Instructions for IRS Form 990 Schedule H - Return of Organization Exempt From Income Tax for Hospitals 2018

November 15, 2018 "Instructions For Irs Form 990 Schedule H - Return Of Organization Exempt From Income Tax For Hospitals" contain the updated filing procedures for the IRS-issued Form 990. Download your copy of the instructions by clicking the link below.

IRS Form 990 is a tax form issued by the United States Internal Revenue Service.

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2018
Department of the Treasury
Internal Revenue Service
Instructions for Schedule H
(Form 990)
Hospitals
Background. The Patient Protection and
under state law. The organization
Section references are to the Internal Revenue
Code unless otherwise noted.
Affordable Care Act (Affordable Care Act),
shouldn't complete Part V, Section B, for
enacted March 23, 2010, P.L. No.
any of these non-hospital facilities.
Contents
Page
111-148, added section 501(r) to the
Sec. 501(r) final regulations are
Future Developments . . . . . . . . . . . .
1
Code. Section 501(r) includes additional
effective for tax years beginning
Purpose of Schedule . . . . . . . . . . . .
1
TIP
requirements a hospital organization
after 12/29/15.
Specific Instructions . . . . . . . . . . . . .
2
must meet to qualify for tax exemption
Part I. Financial Assistance and
under section 501(c)(3) in tax years
Purpose of Schedule
Certain Other Community
beginning after March 23, 2010. These
Benefits at Cost . . . . . . . . . . . .
2
additional requirements address a hospital
Hospital organizations use Schedule H
Optional Worksheets for Part I,
organization's financial assistance policy;
(Form 990) to provide information on the
Line 7 (Financial Assistance
policy relating to emergency medical care;
activities and policies of, and community
and Certain Other Community
billing and collections; and charges for
Benefits at Cost) . . . . . . . . . . . .
4
benefit provided by, its hospital facilities
medical care. Also, for tax years beginning
and other non-hospital health care
Part II. Community Building
after March 23, 2012, the Affordable Care
Activities . . . . . . . . . . . . . . . . .
4
facilities that it operated during the tax
Act requires hospital organizations to
year. This includes facilities operated
Part III. Bad Debt, Medicare, &
conduct community health needs
Collection Practices . . . . . . . . . .
5
either directly or through disregarded
assessments.
Part IV. Management Companies
entities or joint ventures.
and Joint Ventures
. . . . . . . . . .
6
Because section 501(r) requires a
Who Must File
Part V. Facility Information . . . . . . . . .
7
hospital organization to meet these
An organization that answered “Yes” on
requirements for each of its hospital
Part VI. Supplemental
Information . . . . . . . . . . . . . .
12
Form 990, Part IV, line 20a, must
facilities, Part V, Facility Information, has
complete and attach Schedule H to Form
Worksheet 1. Financial Assistance
been expanded to include a Section A,
at Cost (Part I, Line 7a) . . . . . . .
13
990.
Hospital Facilities. In this section, a
Worksheet 2. Ratio of Patient Care
hospital organization must list its hospital
Schedule H (Form 990) must be
Cost to Charges . . . . . . . . . . .
14
facilities; that is, its facilities that at any
completed by a hospital organization
Worksheet 3. Medicaid and Other
time during the tax year, were required to
Means-Tested Government
that operated at any time during the tax
be licensed, registered, or similarly
Health Programs (Part I, Lines
year at least one hospital facility. A
recognized as a hospital under state law.
7b and 7c) . . . . . . . . . . . . . . .
15
hospital facility is one that is required to be
Part V also includes Section B, Facility
Worksheet 4. Community Health
licensed, registered, or similarly
Policies and Practices, for reporting of
Improvement Services and
recognized by a state as a hospital. A
information on policies and practices
Community Benefit
hospital organization may treat multiple
addressed in section 501(r). The hospital
Operations (Part I, Line 7e) . . . .
