Schedule H - Hospitals

2012

Instructions for Schedule H
(Form 990)

Department of the Treasury
Internal Revenue Service

Hospitals
Contents
Future Developments . . . . . . . . .
Purpose of Schedule . . . . . . . . .
Specific Instructions . . . . . . . . . .
Part I. Financial Assistance and
Certain Other Community
Benefits at Cost . . . . . . . . .
Optional Worksheets for Part I,
Line 7 (Financial Assistance
and Certain Other Community
Benefits At Cost) . . . . . . . . .
Part II. Community Building
Activities . . . . . . . . . . . . . .
Part III. Bad Debt, Medicare, &
Collection Practices . . . . . . .
Part IV. Management Companies
and Joint Ventures . . . . . . .
Part V. Facility Information . . . . . .
Part VI. Supplemental
Information . . . . . . . . . . . .
Worksheet 1. Financial Assistance
at Cost (Part I, Line 7a) . . . . .
Worksheet 2. Ratio of Patient Care
Cost to Charges . . . . . . . . .
Worksheet 3. Medicaid and Other
Means-Tested Government
Health Programs (Part I, lines
7b and 7c) . . . . . . . . . . . . .
Worksheet 4. Community Health
Improvement Services and
Community Benefit
Operations (Part I, Line 7e) . .
Worksheet 5. Health Professions
Education (Part I, Line 7f) . . .
Worksheet 6. Subsidized Health
Services (Part I, Line 7g) . . . .
Worksheet 7. Research (Part I,
Line 7h) . . . . . . . . . . . . . .
Worksheet 8. Cash and In-Kind
Contributions for Community
Benefit (Part I, Line 7i) . . . . .
Index . . . . . . . . . . . . . . . . . . .

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Section references are to the Internal Revenue
Code unless otherwise noted.

Future Developments
For the latest information about
developments related to Form 990 and its
instructions, such as legislation enacted
after they were published, go to
www.irs.gov/form990.

General Instructions
Note. Terms in bold are defined in the
Glossary of the Instructions for Form 990.
Background. The Patient Protection and
Affordable Care Act (Affordable Care Act),
Jan 24, 2013

enacted March 23, 2010, Pub. L. No.
111-148, added section 501(r) to the
Code. Section 501(r) includes additional
requirements a hospital organization
must meet to qualify for tax exemption
under section 501(c)(3) in tax years
beginning after March 23, 2010. These
additional requirements address a hospital
organization's financial assistance policy,
policy relating to emergency medical care,
billing and collections, and charges for
medical care. Also, for tax years beginning
after March 23, 2012, the Affordable Care
Act requires hospital organizations to
conduct community health needs
assessments.
Because section 501(r) requires a
hospital organization to meet these
requirements for each of its hospital
facilities, Part V, Facility Information, has
been expanded to include a Section A,
Hospital Facilities. In this new section a
hospital organization must list its hospital
facilities; that is, its facilities that at any
time during the tax year, were required to
be licensed, registered, or similarly
recognized as a hospital under state law.
Part V also includes Section B, Facility
Policies and Practices, for reporting of
information on policies and practices
addressed in section 501(r). The hospital
organization must complete a separate
Section B for each of its hospital facilities
listed in Section A.
The community health needs
assessment requirements of section
501(r)(3) are effective for tax years
beginning after March 23, 2012.
Accordingly, the questions in Part V,
Section B, about community health needs
assessments (lines 1 through 8) are
optional for any tax year beginning before
March 24, 2012.
Section 6033(b)(15)(B) also requires
hospital organizations to submit a copy of
their audited financial statements to the
IRS. Accordingly, a hospital organization
that is required to file Form 990 must
attach a copy of its most recent audited
financial statements to its Form 990 (see
instructions for Form 990, Part IV,
line 20b).
Section C, Part V, requires an
organization to list all of its non-hospital
health care facilities that it operated during
the tax year, whether or not such facilities
were required to be licensed or registered
under state law. The organization should
Cat. No. 51526B

not complete Part V, Section B, for any of
these non-hospital facilities.

Purpose of Schedule

Hospital organizations use Schedule H
(Form 990) to provide information on the
activities and policies of, and community
benefit provided by, its hospital facilities
and other non-hospital health care
facilities that it operated during the tax
year. This includes facilities operated
either directly or through disregarded
entities or joint ventures.

Who Must File

An organization that answered “Yes” on
Form 990, Part IV, line 20a must complete
and attach Schedule H to Form 990.
Schedule H (Form 990) must be
completed by a hospital organization
that operated during the tax year at least
one hospital facility. A hospital facility is
one that is required to be licensed,
registered, or similarly recognized by a
state as a hospital. A hospital
organization may treat multiple buildings
operated under a single state license as a
single hospital facility.
The organization must file a single
Schedule H (Form 990) that combines
information from:
1. Hospital facilities directly operated
by the organization.
2. Hospital facilities operated by
disregarded entities of which the
organization is the sole member.
3. Other health care facilities and
programs of the hospital organization or
any of the entities described in 1 or 2,
even if provided separately from the
hospital's license.
4. Hospital facilities and other health
care facilities and programs operated by
any joint venture treated as a
partnership, to the extent of the hospital
organization's proportionate share of the
joint venture.
Proportionate share is defined as the
ending capital account percentage listed
on the Schedule K-1 (Form 1065),
Partner's Share of Income, Deductions,
Credits, etc., Part II, line J, for the
partnership tax year ending in the
organization's tax year being reported on
the organization's Form 990. If
Schedule K-1 (Form 1065) is not

available, the organization can use other
business records to make a reasonable
estimate, including the most recently
available Schedule K-1 (Form 1065),
adjusted as appropriate to reflect facts
known to the organization, or information
used for purposes of determining its
proportionate share of the venture for the
organization's financial statements.
5. In the case of a group return filed
by the hospital organization, hospital
facilities operated directly by members of
the group exemption included in the
group return, hospital facilities operated by
a disregarded entity of which a member
included in the group return is the sole
member, hospital facilities operated by a
joint venture treated as a partnership to
the extent of the group member's
proportionate share (determined in the
manner described in 4, earlier), and other
health care facilities or programs of a
member included in the group return even
if such programs are provided separately
from the hospital's license.
Example. The organization is the sole
member of a disregarded entity. The
disregarded entity owns 50% of a joint
venture treated as a partnership. The
partnership in turn owns 50% of another
joint venture treated as a partnership that
operates a hospital and a freestanding
outpatient clinic that is not part of the
hospital's license. (Assume the
proportionate shares of the partnerships
based on capital account percentages
listed on the partnerships' Schedule K-1
(Form 1065), Part II, line J, are also 50%.)
The organization would report 25% (50%
of 50%) of the hospital's and outpatient
clinic's combined information on
Schedule H (Form 990).
Note that while information from all the
above sources is combined for purposes
of Schedule H (Form 990), the
organization is required to report each of
its hospital facilities in Part V, Sections A
and B, whether operated directly by the
organization or through a disregarded
entity or joint venture treated as a
partnership. In addition, the organization
must list in Part V, Section C, each of its
other health care facilities (for example,
rehabilitation clinics, other outpatient
clinics, diagnostic centers, skilled nursing
facilities, long-term acute care facilities
that it operated during the tax year),
whether operated directly by the
organization or through a disregarded
entity or a joint venture treated as a
partnership.
Organizations are not to report
information from hospitals located outside
the United States in Parts I, II, III, or V.
Information from foreign joint ventures and
partnerships must be reported in Part IV,
Management Companies and Joint
Ventures. Information concerning foreign

hospitals and facilities can be described in
Part VI.
Except as provided in Part IV, do not
report on Schedule H (Form 990)
information from an entity organized as a
separate legal entity from the organization
and treated as a corporation for federal
income tax purposes (except for members
of a group exemption included in a group
return filed by the organization), even if
such entity is affiliated with or otherwise
related to the organization (for example,
part of an affiliated health care system).
If an organization is not required to file
Form 990 but chooses to do so, it must file
a complete return and provide all of the
information requested, including the
required schedules.
An organization that does not operate one
or more facilities that satisfy the definition
of hospital facility, above, should not file
Schedule H (Form 990).
The definition of hospital for
Schedule A (Form 990), Public
Charity Status and Public
Support, Part I, line 3, and the definition of
hospital for Schedule H (Form 990) are
not the same. Accordingly, an
organization that checks box 3 in Part I of
Schedule A (Form 990) to report that it is a
hospital or cooperative hospital service
organization, must complete and attach
Schedule H to Form 990 only if it meets
the definition of hospital facility for
purposes of Schedule H(Form 990), as
explained above.

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Specific Instructions
Part I. Financial
Assistance and Certain
Other Community Benefits
at Cost

Part I requires reporting of financial
assistance policies, the availability of
community benefit reports, and the cost of
certain financial assistance and other
community benefit activities and
programs. Worksheets and accompanying
instructions are provided at the end of the
instructions to this schedule to assist in
completing the table in Part I, line 7.

Line 1. A financial assistance policy,
sometimes referred to as a charity care
policy, is a policy describing how the
organization will provide financial
assistance at its hospital(s) and other
facilities, if any. Financial assistance
includes free or discounted health
services provided to persons who meet
the organization's criteria for financial
assistance and are unable to pay for all or
a portion of the services. Financial
assistance does not include: bad debt or
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uncollectible charges that the organization
recorded as revenue but wrote off due to a
patient's failure to pay, or the cost of
providing such care to such patients; the
difference between the cost of care
provided under Medicaid or other
means-tested government programs or
under Medicare and the revenue derived
therefrom; or contractual adjustments with
any third-party payors.
Line 2. Check only one of the three
boxes. “Applied uniformly to all hospitals”
means that all of the organization's
hospital facilities use the same financial
assistance policy. “Applied uniformly to
most hospitals” means that the majority of
the organization's hospital facilities use
the same financial assistance policy.
“Generally tailored to individual hospitals”
means that the majority of the
organization's hospital facilities use
different financial assistance policies. If
the organization operates only one
hospital facility, check “Applied uniformly
to all hospitals.”
Line 3. Answer lines 3a, 3b, and 3c
based on the financial assistance eligibility
criteria that apply to (1) the largest number
of the organization's patients based on
patient contacts or encounters or (2) if the
organization does not operate its own
hospital facility, the largest number of
patients of a hospital facility operated by a
joint venture in which the organization
has an ownership interest. For example, if
the organization has two hospital facilities,
use the financial assistance eligibility
criteria used by the hospital facility which
has the most patient contacts or
encounters during the tax year.
Line 3a. “Federal Poverty Guidelines”
(FPG) are the Federal Poverty Guidelines
established by the U.S. Department of
Health and Human Services. If the
organization has established a family or
household income threshold that a patient
must meet or fall below to qualify for free
medical care, check the box in the “Yes”
column and indicate the specific threshold
by checking the appropriate box. For
instance, if a patient's family or household
income must be less than or equal to
250% of FPG for the patient to qualify for
free care, then check the box marked
“Other” and enter “250%.”
Line 3b. If the organization has
established a family or household income
threshold that a patient must meet or fall
below to qualify for discounted medical
care, check the box in the “Yes” column
and indicate the specific threshold by
checking the appropriate box.
Line 3c. If applicable, describe the
other income-based criteria, asset test, or
other means test or threshold for free or
discounted care in Part VI, line 1 of this
schedule. An “asset test” includes (i) a

limit on the amount of total or liquid assets
that a patient or the patient's family or
household can own for the patient to
qualify for free or discounted care, and/or
(ii) a criterion for determining the level of
discounted medical care patients can
receive, depending on the amount of
assets that they and/or their families or
households own.
Line 4. “Medically indigent” means
persons whom the organization has
determined are unable to pay some or all
of their medical bills because their medical
bills exceed a certain percentage of their
family or household income or assets (for
example, due to catastrophic costs or
conditions), even though they have
income or assets that otherwise exceed
the generally applicable eligibility
requirements for free or discounted care
under the organization's financial
assistance policy.
Line 5. Answer lines 5a, 5b, and 5c
based on the organization's budgeted
amounts under its financial assistance
policy.
Line 5a. Answer “Yes,” if the
organization established or had in place at
any time during the tax year an annual or
periodic budgeted amount of free or
discounted care to be provided under its
financial assistance policy. If “No,” skip to
line 6a.
Line 5b. Answer “Yes,” if the free or
discounted care the organization provided
in the applicable period exceeded the
budgeted amount of costs or charges for
that period. If “No,” skip to line 6a.
Line 5c. Answer “Yes,” if the
organization denied financial assistance to
any patient eligible for free or discounted
care under its financial assistance policy
or under any of its hospital facilities'
financial assistance policies solely
because the organization's or the facility's
financial assistance budget was
exceeded.
Line 6. Answer lines 6a and 6b based on
the community benefit report that the
organization prepared for the organization
as a whole during the tax year.
Line 6a. Answer “Yes” if the
organization prepared a written report
during the tax year that describes the
organization's programs and services that
promote the health of the community or
communities served by the organization. If
the organization's community benefit
report is contained in a report prepared by
a related organization, answer “Yes” and
identify the related organization in Part VI,
line 1. If “No,” skip to line 7.
Line 6b. Answer “Yes” if the
organization made the community benefit

report it prepared during the tax year
available to the public.
Examples of how an organization
can make its community benefit
report available to the public are:
to post the report on the organization's
website, to publish and distribute the
report to the public by mail or at its
facilities, or to submit the report to a state
agency or other organization that makes
the report available to the public.

