• IRS Issues Interim Guidance Concerning Community Health Needs Assessment Requirements Applicable to Tax-Exempt Hospitals
  • August 12, 2011 | Authors: J. William Gray; Douglas M. Mancino
  • Law Firms: Hunton & Williams LLP - Richmond Office ; Hunton & Williams LLP - Los Angeles Office
  • For decades, nonprofit hospitals described in section 501(c)(3) of the Internal Revenue Code have had to satisfy one of two operational tests to obtain or maintain federal income-tax-exempt status. One is to provide free or below-cost care “to the extent of their financial ability” under the relief of poverty test in Revenue Ruling 56-185. The other is to satisfy the “community benefit” test set forth in Revenue Ruling 69-545. The community benefit test requires section 501(c)(3) hospitals to operate an open emergency room (in most cases) but otherwise allows them to treat people who are able to pay, have insurance, participate in the federal Medicare program or participate in the federal-state Medicaid program.