16
buildings operated by a hospital
organization must complete a separate
Worksheet 5. Health Professions
organization under a single state license
Section B for each of its hospital facilities
Education (Part I, Line 7f) . . . . .
17
as a single hospital facility.
or facility reporting groups listed in
Worksheet 6. Subsidized Health
Section A.
Services (Part I, Line 7g) . . . . . .
19
The organization must file a single
Worksheet 7. Research (Part I,
Section 6033(b)(15)(B) also requires
Schedule H (Form 990) that combines
Line 7h)
. . . . . . . . . . . . . . . .
20
hospital organizations to submit a copy of
information from:
Worksheet 8. Cash and In-Kind
their audited financial statements to the
1. Hospital facilities directly
Contributions for Community
IRS. Accordingly, a hospital organization
operated by the organization.
Benefit (Part I, Line 7i) . . . . . . .
20
that is required to file Form 990 must
Index . . . . . . . . . . . . . . . . . . . . .
24
2. Hospital facilities operated by
attach a copy of its most recent audited
disregarded entities of which the
financial statements to its Form 990. If the
Future Developments
organization is the sole member.
organization was included in consolidated
audited financial statements but not
3. Other health care facilities and
For the latest information about
separate audited financial statements for
programs of the hospital organization or
developments related to Form 990 and its
the tax year, then it must attach a copy of
any of the entities described in 1 or 2,
instructions, such as legislation enacted
the consolidated financial statements,
even if provided separately from the
after they were published, go to
IRS.gov/
including details of consolidation (see
hospital's license.
Form990.
instructions for Form 990, Part IV,
4. Hospital facilities and other health
line 20b).
General Instructions
care facilities and programs operated by
Part V, Section D, requires an
any joint venture treated as a
organization to list all of its non-hospital
Note. Terms in bold are defined in the
partnership, to the extent of the hospital
health care facilities that it operated during
Glossary of the Instructions for Form 990.
organization's proportionate share of the
the tax year, whether or not such facilities
joint venture.
were required to be licensed or registered
Nov 15, 2018
Cat. No. 51526B
2018
Department of the Treasury
Internal Revenue Service
Instructions for Schedule H
(Form 990)
Hospitals
Background. The Patient Protection and
under state law. The organization
Section references are to the Internal Revenue
Code unless otherwise noted.
Affordable Care Act (Affordable Care Act),
shouldn't complete Part V, Section B, for
enacted March 23, 2010, P.L. No.
any of these non-hospital facilities.
Contents
Page
111-148, added section 501(r) to the
Sec. 501(r) final regulations are
Future Developments . . . . . . . . . . . .
1
Code. Section 501(r) includes additional
effective for tax years beginning
Purpose of Schedule . . . . . . . . . . . .
1
TIP
requirements a hospital organization
after 12/29/15.
Specific Instructions . . . . . . . . . . . . .
2
must meet to qualify for tax exemption
Part I. Financial Assistance and
under section 501(c)(3) in tax years
Purpose of Schedule
Certain Other Community
beginning after March 23, 2010. These
Benefits at Cost . . . . . . . . . . . .
2
additional requirements address a hospital
Hospital organizations use Schedule H
Optional Worksheets for Part I,
organization's financial assistance policy;
(Form 990) to provide information on the
Line 7 (Financial Assistance
policy relating to emergency medical care;
activities and policies of, and community
and Certain Other Community
billing and collections; and charges for
Benefits at Cost) . . . . . . . . . . . .
4
benefit provided by, its hospital facilities
medical care. Also, for tax years beginning
and other non-hospital health care
Part II. Community Building
after March 23, 2012, the Affordable Care
Activities . . . . . . . . . . . . . . . . .
4
facilities that it operated during the tax
Act requires hospital organizations to
year. This includes facilities operated
Part III. Bad Debt, Medicare, &
conduct community health needs
Collection Practices . . . . . . . . . .
5
either directly or through disregarded
assessments.