TIP

Lines 7a through 7k. Report on the table
(lines 7a through 7k), at cost, the
organization's financial assistance (as
defined in the instructions for line 1) and
certain other community benefits. Report
on line 7i contributions that the
organization restricts to one or more of the
community benefit activities listed in lines
7a through 7h. Do not report such
contributions on lines 7a through 7h. To
calculate the amounts to be reported on
the table, use the worksheets or other
equivalent documentation that
substantiates the information reported
consistent with the methodology used on
the worksheets. See the instructions to the
worksheets for definitions of the various
types of community benefit (for example,
community health improvement services,
health professions education, subsidized
health services, research, etc.) to be
reported on lines 7a through 7k.
If the organization completed
worksheets other than on an a
combined basis (for example,
facility by facility, joint venture by joint
venture), the organization should combine
all information from these worksheets for
purposes of reporting amounts on the
table. Only the portion of each joint
venture or partnership that represents the
organization's proportionate share, based
on capital interest, can be reported on
lines 7a through 7k (see Purpose of
Schedule for instructions on aggregation).

TIP

Use the organization's most accurate
costing methodology (cost accounting
system, cost-to-charge ratio, or other) to
calculate the amounts reported on the
table. If the organization uses a
cost-to-charge ratio, it can use Worksheet
2. Ratio of Patient Care Cost to Charges,
for this purpose. See the instructions for
Part VI, line 1, regarding an explanation of
the costing methodology used to calculate
the amounts reported on the table.
If the organization included any costs
for a physician clinic as subsidized health
services on Part I, line 7g, report these
costs on Part VI, line 1.
If the organization included any bad
debt expense on Form 990, Part IX,
line 25 but subtracted this bad debt for
purposes of calculating the amount

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reporting on line 7, column (f), report this
bad debt expense on Part VI, line 1.
Do not report bad debt expense on
lines 7a through 7k.
The following are descriptions of the
type of information reported in each
column of the table.
Column (a). “Number of activities or
programs” means the number of the
organization's activities or programs
conducted during the year that involve the
community benefit reported on the line.
Report each activity and program on only
one line so that it is not counted more than
once. Reporting in this column is optional.
Column (b). “Persons served” means
the number of patient contacts or
encounters in accordance with the filing
organization's records. Persons served
can be reported in multiple rows, as
services across different categories may
be provided to the same patient.
Reporting in this column is optional.
Column (c). “Total community benefit
expense” means the total gross expense
of the activity incurred during the year,
calculated by using the pertinent
worksheets for each line item. “Total
community benefit expense” includes both
“direct costs” and “indirect costs.”“Direct
costs” means salaries and benefits,
supplies, and other expenses directly
related to the actual conduct of each
activity or program. “Indirect costs” means
costs that are shared by multiple activities
or programs, such as facilities and
administration costs related to the
organization's infrastructure (space,
utilities, custodial services, security,
information systems, administration,
materials management, and others).
Column (d). “Direct offsetting
revenue” means revenue from the activity
during the year that offsets the total
community benefit expense of that activity,
as calculated on the worksheets for each
line item. “Direct offsetting revenue”
includes any revenue generated by the
activity or program, such as payment or
reimbursement for services provided to
program patients. Direct offsetting
revenue does not include restricted or
unrestricted grants or contributions that
the organization uses to provide a
community benefit.
Example. The organization receives a
restricted grant from an unrelated
organization that must be used by the
organization to provide financial
assistance. The amount of the restricted
grant is not reportable as direct offsetting
revenue on line 7a, column (d).
Column (e). “Net community benefit
expense” is “Total community benefit

expense” (column (c)) minus “Direct
offsetting revenue” (column (d)). If the
calculated amount is less than zero, report
the amount as a negative number.
Column (f). “Percent of total expense”
is the “net community benefit expense” in
column (e) divided by the sum of the
amount on Form 990, Part IX, line 25,
column (A) including the organization's
proportionate share of total expenses of all
joint ventures in which it has an
ownership interest (see Appendix F).
Report the percentage to two decimal
places (x.xx%). If the net community
benefit expense in column (e) is a
negative number, report -0- in column (f)
rather than a negative percentage. Any
bad debt expense included in the
denominator should be removed before
calculation, and the amount of bad debt
expense that was included on Form 990,
Part IX, line 25, column (A) but removed
from this figure should be reported in Part
VI, line 1.
Column (f) “percent of total
expense” is based on column (e)
“net community benefit expense,”
rather than column (c) “total community
benefit expense.” Organizations that
report amounts of direct offsetting revenue
also might wish to report total community
benefit expense (Part I, line 9, column (c))
as a percentage of total expenses.
Although this percentage cannot be
reported in Part I, line 7, column (f), it can
be reported on Schedule H (Form 990),
Part VI, line 1.

TIP

Optional Worksheets for
Part I, Line 7 (Financial
Assistance and Certain
Other Community Benefits
At Cost)

Worksheets 1 through 8 are intended to
assist the organization in completing
Schedule H (Form 990), Part I, lines 7a
through 7k. Use of the worksheets is not
required and they should not be filed with
Form 990. The organization can use
alternative equivalent documentation,
provided that the methodology described
in these instructions (including the
instructions to the worksheets) is followed.
Regardless of whether the worksheets or
alternative equivalent documentation is
used to compile and report the required
information, such documentation must be
retained by the organization to
substantiate the information reported on
Schedule H (Form 990). The worksheets
or alternative equivalent documentation
are to be completed using the
organization's most accurate costing
methodology, which can include a cost
accounting system, cost-to-charge ratios,

a combination thereof, or some other
method.
If the organization is filing a group
return or has a disregarded entity or an
ownership interest in one or more joint
ventures, the organization may find it
helpful to complete the worksheets
separately for the organization and for
each disregarded entity, joint venture in
which the organization had an ownership
interest during the tax year, and group
affiliate. In that case, the organization
should combine all information from the
worksheets for purposes of completing
line 7. Complete the table by combining
amounts from the organization's
worksheets, amounts from disregarded
entities or group affiliates, and amounts
from joint ventures that are attributable to
the organization's proportionate share of
each joint venture, under the aggregation
instruction in Purpose of Schedule.
See Worksheets 1 through 8 and
specific instructions for the worksheets
later in these instructions.

Part II. Community
Building Activities

Report in this part the costs of the
organization's activities that it engaged in
during the tax year to protect or improve
the community's health or safety, and that
are not reportable in Part I of this
schedule. Some community building
activities may also meet the definition of
community benefit. Do not report in Part II
community building costs that are reported
on Part I, line 7 as community benefit
(costs of a community health improvement
service reportable on Part I, line 7e). An
organization that reports information in this
Part II must describe in Part VI how its
community building activities promote the
health of the communities it serves.
If the filing organization makes a grant
to an organization to be used to
accomplish one of the community building
activities listed in this part, then the
organization should include the amount of
the grant on the appropriate line in Part II.
If the organization makes a grant to a joint
venture in which it has an ownership
interest to be used to accomplish one of
the community building activities listed in
this part, report the grant on the
appropriate line in Part II, but do not
include in Part II the organization's
proportionate share of the amount spent
by the joint venture on such activities, to
avoid double counting. Do not include any
contribution made by the organization that
was funded in whole or in part by a
restricted grant, to the extent that such
grant was funded by a related
organization.
Line 1. “Physical improvements and
housing” include, but are not limited to, the
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provision or rehabilitation of housing for
vulnerable populations, such as removing
building materials that harm the health of
the residents, neighborhood improvement
or revitalization projects, provision of
housing for vulnerable patients upon
discharge from an inpatient facility,
housing for low-income seniors, and the
development or maintenance of parks and
playgrounds to promote physical activity.
Line 2. “Economic development” can
include, but is not limited to, assisting
small business development in
neighborhoods with vulnerable
populations and creating new employment
opportunities in areas with high rates of
joblessness.
Line 3. “Community support” can include,
but is not limited to, child care and
mentoring programs for vulnerable
populations or neighborhoods,
neighborhood support groups, violence
prevention programs, and disaster
readiness and public health emergency
activities, such as community disease
surveillance or readiness training beyond
what is required by accrediting bodies or
government entities.
Line 4. “Environmental improvements”
include, but are not limited to, activities to
address environmental hazards that affect
community health, such as alleviation of
water or air pollution, safe removal or
treatment of garbage or other waste
products, and other activities to protect the
community from environmental hazards.
The organization cannot include on this
line or in this part expenditures made to
comply with environmental laws and
regulations that apply to activities of itself,
its disregarded entity or entities, a joint
venture in which it has an ownership
interest, or a member of a group
exemption included in a group return of
which the organization is also a member.
Similarly, the organization cannot include
on this line or in this part expenditures
made to reduce the environmental
hazards caused by, or the environmental
impact of, its own activities, or those of its
disregarded entities, joint ventures, or
group exemption members, unless the
expenditures are for an environmental
improvement activity that (i) is provided for
the primary purpose of improving
community health; (ii) addresses an
environmental issue known to affect
community health; and (iii) is subsidized
by the organization at a net loss. An
expenditure may not be reported on this
line if the organization engages in the
activity primarily for marketing purposes.
Line 5. “Leadership development and
training for community members” includes,
but is not limited to, training in conflict
resolution; civic, cultural, or language
skills; and medical interpreter skills for
community residents.

Line 6. “Coalition building” includes, but
is not limited to, participation in community
coalitions and other collaborative efforts
with the community to address health and
safety issues.
Line 7. “Community health improvement
advocacy” includes, but is not limited to,
efforts to support policies and programs to
safeguard or improve public health,
access to health care services, housing,
the environment, and transportation.
Line 8. “Workforce development”
includes, but is not limited to, recruitment
of physicians and other health
professionals to medical shortage areas or
other areas designated as underserved,
and collaboration with educational
institutions to train and recruit health
professionals needed in the community
(other than the health professions
education activities reported in Part I,
line 7f).
Line 9. “Other” refers to community
building activities that protect or improve
the community's health or safety that are
not described in the categories listed in
lines 1 through 8 above.
Refer to the instructions to Part I, line 7,
columns (a) through (f), for descriptions of
the types of information that should be
reported in each column of Part II.
If the organization is filing a group
return or has a disregarded entity or an
ownership interest in one or more joint
ventures, the organization may find it
helpful to complete Part II separately for
itself and for each disregarded entity, joint
venture in which the organization had an
ownership interest during the tax year, and
group affiliate. The organization should
combine the amounts from all such tables,
according to the combined instructions in
Purpose of Schedule, and include the
combined information in Part II.

