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Business and Policy Areas
Business and Policy Areas

Proposed Regulations for Charitable Hospitals Released

June 28, 2012

The IRS has issued proposed rules for 501(c)(3) hospitals, stemming from provisions in the Affordable Care Act (ACA).

The ACA modified Internal Revenue Code section 501(r) to impose additional requirements on charitable hospitals. Specifically, the proposed rules set forth guidance on the requirements relating to financial assistance and emergency care policies, charges for certain care provided to individuals eligible for financial assistance, and billing and collection policies, including:

  • Definitions for hospital facilities and hospital organizations, as well as guidance on hospital facilities located outside of the United States, hospitals operated through a partnership or disregarded entity, and government hospital organizations.
  • Requirements that hospital organizations establish written financial assistance and emergency care policies.
  • Prohibitions on charging an individual eligible for financial assistance more than the amount generally billed to individuals covered by health insurance.
  • Guidance on billing and collection requirements, including a rule that charitable hospitals may not engage in extraordinary collection efforts against an individual before determining if that individual is eligible for financial assistance.

The proposed rules relating to financial assistance and billing and collections will be effective for taxable years beginning after the date they are published as final. Section 501(r)—with the exception of section 501(r)(3)—applies to taxable years beginning after March 23, 2010. Section 501(r)(3) applies to taxable years beginning after March 23, 2012. Comments on the proposed rules are due September 24.


Mary Bachinger
Director, Tax Policy