On December 29, the IRS released the long awaited final regulations under Code Section 501(r) applicable to hospital organizations exempt from tax under Code Section 501(c)(3). The final regulations indicate that they apply to tax years that begin after December 29, 2015, which will give all tax-exempt hospital organizations at least one year to come into compliance. For tax years beginning before this date, the IRS continues to emphasize that tax-exempt hospital organizations may rely on a reasonable, good faith interpretation of Code Section 501(r), which would include compliance with the previously issued proposed regulations or with the final regulations.
The final regulations provide substantive guidance for tax-exempt hospital organizations by adopting and amending two sets of previously issued proposed regulations that address each component of Code Section 501(r). Code Section 501(r) was added to the Internal Revenue Code by the Patient Protection and Affordable Care Act of 2010. Under the rules, tax-exempt hospital organizations are required to conduct a community health needs assessment (“CHNA”) and adopt an implementation strategy to meet the community health needs identified through the CHNA at least once every three years; establish a written financial assistance policy (“FAP”) and a written policy related to care for emergency medical conditions; limit their charges to individuals eligible for financial assistance; and make reasonable efforts to determine whether an individual is eligible for assistance under a FAP before engaging in extraordinary collection actions.
In the coming days, Hall Render will provide additional guidance regarding the final regulations and suggestions for tax-exempt hospital organizations to guide their compliance efforts. In addition, Hall Render will host a complimentary webinar to discuss the final regulations and the implications for tax-exempt hospital organizations. More information about the webinar will be provided in the near future.
Meanwhile, we anticipate that the final regulations will be published in the Federal Register on December 31, 2014. The pre-publication version of the final regulations may be accessed here.
If you need additional information about the final regulations and the requirements of Code Section 501(r), please contact:
- Jeff Carmichael at 317-977-1443 or jcarmichael@wp.hallrender.com;
- Calvin Chambers at 317-977-1459 or cchambers@wp.hallrender.com; or
- Your regular Hall Render attorney.
