Memorial Hermann ACO Loses Tax Exempt Status

Although it is structured as a non-profit corporation, Memorial Hermann Accountable Care Organization (MHACO), lost its tax exempt status in an appeals court ruling. The US Court of Appeals for the Fifth Circuit held that a non-profit corporation that coordinates health care for privately insured consumers does not qualify for tax exemption under Section 501(c)(4) because it is not “operating exclusively for the promotion of social welfare.”

The ruling was in Memorial Hermann Accountable Care Organization v. IRS. The ruling upheld the US Tax Court’s ruling that the ACO’s benefits conferred upon its health . . .