Part IV. Management Companies
entities or joint ventures.
and Joint Ventures
. . . . . . . . . .
6
Because section 501(r) requires a
Who Must File
Part V. Facility Information . . . . . . . . .
7
hospital organization to meet these
An organization that answered “Yes” on
requirements for each of its hospital
Part VI. Supplemental
Information . . . . . . . . . . . . . .
12
Form 990, Part IV, line 20a, must
facilities, Part V, Facility Information, has
complete and attach Schedule H to Form
Worksheet 1. Financial Assistance
been expanded to include a Section A,
at Cost (Part I, Line 7a) . . . . . . .
13
990.
Hospital Facilities. In this section, a
Worksheet 2. Ratio of Patient Care
hospital organization must list its hospital
Schedule H (Form 990) must be
Cost to Charges . . . . . . . . . . .
14
facilities; that is, its facilities that at any
completed by a hospital organization
Worksheet 3. Medicaid and Other
time during the tax year, were required to
Means-Tested Government
that operated at any time during the tax
be licensed, registered, or similarly
Health Programs (Part I, Lines
year at least one hospital facility. A
recognized as a hospital under state law.
7b and 7c) . . . . . . . . . . . . . . .
15
hospital facility is one that is required to be
Part V also includes Section B, Facility
Worksheet 4. Community Health
licensed, registered, or similarly
Policies and Practices, for reporting of
Improvement Services and
recognized by a state as a hospital. A
information on policies and practices
Community Benefit
hospital organization may treat multiple
addressed in section 501(r). The hospital
Operations (Part I, Line 7e) . . . .
16
buildings operated by a hospital
organization must complete a separate
Worksheet 5. Health Professions
organization under a single state license
Section B for each of its hospital facilities
Education (Part I, Line 7f) . . . . .
17
as a single hospital facility.
or facility reporting groups listed in
Worksheet 6. Subsidized Health
Section A.
Services (Part I, Line 7g) . . . . . .
19
The organization must file a single
Worksheet 7. Research (Part I,
Section 6033(b)(15)(B) also requires
Schedule H (Form 990) that combines
Line 7h)
. . . . . . . . . . . . . . . .
20
hospital organizations to submit a copy of
information from:
Worksheet 8. Cash and In-Kind
their audited financial statements to the
1. Hospital facilities directly
Contributions for Community
IRS. Accordingly, a hospital organization
operated by the organization.
Benefit (Part I, Line 7i) . . . . . . .
20
that is required to file Form 990 must
Index . . . . . . . . . . . . . . . . . . . . .
24
2. Hospital facilities operated by
attach a copy of its most recent audited
disregarded entities of which the
financial statements to its Form 990. If the
Future Developments
organization is the sole member.
organization was included in consolidated
audited financial statements but not
3. Other health care facilities and
For the latest information about
separate audited financial statements for
programs of the hospital organization or
developments related to Form 990 and its
the tax year, then it must attach a copy of
any of the entities described in 1 or 2,
instructions, such as legislation enacted
the consolidated financial statements,
even if provided separately from the
after they were published, go to
IRS.gov/
including details of consolidation (see
hospital's license.
Form990.
instructions for Form 990, Part IV,
4. Hospital facilities and other health
line 20b).
General Instructions
care facilities and programs operated by
Part V, Section D, requires an
any joint venture treated as a
organization to list all of its non-hospital
Note. Terms in bold are defined in the
partnership, to the extent of the hospital
health care facilities that it operated during
Glossary of the Instructions for Form 990.
organization's proportionate share of the
the tax year, whether or not such facilities
joint venture.
were required to be licensed or registered
Nov 15, 2018
Cat. No. 51526B
Proportionate share is defined as the
entity or a joint venture treated as a
care policy, is a policy describing how the
ending capital account percentage listed
partnership.