Part III. Bad Debt,
Medicare, & Collection
Practices
Section A. In this section (a) report
combined bad debt expense; (b) provide
an estimate of how much bad debt
expense, if any, reasonably could be
attributable to persons who likely would
qualify for financial assistance under its
financial assistance policy; and (c) provide
a rationale for what portion of bad debt, if
any, the organization believes is
community benefit. In addition, the
organization must report whether it has
adopted Healthcare Financial
Management Association Statement No.
15, Valuation and Financial Statement
Presentation of Charity Care and Bad
Debts by Institutional Healthcare
Providers (“Statement 15”) and provide
the text of its footnote, if applicable, to its

audited financial statements that
describes the bad debt expense.
Line 1. Indicate if the organization
reports bad debt expense in accordance
with Statement 15.
Note. Statement 15 has not been
adopted by the AICPA. The IRS does not
require organizations to adopt Statement
15 or use it to determine bad debt
expense or financial assistance costs.
Some organizations may rely on
Statement 15 in reporting bad debt
expense and financial assistance in their
audited financial statements. Statement
15 provides instructions for
recordkeeping, valuation, and disclosure
for bad debts.
Line 2. Use the most accurate system
and methodology available to the
organization to report bad debt expense. If
only a portion of a patient's bill for services
is written off as a bad debt, include only
the proportionate amount attributable to
the bad debt. Include the organization's
proportionate share of the bad debt
expense of joint ventures in which it had
an ownership interest during the tax year.
Describe in Part VI the methodology
used in determining the amount reported
on line 2 as bad debt, including how the
organization accounted for discounts and
payments on patient accounts in
determining bad debt expense.
Line 3. Provide an estimate of the
amount of bad debt reported on line 2 that
reasonably is attributable to patients who
likely would qualify for financial assistance
under the hospital's financial assistance
policy as reported in Part I, lines 1 through
4, but for whom insufficient information
was obtained to determine their eligibility.
Do not include this amount in Part I,
line 7. Organizations can use any
reasonable methodology to estimate this
amount, such as record reviews, an
assessment of financial assistance
applications that were denied due to
incomplete documentation, analysis of
demographics, or other analytical
methods.
Describe in Part VI the methodology
used to determine the amount reported on
line 3 and the rationale, if any, for
including any portion of bad debt as
community benefit.
Line 4. In Part VI, provide the footnote
from the organization's audited financial
statements on bad debt expense, if
applicable, or the footnotes related to
“accounts receivable,”“allowance for
doubtful accounts,” or similar
designations. Alternatively, report the
page number(s) on which the footnote or
footnotes appear in the organization's
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most recent audited financial statements,
which must be attached to this return. If
the footnote or footnotes address only the
filing organization's bad debt expense or
“accounts receivable,”“allowance for
doubtful accounts,” or similar
designations, provide the exact wording of
the footnote or footnotes, or report the
page numbers(s) in which the footnote or
footnotes appear in the attached audited
financial statements.
If the organization's financial
statements include a footnote on these
issues that also includes other
information, report in Part VI only the
relevant portions of the footnote. If the
organization is a member of a group with
consolidated financial statements, the
organization can summarize that portion, if
any, of the footnote or footnotes that
apply. If the organization's financial
statements do not include a footnote that
discusses bad debt expense, “accounts
receivable,”“allowance for doubtful
accounts,” or similar designations, include
a statement in Part VI that the
organization's audited financial
statements do not include a footnote
discussing these issues and explain how
the organization's financial statements
account for bad debt, if at all.
Section B. In this section, (a) combine
allowable costs to provide services
reimbursed by Medicare, (b) combine
Medicare reimbursements attributable to
such costs, and (c) combine Medicare
surplus or shortfall. Include in Section B
only those allowable costs and Medicare
reimbursements that are reported in the
organization's Medicare Cost Report(s) for
the year, including its share of any such
allowable costs and reimbursement from
disregarded entities and joint ventures
in which it has an ownership interest.
In Part VI, the organization should
describe what portion of its Medicare
shortfall, if any, it believes should
constitute community benefit, and explain
its rationale for its position. As described
below, the organization also can enter in
Part VI the amount of any Medicare
revenues and costs not included in its
Medicare Cost Report(s) for the year, and
can enter a reconciliation of the amounts
reported in Section B (including the
surplus or shortfall reported on line 7) and
the total revenues and costs attributable to
all of the organization's Medicare
programs.
Line 5. Enter all net patient service
revenue (for Medicare fee for service
(FFS) patients) associated with the
allowable costs the organization reports in
its Medicare Cost Report(s) for the year,
including payments for indirect medical
education (IME) (except for Medicare
Advantage IME), Medicare

disproportionate share hospital (DSH)
revenue, coinsurance, patient deductibles,
outliers, capital, bad debt, and any other
amounts paid to the organization on the
basis of its Medicare Cost Report. Do not
include revenue related to subsidized
health services as reported in Part I,
line 7g (see Worksheet 6), or direct
graduate medical education (GME) as
reported in Part I, line 7f (see Worksheet
5). If the organization has more than one
Medicare provider number, combine the
revenue attributable to costs reported on
the Medicare Cost Reports submitted
under each provider number, and report
the combined revenues on line 5.
Line 6. Enter all Medicare allowable
costs reported in the organization's
Medicare Cost Report(s), except those
already reported in Part I, line 7g
(subsidized health services) and costs
associated with direct GME already
reported in Part I, line 7f (health
professions education). This can be
determined using Worksheet A. If
Worksheet A is not used, the organization
still must subtract the costs attributable to
subsidized health services and direct
GME from the Medicare allowable costs it
enters on line 6. If the organization has
more than one Medicare provider number,
it should combine the costs reported in the
Medicare Cost Reports submitted under
each provider number and report the
combined costs on line 6.

Worksheet A (optional)
Complete Worksheets 5 and 6 before
completing this Worksheet A.
1.
2.

3.

4.

5.

Total Medicare allowable costs
(from Medicare Cost Report) . .
Total Medicare allowable costs
(from line 1) included in
Worksheet 6, line 3, col. (A) . .
Total Medicare allowable costs
(from line 1) included in
Worksheet 5, line 8 (direct
GME) . . . . . . . . . . . . . . .
Total adjustments to Medicare
allowable costs (add lines 2 and
3) . . . . . . . . . . . . . . . . .
Total Medicare allowable costs
(line 1 minus line 4).
Enter this value in Part III,
line 6. . . . . . . . . . . . . . . .

$

$

$

$

$

Line 7. Subtract line 6 from the
amount on line 5. If line 6 exceeds line 5,
report the excess (the shortfall) as a
negative number.
Line 8. Check the box that best
describes the costing methodology used
to determine the Medicare allowable costs
reported in the organization's Medicare
Cost Report(s), as reflected on line 6.
Describe this methodology in Part VI.

The organization must also describe in
Part VI its rationale for treating the amount
reported in Part III, line 7, or any portion of
it, as a community benefit. An
organization's rationale must have a
reasonable basis. Do not include this
amount in Part I, line 7. Do not include
any Medicare-related expenses or
revenue properly reported in Part I, line 7g
or any Medicare-related expenses or
revenue reported in Part I, line 7f in Part III,
Section B.
Lines 5, 6, and 7 do not include
certain Medicare program
revenues and costs, and thus
cannot reflect all of the organization's
revenues and costs associated with its
participation in Medicare programs. The
organization can describe in Part VI the
Medicare revenues and costs not included
in its Medicare Cost Report(s) for the year
(for example, revenues and costs for
freestanding ambulatory surgery centers,
physician services billed by the
organization, clinical laboratory services,
and revenues and costs of Medicare Part
C and Part D programs). The organization
can enter in Part VI, line 1, a reconciliation
of amounts reportable in Section B
(including the surplus or shortfall reported
on line 7) and all of the organization's total
revenues and total expenses attributable
to Medicare programs.

TIP

If the organization received any prior
year settlements for Medicare-related
services in the current tax year, it can
provide an explanation in Part VI, line 1.
Section C. In this section report the
organization's written debt collection
policy.
Line 9a. Answer “Yes” if the
organization had a written debt collection
policy on the collection of amounts owed
by patients during its tax year.
For purposes of Line 9a, a “written debt
collection policy” includes a written billing
and collections policy, or in the case of an
organization that does not have a
separate written billing and collections
policy, a written financial assistance policy
that includes the actions the organization
may take in the event of non-payment,
including collection actions and reporting
to credit agencies.
Line 9b. Answer “Yes” if the
organization's written debt collection
policy that applied to the facilities that
served the largest number of the
organization's patients during the tax year
contained provisions for collecting
amounts due from those patients who the
organization knows qualify for financial
assistance. If the organization answers
“Yes,” describe in Part VI the collection
practices that it follows for such patients,
whether or not such practices apply
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specifically to such patients or more
broadly to also cover other types of
patients.

Part IV. Management
Companies and Joint
Ventures owned 10% or
more by officers,
directors, trustees, key
employees, and
physicians

List any management company, joint
venture, or other separate entity (whether
treated as a partnership or a corporation),
including joint ventures outside of the
United States, of which the organization
is a partner or shareholder,
1. In which persons described in 1a
and/or 1b below owned, in the aggregate,
more than 10% of the share of profits of
such partnership or LLC interest, or stock
of the corporation:
a. Persons who were officers,
directors, trustees, or key employees
of the organization at any time during the
organization's tax year, and
b. Physicians who were employed as
physicians by, or had staff privileges with,
one or more of the organization's
hospitals; and
2. That either:
a. Provided management services
used by the organization in its provision of
medical care, or
b. Provided medical care, or owned or
provided real property, tangible personal
property, or intangible property used by
the organization or by others to provide
medical care.

Examples of such joint ventures and
management companies include:
An ancillary joint venture formed by the
organization and its officers or physicians
to conduct an exempt or unrelated
business activity,
A company owned by the organization
and its officers or physicians that owns
and leases to the organization a hospital
or other medical care facility, and
A company that owns and leases to
entities other than the organization
diagnostic equipment or intellectual
property used to provide medical care.
For purposes of Part IV, ownership
interests can be direct or indirect. For
example, if a joint venture reported in Part
IV is owned, in part, by a physician group
practice owned by staff physicians of the
organization's hospital, report the
physicians' indirect ownership interest in
the joint venture in proportion to their
ownership share of the physician group
practice.

Note. Do not include publicly traded
entities or entities whose sole income is
passive investment income from interest
or dividends.
For purposes of Part IV, the aggregate
percentage share of profits or stock
ownership percentage of officers,
directors, trustees, key employees, and
physicians who are employed as
physicians by, or have staff privileges with,
one or more of the organization's hospitals
is measured as of the earlier of the close
of the tax year of the organization or the
last day the organization was a member of
the joint venture. All stock, whether
common or preferred, is considered stock
for purposes of determining the stock
ownership percentage. Provide all the
information requested below for each such
entity.
Column (a). Enter the full legal name of
the entity.
Column (b). Describe the primary
business activity or activities conducted by
the management company, joint
venture, or separate entity.
Column (c). Enter the organization's
percentage share of profits in the
partnership or LLC, or stock in the entity
that is owned by the organization.
Column (d). Enter the percentage share
of profits or stock in the entity owned by all
of the organization's current officers,
directors, trustees, or key employees.
Column (e). Enter the percentage share
of profits or stock in the entity owned by all
physicians who are employees practicing
as physicians or who have staff privileges
with one or more of the organization's
hospitals.
If a physician described above is also a
current officer, director, trustee, or key
employee of the organization, include his
or her profits or stock percentage in
column (d). Do not include this in column
(e).
Part IV can be duplicated if more space
is needed to list additional management
companies and joint ventures.

Part V. Facility Information

In Part V, the organization must list all of
its hospital facilities in Section A,
complete a separate Section B for each of
its hospital facilities listed in Section A,
and list its non-hospital health care
facilities in Section C.
Facility reporting groups. If the
organization is able to check the same
checkboxes for all Part V, Section B
questions for more than one of its hospital
facilities, it may file a single Section B for
all facilities in that facility reporting group.
For each of those facilities, the
organization would assign and list the

facility reporting group letter in the 'Facility
reporting group' column in Section A.
Assign letter A to the facility reporting
group with the greatest number of
facilities, letter B to the group with the
second greatest number of facilities, and
so forth. For instance, three hospital
facilities with identical answers to the
Section B checkboxes would be assigned
facility group letter A, while two other
hospital facilities with identical answers
would be assigned facility group letter B.
Section A. Complete Part V, Section A,
by listing all of the organization's hospital
facilities that it operated during the tax
year. List these facilities in order of size
from largest to smallest, measured by a
reasonable method (for example, the
number of patients served or total revenue
per facility). “Hospital facilities” are
facilities that, at any time during the tax
year, were required to be licensed,
registered, or similarly recognized as a
hospital under state law. A hospital facility
is operated by an organization whether the
facility is operated directly by the
organization or indirectly through a
disregarded entity or joint venture
treated as a partnership. For each hospital
facility, list its name, address, and primary
website address, and check the
applicable column(s).
“Licensed hospital” is a facility
licensed, registered, or similarly
recognized by a state as a hospital.
“General medical and surgical” refers
to a hospital primarily engaged in
providing diagnostic and medical
treatment (both surgical and nonsurgical)
to inpatients with a wide variety of medical
conditions, and that may provide
outpatient services, anatomical pathology
services, diagnostic X-ray services,
clinical laboratory services, operating
room services, and pharmacy services.
“Children's hospital” is a center for
provision of health care to children, and
includes independent acute care
children's hospitals, children's hospitals
within larger medical centers, and
independent children's specialty and
rehabilitation hospitals.
“Teaching hospital” is a hospital that
provides training to medical students,
interns, residents, fellows, nurses, or other
health professionals and providers,
provided that such educational programs
are accredited by the appropriate national
accrediting body.
“Critical access hospital” (CAH) is a
hospital designated as a CAH by a state
that has established a State Medicare
Rural Hospital Flexibility Program in
accordance with Medicare rules.
“Research facility” is a facility that
conducts research.

