Internal Revenue Service (IRS) and the Treasury Department recently proposed regulations that will affect charitable hospital organizations. The Patient Protection and Affordable Care Act (ACA) added §501(r) to the Internal Revenue Code, which imposes certain requirements for tax-exempt hospitals to obtain and retain their tax-exempt status. Under this provision, for example, hospital organizations must conduct a community health needs assessment at least once every three years and adopt an implementation program to meet the identified needs.

In addition, hospital organizations must adopt a written financial assistance policy (FAP) that establishes eligibility criteria for free or discounted care, including how any unpaid charges will be collected as well as a written policy relating to emergency medical care that outlines requirements to provide care for emergency medical care regardless of eligibility under the FAP. The Proposed Regulations provide guidance on compliance with certain of the §501(r) requirements:

Clarification on which entities must meet the §501(r) requirements in order to obtain or retain tax exemption. Descriptions of the information that a hospital facility must include in its FAP and the methods a hospital facility must use to widely publicize that policy. Descriptions of what a hospital facility must include in its emergency medical care policy. How the hospital facility can determine the maximum amount that...

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