organization will provide financial
on the Schedule K-1 (Form 1065),
assistance at its hospital(s) and other
Organizations aren't to report
Partner's Share of Income, Deductions,
facilities, if any. Financial assistance
information from hospitals located outside
Credits, etc., Part II, line J, for the
includes free or discounted health
the United States in Parts I, II, III, or V.
partnership tax year ending in the
services provided to persons who meet
Information from foreign joint ventures and
organization's tax year being reported on
the organization's criteria for financial
partnerships must be reported in Part IV,
the organization's Form 990. If
assistance and are unable to pay for all or
Management Companies and Joint
Schedule K-1 (Form 1065) isn't available,
a portion of the services. Financial
Ventures. Information concerning foreign
the organization can use other business
assistance doesn't include: bad debt or
hospitals and facilities may be described
records to make a reasonable estimate,
uncollectible charges that the organization
in Part VI.
including the most recently available
recorded as revenue but wrote off due to a
Schedule K-1 (Form 1065), adjusted as
patient's failure to pay, or the cost of
Except as provided in Part IV, don't
appropriate to reflect facts known to the
providing such care to such patients; the
report on Schedule H (Form 990)
organization, or information used for
difference between the cost of care
information from an entity organized as a
purposes of determining its proportionate
provided under Medicaid or other
separate legal entity from the organization
share of the venture for the organization's
means-tested government programs or
and treated as a corporation for federal
financial statements.
under Medicare and the revenue derived
income tax purposes (except for members
therefrom; self-pay or prompt pay
of a group exemption included in a group
5. In the case of a group return filed
discounts; or contractual adjustments with
return filed by the organization), even if
by the hospital organization, hospital
any third-party payors.
such entity is affiliated with or otherwise
facilities operated directly by members of
related to the organization (for example,
the group exemption included in the
Line 2. Check only one of the three
part of an affiliated health care system).
group return, hospital facilities operated by
boxes. “Applied uniformly to all hospitals”
a disregarded entity of which a member
means that all of the organization's
If an organization isn't required to file Form
included in the group return is the sole
hospital facilities use the same financial
990 but chooses to do so, it must file a
member, hospital facilities operated by a
assistance policy. “Applied uniformly to
complete return and provide all of the
joint venture treated as a partnership to
most hospitals” means that the majority of
information requested, including the
the extent of the group member's
the organization's hospital facilities use
required schedules.
proportionate share (determined in the
the same financial assistance policy.
manner described in 4, earlier), and other
An organization that didn't operate one or
“Generally tailored to individual hospitals”
health care facilities or programs of a
more facilities during the tax year that
means that the majority of the
member included in the group return even
satisfy the definition of hospital facility,
organization's hospital facilities use
if such programs are provided separately
above, shouldn't file Schedule H (Form
different financial assistance policies. If
from the hospital's license.
990).
the organization operates only one
hospital facility, check “Applied uniformly
Example. The organization is the sole
The definition of hospital for
to all hospitals.”
member of a disregarded entity. The
Schedule A (Form 990), Public
TIP
disregarded entity owns 50% of a joint
Charity Status and Public Support,
Line 3. Answer lines 3a, 3b, and 3c
venture treated as a partnership. The
Part I, line 3, and the definition of hospital
based on the financial assistance eligibility
partnership in turn owns 50% of another
for Schedule H (Form 990) aren't the
criteria that apply to (1) the largest number
joint venture treated as a partnership that
same. Accordingly, an organization that
of the organization's patients based on
operates a hospital and a freestanding
checks box 3 in Part I of Schedule A (Form
patient contacts or encounters or (2) if the
outpatient clinic that isn't part of the
990) to report that it is a hospital or
organization doesn't operate its own
hospital's license. (Assume the
cooperative hospital service organization,
hospital facility, the largest number of
proportionate shares of the partnerships
must complete and attach Schedule H to
patients of a hospital facility operated by a
based on capital account percentages
Form 990 only if it meets the definition of
joint venture in which the organization
listed on the partnerships' Schedule K-1
hospital facility for purposes of
has an ownership interest. For example, if
(Form 1065), Part II, line J, are also 50%.)