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“ER–24 hours” refers to a facility that
operates an emergency room 24 hours a
day, 365 days a year.
“ER–other” refers to a facility that
operates an emergency room for periods
less than 24 hours a day, 365 days a year.
Complete the “Other (Describe)”
column for each hospital facility that the
organization operates that is not described
in the other columns of Part V, Section A.
In the upper left hand corner of the Part
V, Section A table, list the total number of
hospital facilities that the organization
operated during the tax year.
If the organization needs additional
space to list all of its hospital facilities, it
should duplicate Section A and use as
many duplicate copies of Section A as
needed, number each page, and
renumber the line numbers in the left hand
margin (an organization with 15 facilities
should renumber lines 1-3 on the 2nd
page as lines 13-15).
Section B. Section B requires reporting
on a hospital facility by hospital facility
basis. The organization must complete
Section B for each of its hospital facilities
listed in Section A. At the top of Section B,
list the name of the hospital facility or
facility reporting group and its line number
(or facility reporting group letter) from
Section A.
If the organization could check the
same checkboxes for all Part V, Section B
questions for more than one of its hospital
facilities, it may file a single Section B for
all facilities in that facility reporting group.
References in these Section B
instructions to a “hospital facility” taking a
certain action mean that the hospital
organization took action through or on
behalf of the hospital facility.
Lines 1 through 8c. These lines are
optional for tax years beginning on or
before March 23, 2012. A community
health needs assessment (“CHNA”) is an
assessment of the health needs of the
community. To meet the requirements of
section 501(r)(3), which is effective for tax
years beginning after March 23, 2012, a
CHNA must take into account input from
persons who represent the broad interests
of the community served by the hospital
facility, including those with special
knowledge of or expertise in public health,
and must be made widely available to the
public. Each hospital facility must
conduct a CHNA at least once every three
years, and adopt an implementation
strategy to meet the community health
needs identified through such CHNA.
Line 1. Answer “Yes” if the hospital
facility conducted a CHNA in the current
tax year or in either of the two immediately
preceding tax years. If “Yes,” indicate
what the CHNA describes by checking all
applicable boxes. If the CHNA describes

information that does not have a
corresponding checkbox, check line 1j,
“Other,” and describe this information in
Part VI. If “No,” skip to line 9.
Line 1i. “Information gaps that limit the
hospital facility's ability to assess the
community's health needs” are areas for
which the hospital facility has determined
that additional information is needed to
assess whether a particular health need
exists.
Line 3. If “Yes,” describe in Part VI how
the hospital facility took into account input
from persons who represent the broad
interests of the community served by the
hospital facility, including those with
special knowledge or expertise in public
health, including a description of how it
consulted with these persons (whether
through meetings, focus groups,
interviews, surveys, written
correspondence, etc.). Identify in Part VI
any organizations and other groups that
the hospital facility consulted in
conducting its most recent CHNA.
Individual members of community forums,
focus groups, survey groups, and similar
groups do not need to be listed.
Line 4. Answer “Yes,” if the hospital
facility's CHNA was conducted with one
or more other hospital facilities. “One or
more other hospital facilities” includes
related and unrelated hospital facilities. If
“Yes,” list in Part VI the other hospital
facilities with which the hospital facility
conducted its CHNA.
Line 5. Answer “Yes,” if the hospital
facility made its most recently conducted
CHNA widely available to the public. If
“Yes,” indicate how the hospital facility
made the CHNA widely available to the
public by checking all applicable boxes. If
the hospital facility made the CHNA widely
available to the public by means other
than those listed in lines 5a and 5b, check
line 5c, “Other,” and describe these
means in Part VI.
Line 5a. Check this box if the CHNA
was made available on the hospital
facility's website or the hospital
organization's website. This box may also
be checked if the hospital facility made its
CHNA available on a website established
and maintained by another entity. If line 5a
is checked, list in Part VI the direct website
address, or url, where the CHNA can be
accessed.
Line 6. Check all applicable boxes for
lines 6a through 6h to show how the
hospital facility addressed the needs
identified in its most recently conducted
CHNA. If the hospital facility addressed
the needs identified in its most recently
conducted CHNA by means other than
those listed in lines 6a through 6h, check
the box for line 6i, “Other,” and describe
these means in Part VI. If the hospital
facility has not addressed any of the

needs identified in its most recently
conducted CHNA, skip to line 7.
Line 6a. Check this box if the hospital
facility adopted an implementation
strategy that addresses each of the
community health needs identified through
the CHNA by either (1) describing how the
facility plans to meet the health need; or
(2) identifying the health need as one the
hospital facility does not intend to meet,
and explaining why the hospital facility
does not intend to meet that health need.
Line 6b. Check the box if the hospital
facility has begun, continued, or
completed execution of its implementation
strategy.
Line 6c. Check this box if the hospital
facility collaborated with others in the
hospital facility's community to develop a
written description of the activities that
hospital facilities and other community
groups and public health agencies plan to
undertake collectively to address specific
health needs in their community.
Line 6d. Check this box if the hospital
facility collaborated with others in the
hospital facility's community to carry out
activities that hospital facilities and other
community groups and public health
agencies planned to undertake collectively
to address specific health needs in their
community.
Line 7. Answer “Yes,” if the hospital
facility took action to address all of the
needs identified in its most recently
conducted CHNA. If “No,” explain in Part
VI which community health needs the
hospital facility did not take action to
address and the reasons why it did not
take action to address such needs. For
example, a hospital facility might identify
limited financial or other resources as
reasons why it did not take action to
address a need identified in its most
recently conducted CHNA.
Line 8a. Answer 'Yes' if the
organization was liable, at any time during
the tax year, for the $50,000 excise tax
incurred under section 4959 for failure to
conduct a CHNA and adopt an
implementation strategy as required under
section 501(r)(3). Section 501(r)(3)
requires each hospital facility to conduct
a CHNA, in the tax year or in either of the
immediately preceding two tax years, that
takes into account input from persons who
represent the broad interests of the
community served by the facility, including
those with special knowledge of or
expertise in public health, and to make the
CHNA widely available to the public.
Section 501(r)(3) also requires each
hospital facility to adopt an implementation
strategy to meet the community health
needs identified through its CHNA.
Line 8b. Answer 'Yes' to line 8b if the
organization answered 'Yes' to line 8a and
filed Form 4720, Return of Certain Excise
-8-

Taxes Under Chapters 41 and 42 of the
Internal Revenue Code, to report the
section 4959 excise tax it incurred.
Answer 'Yes' if the organization filed Form
4720 during the tax year or after the tax
year but prior to the filing of this return.
Line 8c. If line 8b is 'Yes,' report the
total amount of section 4959 excise tax
the organization reported on Form 4720
for all of its hospital facilities that incurred
the tax.
Lines 9 through 14. See the
instructions for Part I, Line 1 of
Schedule H (Form 990) for the definition of
“financial assistance policy.”
Line 9. Answer “Yes,” if, during the tax
year, the hospital facility had a written
financial assistance policy that explains
eligibility criteria for financial assistance,
and whether such assistance includes free
or discounted care.
Line 10. See the instructions for Part I,
Line 3a of Schedule H (Form 990), for the
definition of “Federal Poverty Guidelines”
(FPG). Answer “Yes,” if, during the tax
year, the hospital facility had a written
financial assistance policy that used FPG
for determining eligibility for free medical
care, and show the specific threshold by
writing in the percentage amount. If “No,”
explain in Part VI what criteria the hospital
facility used to determine eligibility for free
care, or state that the hospital facility did
not provide any free care.
Line 11. See the instructions for Part I,
Line 3a of Schedule H (Form 990) for the
definition of “Federal Poverty Guidelines”
(FPG). Answer “Yes,” if, during the tax
year, the hospital facility had a written
financial assistance policy that used FPG
for determining eligibility for discounted
medical care, and show the specific
threshold by writing in the percentage
amount. If “No,” explain in Part VI what
criteria the hospital facility used to
determine eligibility for discounted care, or
state that the hospital facility did not
provide any discounted care.
Line 12. Answer “Yes,” if, during the
tax year, the hospital facility had a
written financial assistance policy that
explained the basis for calculating
amounts charged to patients. If “Yes,”
indicate the factors used in calculating
amounts charged to patients, including
factors used in determining eligibility for
any discounts, by checking all applicable
boxes. If the hospital facility calculated
amounts charged to patients using factors
other than those listed in lines 12a through
12g, check the box for line 12h, “Other,”
and describe these factors in Part VI.
Line 12a. Check this box if the
hospital facility used the income level of
patients, patients' families, or patients'
guarantors as a factor in calculating
amounts charged to patients during the
tax year.

Line 12b. Check this box if the
hospital facility used the asset level of
patients, patients' families, or patients'
guarantors as a factor in calculating
amounts charged to patients during the
tax year.
Line 12c. Check this box if the
hospital facility considered whether
patients were “medically indigent,” as
defined in the instructions for Part I, Line 4
of Schedule H (Form 990), in calculating
amounts charged to patients during the
tax year.
Line 12d. Check this box if the
hospital facility used the insurance
status of patients, patients' families, or
patients' guarantors as a factor in
calculating amounts charged to patients
during the tax year.
Line 12h. “Other” factors used in
determining amounts charged to patients
may include, but are not limited to, the
amount budgeted for financial assistance.
Line 13. Answer “Yes,” if, during the
tax year, the hospital facility had a
written financial assistance policy that
explained the method for applying for
financial assistance.
Line 14. Answer “Yes,” if, during the
tax year, the hospital facility had a
written financial assistance policy that
included measures to publicize the policy
within the community served by the
hospital facility. If “Yes,” indicate how the
hospital facility publicized the policy by
checking all applicable boxes. If the
hospital facility publicized the policy within
the community served by the hospital
facility by means that are not listed in lines
14a-14f, check line 14g, “Other,” and
describe in Part VI how the financial
assistance policy was publicized within
the community served by the hospital
facility.
Line 14g. “Other” measures to
publicize the policy within the community
served by the hospital facility may
include, but are not limited to, having
registration personnel refer uninsured
and/or low income patients to financial
counselors to discuss the policy. Check
the box for line 14g if, instead of the
detailed policy, the hospital facility
provided a summary of the policy in a
manner listed in lines 14a-f.
Line 15. Answer “Yes,” if, during the
tax year, the hospital facility had either
a separate written billing and collections
policy or a written financial assistance
policy (“FAP”) that explained actions the
hospital facility may take upon
non-payment under its policy, including,
but not limited to, the actions listed in lines
16 and 17, if applicable.
Lines 16 and 17. “Other similar
actions” do not include sending the patient
a bill.

