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Washington Highlights

IRS Issues Proposed Regulations on Additional Requirements for Charitable Hospitals

June 29, 2012—The Internal Revenue Service (IRS) June 25 issued proposed regulations that provide guidance regarding additional requirements for charitable hospitals to maintain their 501(c)(3) tax exempt designation. The new section 501(r) requirements, added to the IRS Code by section 9007(a) of the Affordable Care Act (ACA, P.L. 111-148 and P.L. 111-152), apply to taxable years beginning after March 23, 2010.

Proposed regulations specifically address the following section 501(r) requirements: 

  • Establishment of a financial assistance policy and a policy relating to emergency medical care;
  • Prohibition of gross charges and limitation on amounts charged for medically necessary care to the hospital’s financial-assistance-eligible individuals not to exceed charges to insured individuals; and
  • Foregoing of extraordinary collection actions—including lawsuits, liens on residences, arrests, and body attachments—against individuals before making reasonable efforts to determine an individual’s eligibility for hospital financial assistance.

Comments and requests for a public hearing on these proposed regulations are due Sept. 24.

The proposed regulations do not provide guidance on the community health needs assessment (CHNA) requirement (effective for taxable years after March 23, 2012) or on the consequences for failing to satisfy section 501(r) requirements. The IRS will issue additional proposed regulations on these issues.


Peters Willson
Sr. Specialist, Policy and Constituency Issues
Telephone: 202-862-6029

Ivy Baer, J.D., M.P.H.
Senior Director and Regulatory Counsel
Telephone: 202-828-0499


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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.

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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806