Schedule H (Form 990), as explained
the organization has two hospital facilities,
The organization would report 25% (50%
above.
use the financial assistance eligibility
of 50%) of the hospital's and outpatient
criteria used by the hospital facility which
clinic's combined information on
has the most patient contacts or
Specific Instructions
Schedule H (Form 990).
encounters during the tax year.
Note that while information from all the
Line 3a. “Federal Poverty Guidelines”
Part I. Financial
above sources is combined for purposes
(FPG) are the Federal Poverty Guidelines
Assistance and Certain
of Schedule H (Form 990), the
published annually by the U.S.
organization is required to list and provide
Department of Health and Human
Other Community Benefits
information regarding each of its hospital
Services. If the organization has
at Cost
facilities in Part V, Sections A, B, and C
established a family or household income
whether operated directly by the
threshold that a patient must meet or fall
Part I requires reporting of financial
organization or through a disregarded
below to qualify for free medical care,
assistance policies, the availability of
entity or joint venture treated as a
check the box in the “Yes” column and
community benefit reports, and the cost of
partnership. In addition, the organization
financial assistance and other community
indicate the specific threshold by checking
must list in Part V, Section D, each of its
benefit activities and programs.
the appropriate box. For instance, if a
other health care facilities (for example,
patient's family or household income must
Worksheets and accompanying
rehabilitation clinics, other outpatient
be less than or equal to 250% of FPG for
instructions are provided at the end of the
clinics, diagnostic centers, skilled nursing
the patient to qualify for free care, then
instructions to this schedule to assist in
facilities) that it operated during the tax
completing the table in Part I, line 7.
check the box marked “Other” and enter
year, whether operated directly by the
“250%.”
Line 1. A financial assistance policy
organization or through a disregarded
(FAP), sometimes referred to as a charity
Instructions for Schedule H
-2-
Line 3b. If the organization has
organization's programs and services that
the costing methodology used to calculate
established a family or household income
promote the health of the community or
the amounts reported on the table.
threshold that a patient must meet or fall
communities served by the organization. If
If the organization included any costs
below to qualify for discounted medical
the organization's community benefit
for a physician clinic as subsidized health
care, check the box in the “Yes” column
report is contained in a report prepared by
services on Part I, line 7g, report these
and indicate the specific threshold by
a related organization, answer “Yes” and
costs on Part VI, line 1.
checking the appropriate box.
identify the related organization in Part VI,
If the organization included any bad
line 1. If “No,” skip to line 7.
Line 3c. If applicable, describe the
debt expense on Form 990, Part IX,
other criteria used, such as asset test or
Line 6b. Answer “Yes” if the
line 25, but subtracted this bad debt for
other means test or threshold for free or
organization made the community benefit
purposes of calculating the amount
discounted care, in Part VI, line 1, of this
report it prepared during the tax year
reported on line 7, column (f), report this
schedule. An “asset test” includes (i) a
available to the public.
bad debt expense on Part VI, line 1.
limit on the amount of total or liquid assets
The following are descriptions of the
Examples of how an organization
that a patient or the patient's family or
type of information reported in each
can make its community benefit
TIP
household can own for the patient to
column of the table.
report available to the public are:
qualify for free or discounted care, and/or
to post the report on the organization's
Column (a). “Number of activities or
(ii) a criterion for determining the level of
website, and to make a paper copy of the
programs” means the number of the
discounted medical care patients can
CHNA report available for public
organization's activities or programs
receive, depending on the amount of
inspection upon request and without
conducted during the year that involve the
assets that they and/or their families or
charge at the hospital facility.
community benefit reported on the line.
households own.