Note: Section 501(r)(6) requires a
hospital facility to forego extraordinary
collections actions before the facility has
made reasonable efforts to determine the
patient's eligibility under the facility's FAP.
No inference should be made regarding
whether the actions listed in lines 16a
through 16d, 17a through 17d, or
described in Part VI as “other similar
actions,” are “extraordinary collection
actions.”
Line 16. Indicate what actions against
an individual the hospital facility was
permitted to take during the tax year under
its policies before making reasonable
efforts to determine the individual's
eligibility under the facility's FAP by
checking all applicable boxes. If a hospital
facility’s policies permitted the facility to
take an action or actions against an
individual during the tax year similar to
those listed in lines 16a through 16d
before making reasonable efforts to
determine the individual's eligibility under
the facility's FAP, check line 16e, “Other
similar actions,” and describe those
actions in Part VI.
Line 16e. If the organization checked
line 16e, describe in Part VI the other
similar actions that the hospital facility was
permitted to take under its policies during
the tax year before making reasonable
efforts to determine the individual's
eligibility under the hospital facility's
FAP.
Line 17. Answer “Yes” if the hospital
facility or an authorized third party
performed any of the actions listed in lines
17a through 17d during the tax year
before making reasonable efforts to
determine the individual's eligibility under
the facility's FAP. If “Yes,” indicate the
actions the hospital facility or an
authorized third party performed before
making reasonable efforts to determine
the individual's eligibility under the facility's
FAP by checking all applicable boxes. If
the hospital facility or an authorized third
party performed actions similar to those
listed in lines 17a through 17d before
making reasonable efforts to determine
the individual's eligibility under the facility's
FAP, answer “Yes,” check the box for
line 17e, “Other similar actions,” and
describe those actions in Part VI.
Line 18. Indicate which efforts the
hospital facility took before initiating any
of the actions listed (whether or not
checked) in lines 17a through 17d or
described in Part VI (describing 'other
similar actions' checked on line 16e or
line 17e) by checking all applicable boxes
in lines 18a through 18d. If the hospital
facility made efforts other than those listed
in lines 18a through 18d before initiating
any of the actions listed in lines 17a
through 17d or described in Part VI
(describing 'other similar actions' checked
-9-

on line 16e or line 17e) check the box for
line 18e, “Other,” and describe in Part VI.
If the hospital facility made no such
efforts before initiating any of the actions
listed (whether or not checked) in lines
17a through 17d or described in Part VI
(describing 'other similar actions' checked
on line 16e or line 17e), check the box for
line 18e, “Other,” and state in Part VI that
the hospital facility made no such efforts.
Line 18c. The term “communications”
includes, but is not limited to, in-person
interactions, telephone calls, and invoices.
Line 19. Answer “Yes,” if, during the
tax year, the hospital facility had in
place a written policy about emergency
medical care that required the hospital
facility to provide, without discrimination,
care for emergency medical conditions to
individuals without regard to their eligibility
under the hospital facility's financial
assistance policy. If “No,” indicate the
reasons why the hospital facility did not
have a written nondiscriminatory policy
relating to emergency medical care by
checking all applicable boxes. If the
reason the hospital facility did not have a
written nondiscriminatory policy relating to
emergency medical care is not listed in
lines 19a through 19c, check line 19d,
“Other,” and describe the reason(s) in Part
VI.
The hospital facility may check “Yes” if
it had a written policy that required
compliance with 42 U.S.C. 1395dd
(Emergency Medical Treatment and
Active Labor Act (EMTALA)).
For purposes of line 19, the term
“emergency medical conditions” means:
(A) a medical condition manifesting
itself by acute symptoms of sufficient
severity (including severe pain) such that
the absence of immediate medical
attention could reasonably be expected to
result in-1. placing the health of the individual
(or, for a pregnant woman, the health of
the woman or her unborn child) in serious
jeopardy,
2. serious impairment to bodily
functions, or
3. serious dysfunction of any bodily
organ or part; or
(B) for a pregnant woman who is
having contractions-1. that there is inadequate time to
effect a safe transfer to another hospital
before delivery, or
2. that transfer may pose a threat to
the health or safety of the woman or the
unborn child.
Lines 20-22: For purposes of lines
20-22, the term “FAP-eligible” means
eligible for assistance under the hospital
facility's financial assistance policy.

Line 20. Indicate how the hospital
facility determined, during the tax year, the
maximum amounts that can be charged to
FAP-eligible individuals for emergency or
other medically necessary care by
checking the appropriate box.
Note: Under Section 501(r)(5), the
maximum amounts that can be charged to
FAP-eligible individuals for emergency or
other medically necessary care are the
amounts generally billed to individuals
who have insurance covering such care.
Line 21. Answer “Yes,” if, during the
tax year, the hospital facility charged
any FAP-eligible individual to whom the
hospital facility provided emergency or
other medically necessary services more
than the amounts generally billed to
individuals who had insurance covering
such care. If “Yes,” explain in Part VI.
The hospital facility may check “No” if
it charged more than the amounts
generally billed to individuals who had
insurance covering such care to an
individual who had not submitted a
complete FAP application to the hospital
facility as of the time of the charge, and
the hospital facility corrected the bill within
a reasonable period of time after learning
the individual was eligible.
Line 22. Answer “Yes,” if, during the
tax year, the hospital facility charged
any of its FAP-eligible individuals an
amount equal to the gross charge for any
service provided to that individual, and
explain in Part VI the circumstances in
which it used gross charges. A bill that
itemizes a reduction applied to a gross
charge for a service does not need to be
reported if the amount charged to the
individual for such service is less than the
amount of the gross charge.
The hospital facility may check “No” if it
charged gross charges to an individual
who had not submitted a complete FAP
application to the hospital facility as of the
time of the charge, and the hospital facility
corrected the bill within a reasonable
period of time after learning the individual
was eligible.
Section C. Complete Part V, Section C,
by listing all of the non-hospital health care
facilities that the organization operated
during the tax year. A facility is operated
by an organization whether it is operated
directly by the organization or through a
disregarded entity or joint venture
treated as a partnership. List each of
these facilities in order of size from largest
to smallest, measured by a reasonable
method (for example, the number of
patients served or total revenue per
facility). For each non-hospital health care
facility, list its name and address and
describe the type of facility. These types
of facilities may include, but are not limited
to, rehabilitation and other outpatient

clinics, diagnostic centers, long-term
acute care facilities, and skilled nursing
facilities.
In the upper left hand corner of the Part
V, Section C table, list the total number of
non-hospital health care facilities that the
organization operated during the tax year.
If the organization needs additional
space to list all of its non-hospital health
care facilities, it should duplicate Section
C and use as many duplicate copies of
Section C as needed, number each page,
and renumber the line numbers in the left
hand margin (for example, an organization
with 15 such facilities should renumber
lines 1-5 on the 2nd page as lines 11-15).

Part VI. Supplemental
Information
Use Part VI to provide the narrative
explanations required by the following
questions, and to supplement responses
to other questions on Schedule H (Form
990). Identify the specific part, section,
and line number that the response
supports, in the order in which they appear
on Schedule H (Form 990). Part VI can be
duplicated if more space is needed.
Line 1. Provide the following
supplemental information:
Part I, line 3c. If applicable, describe
the income-based criteria for determining
eligibility for free or discounted care under
the organization's financial assistance
policy. Also describe whether the
organization uses an asset test or other
threshold, regardless of income, to
determine eligibility for free or discounted
care.
Part I, line 6a. If the organization's
community benefit report is in a report
prepared by a related organization, and
not in a separate report prepared by the
organization, identify the related
organization and list its employer
identification number.
Part I, line 7g. If applicable, describe
if the organization included as subsidized
health services any costs attributable to a
physician clinic, and report such costs the
organization included.
Part I, line 7, column (f). If
applicable, enter the bad debt expense
included on Form 990, Part IX, line 25,
column (A), (but subtracted for purposes
of calculating the percentage in this
column.)
Part I, line 7. Provide an explanation
of the costing methodology used to
calculate the amounts reported for each
line in the table. If a cost accounting
system was used, indicate whether the
cost accounting system addresses all
patient segments (for example, inpatient,
outpatient, emergency room, private
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insurance, Medicaid, Medicare,
uninsured, or self pay). Also, indicate if a
cost-to-charge ratio was used for any of
the figures in the table. Describe whether
this cost-to-charge ratio was derived from
Worksheet 2, Ratio of Patient Care
Cost-to-Charges, and, if not, what kind of
cost-to-charge ratio was used and how it
was derived. If some other costing
methodology was used besides a cost
accounting system, cost-to-charge ratio,
or a combination of the two, describe the
method used.
Part II. Describe how the
organization’s community building
activities, as reported in Part II, promote
the health of the community or
communities the organization serves.
Part III, line 2. Describe the
methodology used to determine the
amount in Part III, line 2, including how the
organization accounts for discounts and
payments on patient accounts in
determining bad debt expense.
Part III, line 3. Describe the
methodology used to determine the
amount reported on line 3. Also describe
the rationale, if any, for including any
portion of bad debt as community benefit.
Part III, line 4. Provide, if applicable,
the text of the footnote to the
organization's financial statements that
describes bad debt expense, or report the
page number(s) of the organization's most
recent audited financial statements on
which the footnote appears. If the
organization's financial statements include
a footnote on these issues that also
includes other information, report only the
relevant portions of the footnote. If the
organization's financial statements do not
contain such a footnote, enter that the
organization's financial statements do not
include such a footnote, and explain how
the financial statements account for bad
debt, if at all.
Part III, line 8. Describe the costing
methodology used to determine the
Medicare allowable costs reported in the
organization's Medicare Cost Report, as
reflected in the amount reported in Part III,
line 6. Describe, if applicable, the extent to
which any shortfall reported in Part III,
line 7, should be treated as a community
benefit, and the rationale for the
organization's position.
Part III, line 9b. If the organization has
a written debt collection policy and
answered “Yes,” to Part III, line 9b,
describe the collection practices in the
policy that apply to patients who it knows
qualify for financial assistance, whether
the practices apply specifically to such
patients or also cover other types of
patients.

Part V, Section B. Identify the specific
hospital facility name and line number
(from Schedule H (Form 990), Part V,
Section A), to which each set of responses
relates. For instance, if the organization
reported five hospital facilities in Part V,
Section A, it should list the first facility’s
name and number (1) as a heading,
followed by the responses to applicable
Part V, Section B, questions for that
facility, followed by four additional
headings and sets of responses for each
of the other four hospital facilities listed in
Part V, Section A.
Line 1j: If the organization checked
line 1j, describe the other content included
in the hospital facility's CHNA.
Line 3: If the organization checked
“Yes,” describe how the hospital facility
took into account input from persons who
represent the broad interests of the
community served by the hospital facility.
Include a description of how the
organization consulted with these persons
(whether through meetings, focus groups,
interviews, surveys, written
correspondence, etc.). Identify any
organizations and other groups that the
hospital facility consulted in conducting its
most recent CHNA. Individual members of
community forums, focus groups, survey
groups, and similar groups do not need to
be listed.
Line 4: If the organization checked
“Yes,” list the other hospital facilities with
which the hospital facility conducted its
CHNA.
Line 5a: If line 5a is checked, list the
direct website address, or url, where the
CHNA can be accessed.
Line 5c: If the organization checked
line 5c, describe the other means that the
hospital facility used to make its CHNA
widely available.
Line 6i: If the organization checked
line 6i, describe the other ways that the
hospital facility addressed the needs
identified in its most recently conducted
CHNA.
Line 7: If the organization checked
“No,” to line 7, explain which needs
identified in the hospital facility's most
recently conducted CHNA that it did not
take action to address, and why it did not
take action to address such needs.
Line 10: If the organization checked
“No,” explain what criteria the hospital
facility used to determine eligibility for free
care, or state that the hospital facility did
not provide any free care.
Line 11: If the organization checked
“No,” explain what criteria the hospital
facility used to determine eligibility for
discounted care, or state that the hospital
facility did not provide any discounted
care.
Line 12h: If the organization checked
line 12h, describe the other factor(s) that

the hospital facility used in calculating
amounts charged to patients.
Line 14g: If the organization checked
line 14g, describe other ways that the
hospital facility publicized its financial
assistance policy.
Line 16e: If the organization checked
line 16e, describe the other similar actions
that the hospital facility was permitted to
take under its policies during the tax year
before making reasonable efforts to
determine the individual's eligibility under
the facility's FAP.
Line 17e: If the organization checked
line 17e, describe the other similar actions
that the hospital facility was permitted to
take under its policies during the tax year
before making reasonable efforts to
determine the individual's eligibility under
the facility's FAP.
Line 18e: If the organization checked
line 18e, describe the other efforts that the
hospital facility made or state that the
facility made no such efforts before
initiating any of the actions checked in
line 17 or described in Part VI.
Line 19d: If the organization checked
line 19d, describe the other reasons why
the hospital facility did not have a written
nondiscriminatory policy for emergency
medical care.
Line 20d: If the organization checked
line 20d, explain what other means the
hospital facility used to determine the
maximum amounts that can be charged to
FAP-eligible individuals for emergency or
other medically necessary care.
Line 21: If the organization checked
“Yes” to line 21, explain the circumstances
in which the hospital facility charged any
FAP-eligible individual more than the
amounts generally billed to individuals
who had insurance covering such care.
Line 22: If the organization checked
“Yes,” to line 22, explain the
circumstances in which the hospital facility
charged any FAP-eligible individual an
amount equal to the gross charge for any
service provided to that individual.
Line 2. Describe whether and how the
organization assesses the health care
needs of the community or communities it
serves, in addition to any CHNA reported
in Part V, Section B.
Line 3. Describe how the organization
informs and educates patients and
persons who are billed for patient care
about their eligibility for assistance under
federal, state, or local government
programs or under the organization's
financial assistance policy. For example,
enter whether the organization posts its
financial assistance policy, or a summary
thereof, and financial assistance contact
information in admissions areas,
emergency rooms, and other areas of the
organization's facilities where eligible
patients are likely to be present; provides
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a copy of the policy, or a summary thereof,
and financial assistance contact
information to patients as part of the intake
process; provides a copy of the policy, or
a summary thereof, and financial
assistance contact information to patients
with discharge materials; includes the
policy, or a summary thereof, along with
financial assistance contact information, in
patient bills; or discusses with the patient
the availability of various government
benefits, such as Medicaid or state
programs, and assists the patient with
qualification for such programs, where
applicable.
Line 4. Describe the community or
communities the organization serves,
taking into account the geographic service
area(s) (urban, suburban, rural, etc.), the
demographics of the community or
communities (population, average income,
percentages of community residents with
incomes below the federal poverty
guideline, percentage of the hospital's and
community's patients who are uninsured
or Medicaid recipients, etc.), the number
of other hospitals serving the community
or communities, and whether one or more
federally-designated medically
underserved areas or populations are
present in the community.
Line 5. Provide any other information
important to describing how the
organization's hospitals or other health
care facilities further its exempt purpose
by promoting the health of the community
or communities, including but not limited
to whether:
A majority of the organization's
governing body is comprised of persons
who reside in the organization's primary
service area who are neither employees
nor independent contractors of the
organization, nor family members
thereof;
The organization extends medical staff
privileges to all qualified physicians in its
community for some or all of its
departments; and
How the organization applies surplus
funds to improvements in patient care,
medical education, and research.
Line 6. If the organization is part of an
affiliated health care system, describe the
roles of the organization and its affiliates in
promoting the health of the communities
served by the system. For purposes of this
question, an “affiliated health care system”
is a system that includes affiliates under
common governance or control, or that
cooperate in providing health care
services to their community or
communities.
Line 7. Identify all states with which the
organization files (or a related
organization files on its behalf) a
community benefit report. Report only

