On December 29, 2014, Final Regulations providing guidance regarding the requirements for charitable hospital organizations were issued by the Internal Revenue Service (IRS). The ACA, enacted March 23, 2010, added new requirements in Section 501(r) that hospital organizations must satisfy to qualify under Section 501(c)(3). Each 501(c)(3) hospital organization is required to meet four general requirements on a facility-by-facility basis:

  • Establish written financial assistance and emergency medical care policies;
  • Limit amounts charged for emergency or medically necessary care to individuals eligible for assistance under the hospital’s Financial Assistance Policy (FAP);
  • Make reasonable efforts to determine whether an individual is eligible for assistance under the hospital’s FAP before engaging in extraordinary collection actions against that individual; and
  • Conduct a community health needs assessment (CHNA) and adopt an implementation strategy at least every three years.

The IRS issued Proposed Regulations in 2012 and 2013 and has redesigned Form 990 and Schedule H several times since the enactment of Section 501(r). These Final Regulations adopt the Proposed Regulations for the most part. The lengthy preamble considers the comments received on the Proposed Regulations and provides an explanation of the revisions contained in the Final Regulations. Generally, the revisions are beneficial for reporting entities.

The Final Regulations allow reliance on both the 2012 and 2013 Proposed Regulations until a hospital organization’s first taxable year beginning after December 29, 2015.