Report each activity and program on only
Lines 7a through 7k. Report on the table
Line 4. “Medically indigent” means
one line so that it isn't counted more than
(lines 7a through 7k), at cost, the
persons whom the organization has
once. Reporting in this column is optional.
organization's financial assistance (as
determined are unable to pay some or all
defined in the instructions for line 1) and
Column (b). “Persons served” means
of their medical bills because their medical
certain other community benefits. Report
the number of patient contacts or
bills exceed a certain percentage of their
on line 7i contributions that the
family or household income or assets (for
encounters in accordance with the filing
organization restricts, in writing, to one or
example, due to catastrophic costs or
organization's records. Persons served
more of the community benefit activities
conditions), even though they have
can be reported in multiple rows, as
listed in lines 7a through 7h. Don't report
services across different categories may
income or assets that otherwise exceed
such contributions on lines 7a through 7h.
be provided to the same patient.
the generally applicable eligibility
To calculate the amounts to be reported
requirements for free or discounted care
Reporting in this column is optional.
on the table, use the worksheets or other
under the organization's financial
Column (c). “Total community benefit
equivalent documentation that
assistance policy.
expense” means the total gross expense
substantiates the information reported
Line 5. Answer lines 5a, 5b, and 5c
of the activity incurred during the year,
consistent with the methodology used on
based on the organization's budgeted
calculated by using the pertinent
the worksheets. See the instructions to the
amounts under its financial assistance
worksheets for each line item. “Total
worksheets for definitions of the various
policy.
community benefit expense” includes both
types of community benefit (for example,
“direct costs” and “indirect costs.” "Direct
community health improvement services,
Line 5a. Answer “Yes,” if the
costs" means salaries and benefits,
health professions education, subsidized
organization established or had in place at
supplies, and other expenses directly
health services, research, etc.) to be
any time during the tax year an annual or
related to the actual conduct of each
reported on lines 7a through 7k. Don’t
periodic budgeted amount of free or
activity or program. “Indirect costs” means
include bad debt in these amounts. Bad
discounted care to be provided under its
costs that are shared by multiple activities
debt will be reported in Part III.
financial assistance policy. If “No,” skip to
or programs, such as facilities and
line 6a.
If the organization completed
administrative costs related to the
worksheets other than on a
organization's infrastructure (space,
Line 5b. Answer “Yes,” if the free or
TIP
combined basis (for example,
utilities, custodial services, security,
discounted care the organization provided
facility by facility, joint venture by joint
information systems, administration,
in the applicable period exceeded the
venture), the organization should combine
materials management, and others).
budgeted amount of costs or charges for
all information from these worksheets for
that period. If “No,” skip to line 6a.
Column (d). “Direct offsetting
purposes of reporting amounts on the
revenue” means revenue from the activity
Line 5c. Answer “Yes,” if the
table. Only the portion of each joint
during the year that offsets the total
organization denied financial assistance to
venture or partnership that represents the
community benefit expense of that activity,
any patient eligible for free or discounted
organization's proportionate share, based
as calculated on the worksheets for each
care under its financial assistance policy
on capital interest, can be reported on
line item. “Direct offsetting revenue”
or under any of its hospital facilities'
lines 7a through 7k (see Purpose of
includes any revenue generated by the
financial assistance policies because the
Schedule for instructions on aggregation).
activity or program, such as payment or
organization's or the facility's financial
Use the organization's most accurate
reimbursement for services provided to
assistance budget was exceeded.
costing methodology (cost accounting
program patients.
Line 6. Answer lines 6a and 6b based on
system, cost-to-charge ratio, or other) to
“Direct offsetting revenue” also includes
the community benefit report that the
calculate the amounts reported on the
restricted grants or contributions that the
organization prepared for the organization
table. If the organization uses a
organization uses to provide a community
as a whole during the tax year.
cost-to-charge ratio, it can use Worksheet
benefit, such as a restricted grant to
2, Ratio of Patient Care Cost to Charges,
Line 6a. Answer “Yes” if the
provide financial assistance or fund
for this purpose. See the instructions for
organization prepared a written report
research. “Direct offsetting revenue”
Part VI, line 1, regarding an explanation of
during the tax year that describes the
doesn't include unrestricted grants or
Instructions for Schedule H
-3-
contributions that the organization uses to
substantiate the information reported on
Line 1. “Physical improvements and
provide a community benefit.