those states in which the organization's
own community benefit report is filed,
either by the organization itself or by a
related organization on the organization's
behalf.
Line 8. If applicable, list each facility
reporting group for which a single Part V,
Section B is completed, and list all
hospital facilities included in each facility
reporting group. Then, for each hospital
facility, provide the descriptions required
for the following lines in Part V, Section B,
as applicable:
Line 1j
Line 3
Line 4
Line 5c
Line 6i
Line 7
Line 10
Line 11
Line 12h
Line 14g
Line 16e
Line 17e
Line 18e
Line 19c
Line 19d
Line 20d
Line 21
Line 22

Worksheet 1. Financial
Assistance at Cost (Part I,
Line 7a)

Worksheet 1 can be used to calculate the
organization's financial assistance

(sometimes referred to as “charity care”)
at cost reported on Part I, line 7a. Refer to
instructions for Part I, line 1 for the
definition of financial assistance.
Line 1. Enter the gross patient charges
written off to financial assistance under the
organization's financial assistance
policies. “Gross patient charges” means
the total charges at the organization's full
established rates for the provision of
patient care services before deductions
from revenue are applied.
Line 3. Multiply line 1 by line 2, or enter
estimated cost based on the
organization's cost accounting
methodology. Organizations with a cost
accounting system or a cost accounting
method more accurate than the ratio of
patient care cost to charges from
Worksheet 2 can rely on that method to
estimate financial assistance cost.
Line 4. Enter the Medicaid/provider
taxes, fees, and assessments paid by the
organization, if payments received from an
uncompensated care pool or DSH
program in the organization's home state
are intended primarily to offset the cost of
financial assistance. If the payments are
primarily intended to offset the cost of
Medicaid services, then report this amount
on Worksheet 3, line 4, column (A). If the
primary purpose of the taxes or payments
has not been made clear by state
regulation or law, then the organization
can allocate the taxes or payments
proportionately between Worksheet 1,
line 4, and Worksheet 3, line 4, column (A)
based on a reasonable estimate of which

-12-

portions are intended for financial
assistance and Medicaid, respectively.
“Medicaid provider taxes” means amounts
paid or transferred by the organization to
one or more states as a mechanism to
generate federal Medicaid DSH funds (the
cost of the tax generally is promised back
to organizations either through an
increase in the Medicaid reimbursement
rate or through direct appropriation).
Line 6. “Revenue from uncompensated
care pools or programs” means payments
received from a state, including Upper
Payment Limit (UPL) funding and
Medicaid DSH funds, as direct offsetting
revenue for financial assistance or to
enhance Medicaid reimbursement rates. If
such payments are primarily to offset the
cost of Medicaid services, then report this
amount on Worksheet 3, line 7, column
(A). If the primary purpose of the
payments has not been made clear by
state regulation or law, then the
organization can allocate the payments
proportionately between Worksheet 1,
line 6, and Worksheet 3, line 7, column (A)
based on a reasonable estimate of which
portions are intended for financial
assistance and Medicaid, respectively.

Worksheet 1. Financial Assistance at Cost (Part I, line 7a)

Keep for Your Records

Gross patient charges
1. Amount of gross patient charges written off under financial assistance policies . . . . . . . . . . . .

1.

Total community benefit expense
2. Ratio of patient care cost to charges (from Worksheet 2, if used)

.......................

3. Estimated cost (multiply line 1 by line 2, or obtain from cost accounting)

2.

.................

3.

....................................

4.

5. Total community benefit expense (add lines 3 and 4; enter on Part I, line 7a, column
(c)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.

4. Medicaid provider taxes, fees, and assessments

Direct offsetting revenue
6. Revenue from uncompensated care pools or programs

..............................

6.

...................................................

7.

8. Total direct offsetting revenue (add lines 6 and 7; enter on Part I, line 7a, column
(d)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8.

9. Net community benefit expense (subtract line 8 from line 5; enter on Part I, line 7a,
column (e)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9.

7. Other direct offsetting revenue

10. Total expense (enter amount from Form 990, Part IX, Line 25, column (A), including the
organization's share of joint venture expenses, and excluding any bad debt expense included
in Part IX, line 25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10.

11. Percent of total expense
(divide line 9 by line 10; enter on Part I, line 7a, column (f)) . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11.

Worksheet 2. Ratio of
Patient Care Cost to
Charges

Worksheet 2 can be used to calculate the
organization's ratio of patient care cost to
charges.

Line 1. Enter the organization's total
operating expenses (excluding bad debt
expense) from its most recent audited
financial statements.
Line 2. Enter the cost of nonpatient care
activities. “Nonpatient care activities”
include health care operations that
generate “other operating revenue” such
as nonpatient food sales, supplies sold to
nonpatients, and medical records
abstracting. The cost of nonpatient care
activities does not include any total
community benefit expense reported on
Worksheets 1 through 8.
If the organization is unable to establish
the cost associated with nonpatient care
activities, use other operating revenue
from its most recent audited financial

%

statement as a proxy for these costs. This
proxy assumes no markup exists for other
operating revenue compared to the cost of
nonpatient care activities. Alternatively, if
other operating revenue provides a
markup compared to the cost of
nonpatient care activities, the organization
can assume such a markup exists when
completing line 2.

if the organization has not relied on the
ratio of patient care cost to charges from
this worksheet to determine these
expenses, but rather has relied on a cost
accounting system or other cost
accounting method to estimate costs of
financial assistance, Medicaid or other
means-tested government programs, or
subsidized health services.

Line 3. Enter the Medicaid provider
taxes, fees, and assessments paid by the
organization included on line 1, so this
expenditure is not double-counted when
the ratio of patient care cost to charges is
applied.

Line 5. Enter the gross expense of
community building activities reported in
Part II of Schedule H (Form 990).

Line 4. Enter the sum of the total
community benefit expenses included in
'Total operating expense' on line 1 and
reported on Part I, lines 7e, 7f, 7h, and 7i,
column (c), so these expenses are not
double-counted when the ratio of patient
care cost to charges is applied.
Also include in line 4 the total
community benefit expense reported on
Part I, lines 7a, 7b, 7c, and 7g, column (c),

-13-

Line 9. Enter the gross patient charges
for any community benefit activities or
programs for which the organization has
not relied on the ratio of patient care cost
to charges from this worksheet to
determine the expenses of such activities
or programs. For example, if the
organization uses a cost accounting
system or another cost accounting method
to estimate total community benefit
expense for Medicaid or any other
means-tested government programs,
enter gross charges for those programs in
line 9.

Worksheet 2. Ratio of Patient Care Cost to Charges
(can be used for other worksheets)

Keep for Your Records

Patient care cost
1. Total operating expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.

Less adjustments
2. Nonpatient care activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.

3. Medicaid provider taxes, fees, and assessments . . . . . . . . . . . . . . . . .

3.

4. Total community benefit expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.

5. Total community building expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.

6. Total adjustments (add lines 2 through 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.

7. Adjusted patient care cost (subtract line 6 from line 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7.

Patient care charges
8. Gross patient charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8.

Less: adjustments
9. Gross charges for community benefit programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9.

10. Adjusted patient care charges (subtract line 9 from line 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10.

Calculation of ratio of patient care costs to charges
11. Ratio of patient care cost to charges (divide line 7 by line 10; report on the applicable lines of
Worksheets 1, 3, or 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Worksheet 3. Medicaid
and Other Means-Tested
Government Health
Programs (Part I, lines 7b
and 7c)

Worksheet 3 can be used to report the
cost of Medicaid and other means-tested
government health programs. A
“means-tested government program” is a
government health program for which
eligibility depends on the recipient's
income or asset level.
“Medicaid” means the United States
health program for individuals and families
with low incomes and resources. “Other
means-tested government programs”
means government-sponsored health
programs where eligibility for benefits or
coverage is determined by income or
assets. Examples include:
The State Children's Health Insurance
Program (SCHIP), a United States
federal government program that gives
funds to states in order to provide health
insurance to families with children; and
Other federal, state, or local health care
programs.
Report Medicaid and other
means-tested government program
revenues and expenses from all states,
not just from the organization's home
state.

Line 1, column (A). Enter the gross
patient charges for Medicaid services.
Include gross patient charges for all
Medicaid recipients, including those
enrolled in managed care plans. In certain
states, SCHIP functions as an expansion
of the Medicaid program, and
reimbursements from SCHIP are not
distinguishable from regular Medicaid
reimbursements. Hospitals that cannot
distinguish their SCHIP reimbursements
from their Medicaid reimbursements can
report SCHIP charges, costs, and
offsetting revenue under column (A).
Line 1, column (B). Enter the amount of
gross patient charges for other
means-tested government health
programs.
Line 3, column (A). Enter the estimated
cost for Medicaid services. Multiply line 1,
column (A) by line 2, column (A), or enter
estimated cost based on the
organization's cost accounting system or
method. Organizations with a cost
accounting system or a cost accounting
method more accurate than the ratio of
patient care cost to charges from
Worksheet 2 can rely on that system or
method to estimate the cost of Medicaid
services. Organizations relying on a cost
accounting system or method other than
the ratio of patient care cost to charges
from Worksheet 2 should use care not to
-14-

11.

%

double-count community benefit expenses
fully accounted for elsewhere on
Schedule H (Form 990) Part I, line 7, such
as the cost of health professions
education, community health improvement
services, community benefit operations,
subsidized health services, and research.
Line 3, column (B). Enter the estimated
cost for services provided to patients who
receive health benefits from other
means-tested government health
programs.
Line 4, column (A). Enter the Medicaid
provider taxes, fees, and assessments
paid by the organization if payments
received from an uncompensated care
pool, UPL program, or Medicaid DSH
program in the organization's home state
are intended primarily to offset the cost of
Medicaid services. If such payments are
primarily intended to offset the cost of
financial assistance, then report this
amount on Worksheet 1, line 4. If the
primary purpose of such taxes or
payments has not been made clear by
state regulation or law, then the
organization can allocate portions of such
taxes or payments proportionately
between Worksheet 1, line 4, and
Worksheet 3, line 4, column (A), based on
a reasonable estimate of which portions
are intended for financial assistance and
Medicaid, respectively.

Line 6, column (A). Enter the net patient
service revenue for Medicaid services,
including revenue associated with
Medicaid recipients enrolled in managed
care plans. Do not include Medicaid
reimbursement for direct graduate medical
education (GME) costs, which should be
reported on Worksheet 5, line 9. Include
Medicaid reimbursement for indirect GME
costs, including the indirect IME portion of
children's health GME. The direct portion
of children's health GME should be
reported on Worksheet 5, line 10. Also
include Medicaid disproportionate share
hospital (DSH) revenue and UPL funding.
“Net patient service revenue” means
payments expected to be received from
patients or third-party payers for patient
services performed during the year. “Net
patient service revenue” also includes
revenue recorded in the organization's
audited financial statements for services
performed during prior years.
Organizations can describe in Part VI the

amount of prior year Medicaid revenue
included in Part I, line 7b.
Amounts received from a Medicaid
program as “reimbursement for direct
GME” or IME should be treated the way
the Medicaid program that provides
reimbursement classifies the funds.
Line 7, column (A). Enter revenue
received from uncompensated care pools
or programs if payments received from an
uncompensated care pool, UPL program,
or Medicaid DSH program in the
organization's home state are intended
primarily to offset the cost of Medicaid
services. If such payments are primarily
intended to offset the cost of charity care,
then report this amount on Worksheet 1,
line 6. If the primary purpose of such
payments has not been made clear by
state regulation or law, then the
organization can allocate the payments
proportionately between Worksheet 1,
line 6, and Worksheet 3, line 7, column
(A), based on a reasonable estimate of

which portions are intended for financial
assistance and Medicaid, respectively.

Worksheet 4. Community
Health Improvement
Services and Community
Benefit Operations (Part I,
Line 7e)

Worksheet 4 can be used to report the net
cost of community health improvement
services and community benefit
operations.
“Community health improvement
services” means activities or programs,
subsidized by the health care
organization, carried out or supported for
the express purpose of improving
community health. Such services do not
generate inpatient or outpatient bills,
although there may be a nominal patient
fee or sliding scale fee for these services.
“Community benefit operations”
means:

Worksheet 3. Medicaid and Other Means-Tested Government Health
Programs (Part I, lines 7b and 7c)

Keep for Your Records
(A)
Medicaid

(B)
Other
means-tested
government health
programs

Gross patient charges
1. Gross patient charges from the programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.

Total community benefit expense
2. Ratio of patient care cost to charges (from Worksheet 2, if used) . . . . . . . . . . . . . .

2.

3. Cost (multiply line 1 by line 2, or obtain from cost accounting) . . . . . . . . . . . . . . . .

3.

4. Medicaid provider taxes, fees, and assessments . . . . . . . . . . . . . . . . . . . . . . . . . .

4.

5. Total community benefit expense Total community benefit expense (add lines 3
and 4; enter amount from column (A) on Part I, line 7b, column (c); and enter amount
from column (B) on Part I, line 7c, column (c)) . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.

%

%

%

%

Direct offsetting revenue
6. Net patient service revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.

7. Payments from uncompensated care pools or programs . . . . . . . . . . . . . . . . . . . .

7.

8. Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8.

9. Total direct offsetting revenue (add lines 6 through 8; enter amount from column
(A) on Part I, line 7b, column (d) and enter amount from column (B) on Part I, line 7c,
column (d)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9.

10. Net community benefit expense (subtract line 9 from line 5; enter amount from
column (A) on Part I, line 7b, column (e); enter amount from column (B) on Part I,
line 7c, column (e)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10.

11. Total expense (enter amount from Form 990, Part IX, line 25, Column (A), including
the organization's share of joint venture expenses, and excluding any bad debt
expense included in Part IX, line 25, in both columns (A) and (B)) . . . . . . . . . . . . .

11.

12. Percent of total expense (line 10 divided by line 11; enter amount from column (A)
on Part I, line 7b, column (f); enter amount from column (B) on Part I, line 7c, column
(f)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12.

-15-

Worksheet 4. Community Health Improvement Services and Community
Benefit Operations (Part I, line 7e)

Keep for Your Records

(A)
Total
communit
y benefit
expense
1.

(B)
Direct
offsetting
revenue

(C)
Net
community
benefit
expense
(subtract col.
(B) from col. (A)
for lines 1–5)

Community health improvement services
a.

1a.

b.

1b.

c.

1c.

d.

1d.

e.

1e.

f.

1f.

g.

1g

h.

1h.

i.

1i.

j.

1j.

2.

Worksheet subtotal (add lines 1a through 1j) . . . . . . . . . . . . . . . . . . .

2.

3.

Community benefit operations
a.

3a.

b.

3b.

c.

3c.

d.

3d.

4.

Worksheet subtotal (add lines 3a through 3d) . . . . . . . . . . . . . . . . . . . 4.

5.

Worksheet total (add lines 2 and 4; enter amounts from columns
(A), (B), and (C) on Part I, line 7e, columns (c), (d), and (e),
respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.

6.

Total expense (enter amount from Form 990, Part IX, Line 25,
column (A), including the organization's share of joint venture
expenses, and excluding any bad debt expense included in Part IX,
line 25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.

7.

Percent of total expense (line 5, column (C) divided by line 6; enter
amount on Part I, line 7e, column (f) . . . . . . . . . . . . . . . . . . . . . . . . . . .

activities associated with community
health needs assessments,
community benefit program
administration, and
the organization's activities associated
with fundraising or grant-writing for
community benefit programs.
Activities or programs cannot be
reported if they are provided primarily for

7.

marketing purposes or if they are more
beneficial to the organization than to the
community. For example, the activity or
program may not be reported if it is
designed primarily to increase referrals of
patients with third-party coverage,
required for licensure or accreditation, or
restricted to individuals affiliated with the

-16-

organization (employees and physicians
of the organization).
To be reported, community need for
the activity or program must be
established. Community need can be
demonstrated through the following.
A CHNA conducted or accessed by the
organization.

Documentation that demonstrated
community need or a request from a
public health agency or community group
was the basis for initiating or continuing
the activity or program.
The involvement of unrelated,
collaborative tax-exempt or government
organizations as partners in the activity or
program carried out for the express
purpose of improving community health.
Community benefit activities or
programs also seek to achieve a
community benefit objective, including
improving access to health services,
enhancing public health, advancing
increased general knowledge, and relief of
a government burden to improve health.
This includes activities or programs that
do the following.
Are available broadly to the public and
serve low-income consumers.
Reduce geographic, financial, or
cultural barriers to accessing health
services, and if they ceased would result
in access problems (for example, longer
wait times or increased travel distances).
Address federal, state, or local public
health priorities such as eliminating
disparities in access to health care
services or disparities in health status
among different populations.
Leverage or enhance public health
department activities such as childhood
immunization efforts.
Otherwise would become the
responsibility of government or another
tax-exempt organization.
Advance increased general knowledge
through education or research that
benefits the public.
Lines 1a through 1j, column (A). Enter
the name of each reported community
health improvement activity or program
and total community benefit expense for
each. Include both direct costs and
indirect costs in total community benefit
expense. Use additional worksheets if the
organization reports more than 10
community health improvement activities
or programs.
Lines 3a through 3d, column (A). Enter
the name of each reported community
benefit operations activity or program and
total community benefit expense for each.
Include both direct costs and indirect
costs in total community benefit expense.
Use additional worksheets if the
organization reports more than four
community benefit operations activities or
programs.
Report total community benefit
expense, direct offsetting revenue, and
net community benefit expense for each
line item.

Worksheet 5. Health
Professions Education
(Part I, Line 7f)

Worksheet 5 can be used to report the net
cost of health professions education.
“Health professions education” means
educational programs that result in a
degree, certificate, or training necessary
to be licensed to practice as a health
professional, as required by state law, or
continuing education necessary to retain
state license or certification by a board in
the individual's health profession
specialty. It does not include education or
training programs available exclusively to
the organization's employees and
medical staff or scholarships provided to
those individuals. However, it does
include education programs if the primary
purpose of such programs is to educate
health professionals in the broader
community. Costs for medical residents
and interns can be included, even if they
are considered “employees” for purposes
of Form W-2, Wage and Tax Statement.
Examples of health professions
education activities or programs that
should and should not be reported are as
follows.
Activity or
Program

Report

Example
Rationale

Scholarships
for community
members

Yes

More benefit to
community
than
organization

Scholarships
for staff
members

No

More benefit to
organization
than community

Continuing
medical
education for
community
physicians

Yes

Accessible to
all qualified
physicians

Continuing
medical
education for
own medical
staff

No

Restricted to
own medical
staff members

Nurse
education if
graduates are
free to seek
employment at
any organization

Yes

More benefit to
community
than
organization

Nurse
education if
graduates are
required to
become the
organization's
employees

No

Program
designed
primarily to
benefit the
organization

Lines 1 through 6. Include both direct
and indirect costs. Direct costs of health
professions education do not include
-17-

costs related to Ph.D. students and
post-doctoral students, which are to be
reported on Worksheet 7, Research. See
the instructions for Part I, line 7, column (c)
for the definition of “indirect costs.”
“Indirect costs” do not include the
estimated cost of “indirect medical
education.”
Direct costs of health professions
education include the following.
Stipends, fringe benefits of interns,
residents, and fellows in accredited
graduate medical education programs.
Salaries and fringe benefits of faculty
directly related to intern and resident
education.
Salaries and fringe benefits of faculty
directly related to teaching:
1. medical students,
2. students enrolled in nursing
programs that are licensed by state law or,
if licensing is not required, accredited by
the recognized national professional
organization for the particular activity,
3. students enrolled in allied health
professions education programs, licensed
by state law or, if licensing is not required,
accredited by the recognized national
professional organization for the particular
activity, including, but not limited to,
programs in pharmacy, occupational
therapy, dietetics, and pastoral care,
4. and continuing health professions
education open to all qualified individuals
in the community, including payment for
development of online or other
computer-based training accepted as
continuing health professions education
by the relevant professional organization.
Scholarships provided by the
organization to community members.
Line 8. Enter Medicare reimbursement
for direct GME, reimbursement for
approved nursing and allied health
education activities, and direct GME
reimbursement received for services
provided to Medicare Advantage patients.
For a children's hospital that receives
children's GME payments from Health
Resources and Services Administration
(HRSA), count that portion of the payment
equivalent to Medicare direct GME. Do not
include indirect GME reimbursement
provided by Medicare or Medicaid.
Line 9. Enter Medicaid reimbursement for
direct GME, including only that portion of
Medicaid GME payment equivalent to
Medicare direct GME and that can be
explicitly segregated by the organization
from other Medicaid net patient revenue.
Do not include indirect GME
reimbursement provided by Medicaid,
which is to be reported on Worksheet 3,
Unreimbursed Medicaid and Other
Means-Tested Government Programs.
Include Medicaid reimbursement for

nursing and allied health education. If your
state pays Medicaid GME reimbursement
as a lump sum that includes both direct
and indirect payments, use reasonable
methods to estimate the portion of the
lump sum that is direct (for example, the
percent of total Medicare GME payments
that is direct).
Line 10. Enter revenue received for
continuing health professions education
reimbursement or tuition.
Line 11. Enter other revenue received for
health professions education activities
associated with expenses reported in
Worksheet 5, line 7.

Worksheet 6. Subsidized
Health Services (Part I,
Line 7g)

Worksheet 6 can be used to calculate the
net cost of subsidized health services.
Complete Worksheet 6 for each
subsidized health service and report in
Part I the total for all subsidized health
services combined.
“Subsidized health services” means
clinical services provided despite a
financial loss to the organization. The
financial loss is measured after removing
losses associated with bad debt, financial
assistance, Medicaid, and other
means-tested government programs.
Losses attributable to these items are not
included when determining which clinical
services are subsidized health services
because they are reported as community
benefit elsewhere in Part I or as bad debt
in Part III. Losses attributable to these
items are also excluded when measuring
the losses generated by the subsidized
health services. In addition, in order to
qualify as a subsidized health service, the
organization must provide the service
because it meets an identified community
need. A service meets an identified
community need if it is reasonable to
conclude that if the organization no longer
offered the service,
the service would be unavailable in the
community,
the community's capacity to provide the
service would be below the community's
need, or
the service would become the
responsibility of government or another
tax-exempt organization.
Subsidized health services generally
include qualifying inpatient programs (for
example, neonatal intensive care,
addiction recovery, and inpatient
psychiatric units) and ambulatory
programs (emergency and trauma
services, satellite clinics designed to serve
low-income communities, and home
health programs). Subsidized health
services generally exclude ancillary
services that support inpatient and

Worksheet 5. Health Professions Education
(Part I, line 7f)

Keep for Your Records
Totals

Total community benefit expense
1. Medical students . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.

2. Interns, residents, and fellows . . . . . . . . . . . . . . . . . . . . . .

2.

3. Nurses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.

4. Other allied health professions, students . . . . . . . . . . . . .

4.

5. Continuing health professions education . . . . . . . . . . . . .

5.

6. Other students . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.

7. Total community benefit expense (add lines 1 through
6; enter on Part I, line 7f, column (c)) . . . . . . . . . . . . . . . .

7.

Direct offsetting revenue
8. Medicare reimbursement for direct GME . . . . . . . . . . . . .

8.

9. Medicaid reimbursement for direct GME . . . . . . . . . . . . .

9.