Schedule H (Form 990). The worksheets
housing” include, but aren't limited to, the
Organizations may describe any
or alternative equivalent documentation
provision or rehabilitation of housing for
inconsistencies from reporting in prior
are to be completed using the
vulnerable populations, such as removing
years in Part VI.
organization's most accurate costing
building materials that harm the health of
methodology, which can include a cost
the residents, neighborhood improvement
Examples. The organization receives
accounting system, cost-to-charge ratios,
or revitalization projects, provision of
a restricted grant from an unrelated
a combination thereof, or some other
housing for vulnerable patients upon
organization that must be used by the
method.
discharge from an inpatient facility,
organization to provide financial
housing for low-income seniors, and the
assistance. The amount of the restricted
If the organization is filing a group
development or maintenance of parks and
grant is reportable as direct offsetting
return or has a disregarded entity or an
playgrounds to promote physical activity.
revenue on line 7a, column (d).
ownership interest in one or more joint
ventures, the organization may find it
Line 2. “Economic development” can
The organization receives an
helpful to complete the worksheets
include, but isn't limited to, assisting small
unrestricted grant from an unrelated
separately for the organization and for
business development in neighborhoods
organization. The organization decides to
each disregarded entity, joint venture in
with vulnerable populations and creating
use the grant to increase the amount of
which the organization had an ownership
new employment opportunities in areas
financial assistance it provides. The
interest during the tax year, and group
with high rates of joblessness.
amount of the unrestricted grant isn't
affiliate. In that case, the organization
reportable as direct offsetting revenue on
Line 3. “Community support” can include,
should combine all information from the
line 7a, column (d).
but isn't limited to, child care and
worksheets for purposes of completing
Columns (e) and (f). Don't report
mentoring programs for vulnerable
line 7. Complete the table by combining
negative numbers. If the net community
populations or neighborhoods,
amounts from the organization's
benefit expense is less than $0, enter “0.”
neighborhood support groups, violence
worksheets, amounts from disregarded
Similarly, don't report a negative percent in
prevention programs, and disaster
entities or group affiliates, and amounts
column (f), but enter “0.”
readiness and public health emergency
from joint ventures that are attributable to
activities, such as community disease
Group return filers. The “total
the organization's proportionate share of
surveillance or readiness training beyond
expense” denominator for purposes of
each joint venture, under the aggregation
what is required by accrediting bodies or
determining the percent of total expense
instruction in Purpose of Schedule.
government entities.
for column (f) is the amount reported on
Form 990, Part IX, line 25, column (A), of
See Worksheets 1 through 8 and
Line 4. “Environmental improvements”
the group return.
specific instructions for the worksheets
include, but aren't limited to, activities to
later in these instructions.
address environmental hazards that affect
Column (f) “percent of total
community health, such as alleviation of
expense” is based on column (e)
Part II. Community
TIP
water or air pollution, safe removal or
“net community benefit expense,”
Building Activities
treatment of garbage or other waste
rather than column (c) “total community
products, and other activities to protect the
benefit expense.” Organizations that
Report in this part the costs of the
community from environmental hazards.
report amounts of direct offsetting revenue
organization's activities that it engaged in
The organization cannot include on this
also might wish to report total community
during the tax year to protect or improve
line or in this part expenditures made to
benefit expense (Part I, line 7, column (c))
the community's health or safety, and that
comply with environmental laws and
as a percentage of total expenses.
aren't reportable in Part I of this schedule.
regulations that apply to activities of itself,
Although this percentage cannot be
Some community building activities may
its disregarded entity or entities, a joint
reported in Part I, line 7, column (f), it can
also meet the definition of community
venture in which it has an ownership
be reported on Schedule H (Form 990),
benefit. Don't report in Part II community
interest, or a member of a group
Part VI, line 1.
building costs that are reported on Part I,
exemption included in a group return of
line 7, as community benefit (costs of a
which the organization is also a member.