10. Continuing health professions education reimbursement/
tuition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10.

11. Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11.

12. Total direct offsetting revenue (add lines 8 through
11; enter on Part I, line 7f, column (d)) . . . . . . . . . . . . . . .

12.

13. Net community benefit expense (line 7 minus line 12;
enter on Part I, line 7f, column (e)) . . . . . . . . . . . . . . . . . .

13.

14. Total expense (enter amount from Form 990, Part IX,
line 25, column (A), including the organization's share of
joint venture expenses, and excluding any bad debt
expense included in Part IX, line 25) . . . . . . . . . . . . . . . .

14.

15. Percent of total expense (line 13 divided by line 14;
enter amount on Part I, line 7f, column (f)) . . . . . . . . . . . .

15.

ambulatory programs such as
anesthesiology, radiology, and laboratory
departments. Subsidized health services
include services or care provided at
physician clinics and skilled nursing
facilities if such clinics or facilities satisfy
the general criteria for subsidized health
services. An organization that includes
any costs associated with stand-alone
physician clinics (not other facilities at
which physicians provide services) as
subsidized health services in Part I,
line 7g, must describe that it has done so
and report in Part VI such costs included
in Part I, line 7g.
Line 3, columns (A) through (D). Enter
the estimated cost for each subsidized
health service. For column (B), enter bad
debt amounts attributable to the
subsidized health service measured by
cost. For column (C), enter amounts
attributable to the subsidized health
service for patients who are recipients of
Medicaid and other means-tested
-18-

%

government health programs. For column
(D), enter financial assistance amounts
attributable to the subsidized health
service measured by cost. Multiply line 1
by line 2 or enter the estimated expense of
each subsidized health service based on
the organization's cost accounting.
Organizations with a cost accounting
system or method more accurate than the
ratio of patient care cost to charges from
Worksheet 2 can rely on that system or
method to estimate the cost of each
subsidized health service.

Worksheet 7. Research
(Part I, Line 7h)

Worksheet 7 can be used to report the
cost of research conducted by the
organization.
Research means any study or
investigation the goal of which is to
generate increased generalizable
knowledge made available to the public

Keep for Your Records

Worksheet 6. Subsidized Health Services (Part I, line 7g)
(A)
Total
subsidized
health
service
program

Program name: ______________________________
Gross patient charges
1.
Gross patient charges from program(s) . . . . . . . . . .

(D)
Financial
assistance

(E)
Totals
(subtract
columns (B),
(C), and (D)
from column
(A))

1.

Total community benefit expense
2.
Ratio of patient care cost to charges (from Worksheet
2, if used) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
3.

(B)
Bad debt

(C)
Medicaid and
other meanstested
government
health
programs

Total community benefit expense (multiply line 1
by line 2, or obtain from cost accounting; enter
column (E) on Part I, line 7g, column (c)) . . . . . . . . .

3.

Direct offsetting revenue
4.
Net patient service revenue . . . . . . . . . . . . . . . . . .

4.

5.

Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.

6.

Total direct offsetting revenue (add lines 4 and 5;
enter column (E) on Part I, line 7g, column
(d)). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.

7.

Net community benefit expense (subtract line 6
from line 3; enter column (E) on Part I, line 7g, column
(e)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.

8.

Total expense (enter amount from Form 990, Part IX,
line 25, column (A), including the organization's share
of joint venture expenses, and excluding any bad debt
expense included in Part IX, line 25) . . . . . . . . . . . . 8.

9.

Percent of total expense (line 7, column (E) divided
by line 8; enter on Part I, line 7g, column (f)) . . . . . . 9.

%

%

%

%

$
%

-19-

(for example: knowledge about underlying
biological mechanisms of health and
disease, natural processes, or principles
affecting health or illness; evaluation of
safety and efficacy of interventions for
disease such as clinical trials and studies
of therapeutic protocols; laboratory-based
studies; epidemiology, health outcomes,
and effectiveness; behavioral or
sociological studies related to health,
delivery of care, or prevention; studies
related to changes in the health care
delivery system; and communication of
findings and observations, including
publication in a medical journal.) The
organization can include the cost of
internally funded research it conducts, as
well as the cost of research it conducts
funded by a tax-exempt or government
entity.
The organization cannot include in Part
I, line 7h, direct or indirect costs of
research funded by an individual or an
organization that is not a tax-exempt or
government entity. However, the
organization can describe in Part VI any
research it conducts that is not funded by
tax-exempt or government entities,
including the cost of such research, the
identity of the funder, how the results of
such research are made available to the
public, if at all, and whether the results are
made available to the public at no cost or
nominal cost.
Examples of costs of research include,
but are not limited to, salaries and benefits
of researchers and staff, including
stipends for research trainees (Ph.D.
candidates or fellows); facilities for
collection and storage of research, data,
and samples; animal facilities; equipment;

supplies; tests conducted for research
rather than patient care; statistical and
computer support; compliance (for
example, accreditation for human subjects
protection, biosafety, HIPAA, etc.); and
dissemination of research results.
Line 1. Define direct costs under the
guidelines and definitions published by the
National Institutes of Health.
Line 2. Define indirect costs under the
guidelines and definitions published by the
National Institutes of Health.
Line 4. Enter license fees and royalties
the organization received during the tax
year that are directly associated with
research that the organization has (in any
tax year) reported on Schedule H as
community benefit.
Line 5. An example of 'other revenue' is
Medicare reimbursement associated with
any research expense reported as
community benefit.

Worksheet 8. Cash and
In-Kind Contributions for
Community Benefit (Part I,
Line 7i)

Worksheet 8 can be used to report cash
contributions or grants and the cost of
in-kind contributions that support financial
assistance, health professions education,
and other community benefit activities
reportable in Part I, lines 7a through 7h.
Report such contributions on line 7i, and
not on lines 7a through 7h. Do not include
any contributions funded in whole or in
part by a restricted grant, to the extent that
such grant was from a related

organization, as illustrated in the
examples on this page and the next.
“Cash and in-kind contributions” means
contributions made by the organization to
health care organizations and other
community groups restricted to one or
more of the community benefit activities
described in the table in Part I, line 7 (and
the related worksheets and instructions).
“In-kind contributions” include the cost of
staff hours donated by the organization to
the community while on the organization's
payroll, indirect cost of space donated to
tax-exempt community groups (such as
for meetings), and the financial value
(generally measured at cost) of donated
food, equipment, and supplies.
Do not report as cash or in-kind
contributions any payments that the
organization makes in exchange for a
service, facility, or product, or that the
organization makes primarily to obtain an
economic or physical benefit; for example,
payments made in lieu of taxes that the
organization makes to prevent or forestall
local or state property tax assessments,
and a teaching hospital's payments to its
affiliated medical school for intern or
resident supervision services by the
school's faculty members.
Report cash contributions and grants
made by the organization to entities and
community groups that share the
organization's goals and mission. Do not
report cash or in-kind contributions
contributed by employees, or emergency
funds provided by the organization to the
organization's employees; loans,
advances, or contributions to the capital of
another organization that are reportable in

Keep for Your Records

Worksheet 7. Research (Part I, line 7h)
Total community benefit expense
1.

Direct costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.

2.

Indirect costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.

3.

Total community benefit expense (add lines 1 and 2; enter on Part I, line 7h, column
(c)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.

Direct offsetting revenue

4.

License fees and royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.

5.

Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.

6.

Total direct offsetting revenue (add lines 4 and 5; enter on Part I, line 7h, column (d)) . . . . . .

6.

7.

Net community benefit expense (subtract line 6 from line 3; enter on Part I, line 7h,
column (e)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7.

8.

Total expense (enter amount from Form 990, Part IX, line 25, column (A), including the
organization's share of joint venture expenses, and excluding any bad debt expense included in
Part IX, line 25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8.

Percent of total expense
(divide line 7 by line 8; enter on Part I, line 7h, column (f)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9.

9.

-20-

%

Part X of the core Form 990; or
unrestricted grants or gifts to another
organization that can, at the discretion of
the grantee organization, be used other
than to provide the type of community
benefit described in the table in Part I,
line 7.
Special rule for grants to joint ventures. If the organization makes a grant to
a joint venture in which it has an
ownership interest to be used to
accomplish one of the community benefit
activities reportable in the table, in Part I,
line 7, report the grant on line 7i, but do
not include the organization's
proportionate share of the amount spent
by the joint venture on such activities in
any other part of the table, to avoid
double-counting.
Example 1. The filing organization (A)
and foundation (B) are related
organizations. B makes a grant to A that
must be used by A to conduct a

community health needs assessment
(CHNA) in a community served by A. A
can report the cost of conducting the
CHNA in Part I, line 7e, column (c) in the
year it incurs the expense for the CHNA,
but A need not report the restricted grant
from B in Part I, line 7e, column (d). The
same result is obtained if B is unrelated to
A, or if the grant is unrestricted rather than
required to be used by A to provide
community benefit.
Example 2. Use the same facts as in
Example 1, except A may also use the
grant from B to make a grant to another
organization (C), which must be used by C
to provide community benefit. A makes
such a grant to C. A cannot report the
grant to C in Part I, line 7i, because it is
funded by a related organization, but A
need not report the grant from B in Part I,
line 7, column (d) for any line 7 item. This
is the result regardless of whether B and C
are related organizations.

Example 3. A is a related organization
to B, C, and D. Each of the organizations
files a Form 990 and a Schedule H (Form
990). A makes a restricted grant to B that
is restricted to one or more of the
community benefit activities described in
the table in Part I, line 7 (and the related
worksheets and instructions). A's grant is
not funded by a related organization. B
makes a restricted grant to C that is
funded by A's restricted grant. C makes an
unrestricted grant to D that is not funded
by B's restricted grant. Under these
circumstances, A can report the grant to B
on A's Schedule H (Form 990), Part I,
line 7i, but neither B nor C can report their
respective grants to C and D on Part I,
line 7i of their own Schedule H (Form
990). If D uses the grant funds to make a
grant restricted to one or more of the
community benefit activities described in
the table in Part I, D can report the grant
on line 7i.

Worksheet 8. Cash and In-Kind Contributions for Community Benefit
(Part I, line 7i)
(A)
Cash contributions
1.

Total community benefit expense (enter amount from
column (C) on Part I, line 7i, column (c)) . . . . . . . . . . . . .

1.

2.

Direct offsetting revenue (enter amount from column
(C) on Part I, line 7i, column (d)) . . . . . . . . . . . . . . . . . . . .

2.

3.

Net community benefit expense (subtract line 2 from
line 1; enter on Part I, line 7i, column (e)) . . . . . . . . . . . . .

3.

4.

Total expense (enter amount from Form 990, Part IX,
line 25, column (A), including the organization's share of
joint venture expenses, and excluding any bad debt
expense included in Part IX, line 25) . . . . . . . . . . . . . . . .

4.

Percent of total expense (divide line 3 by line 4; enter
on Part I, line 7i, column (f)) . . . . . . . . . . . . . . . . . . . . . . . .

5.

5.

-21-

Keep for Your Records
(B)
In-kind
contributions

(C)
Total

%

Index

To help us develop a more useful index, please let us know if you have ideas for index entries.
See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.

B
Bad Debt, Medicare, &
Collection Practices .... 5
Worksheet (optional) ..... 6
C
Community Building
Activities .................. 4
Disregarded entity ........ 5
Group return ............... 5
F
Facility Information:
CHNA ......................
Community Health Needs
Assessment ...........
Facility Policies &
Practices ......... .......
Billing and
Collections .........

7
7
7
9

Charges for Medical
Care ............... 10
Financial Assistance
Policy ............... 8
Policy Relating to
Emergency Medical
Care ................. 9
Hospital facilities .......... 7
Other Health Care Facilities
(Non-Hospitals) .... .. 10
Financial Assistance and
Certain Other Community
Benefits at Cost ......... 2
Contributions for
community benefit .... 3
M
Management Companies
and Joint Ventures ..... 6

P
Patient Protection and
Affordable Care Act:
Hospital facilities .......... 1
Section 501(r) of the
Code ................... 1
S
Supplemental
Information ............. 10
W
Worksheets:
1-Financial Assistance at
Cost .................. 13
2-Ratio of Patient Care Cost
to Charges ........... 13
3-Unreimbursed Medicaid
and Other
Means-Tested

-22-

Government
Programs ............ 14
4-Community Health
Improvement Services
and Community Benefit
Operations ........... 17
5-Health Professions
Education ............ 18
6-Subsidized Health
Services .............. 18
7-Research .............. 18
8-Cash and In-Kind
Contributions for
Community
Benefit ................ 21