Optional Worksheets for
community health improvement service
Similarly, the organization cannot include
reportable on Part I, line 7e). An
Part I, Line 7 (Financial
on this line or in this part expenditures
organization that reports information in this
made to reduce the environmental
Assistance and Certain
Part II must describe in Part VI how its
hazards caused by, or the environmental
Other Community Benefits
community building activities promote the
impact of, its own activities, or those of its
health of the communities it serves.
at Cost)
disregarded entities, joint ventures, or
group exemption members, unless the
If the filing organization makes a grant
Worksheets 1 through 8 are intended to
expenditures are for an environmental
to an organization to be used to
assist the organization in completing
improvement activity that (i) is provided for
accomplish one of the community building
Schedule H (Form 990), Part I, lines 7a
the primary purpose of improving
activities listed in this part, then the
through 7k. Use of the worksheets isn't
community health; (ii) addresses an
organization should include the amount of
required and they shouldn't be filed with
environmental issue known to affect
the grant on the appropriate line in Part II.
Form 990. The organization can use
community health; and (iii) is subsidized
If the organization makes a grant to a joint
alternative equivalent documentation,
by the organization at a net loss. An
venture in which it has an ownership
provided that the methodology described
expenditure may not be reported on this
interest to be used to accomplish one of
in these instructions (including the
line if the organization engages in the
the community building activities listed in
instructions to the worksheets) is followed.
activity primarily for marketing purposes.
this part, report the grant on the
Regardless of whether the worksheets or
appropriate line in Part II, but don't include
alternative equivalent documentation is
Line 5. “Leadership development and
in Part II the organization's proportionate
used to compile and report the required
training for community members” includes,
share of the amount spent by the joint
information, such documentation must be
but isn't limited to, training in conflict
venture on such activities, to avoid double
retained by the organization to
resolution; civic, cultural, or language
counting.
Instructions for Schedule H
-4-
skills; and medical interpreter skills for
the text or page number of its footnote, if
which must be attached to this return. If
community residents.
applicable, to its audited financial
the footnote or footnotes address only the
statements that describes the bad debt
filing organization's bad debt expense or
Line 6. “Coalition building” includes, but
expense.
“accounts receivable,” "allowance for
isn't limited to, participation in community
doubtful accounts," or similar
coalitions and other collaborative efforts
Line 1. Indicate if the organization
designations, provide the exact wording of
with the community to address health and
reports bad debt expense in accordance
the footnote or footnotes, or report the
safety issues.
with Statement 15.
page number(s) in which the footnote or
Line 7. “Community health improvement
footnotes appear in the attached audited
Note. Statement 15 hasn't been adopted
advocacy” includes, but isn't limited to,
financial statements.
by the AICPA. The IRS doesn't require
efforts to support policies and programs to
If the organization's financial
organizations to adopt Statement 15 or
safeguard or improve public health,
statements include a footnote on these
use it to determine bad debt expense or
access to health care services, housing,
issues that also includes other
financial assistance costs. Some
the environment, and transportation.
information, report in Part VI only the
organizations may rely on Statement 15 in
relevant portions of the footnote. If the
Line 8. “Workforce development”
reporting bad debt expense and financial
organization is a member of a group with
includes, but isn't limited to, recruitment of
assistance in their audited financial
consolidated financial statements, the
physicians and other health professionals
statements. Statement 15 provides
organization can summarize that portion, if
to medical shortage areas or other areas
instructions for recordkeeping, valuation,
any, of the footnote or footnotes that
designated as underserved, and
and disclosure for bad debts.
apply. If the organization's financial
collaboration with educational institutions
Line 2. Use the most accurate system
statements don't include a footnote that
to train and recruit health professionals
and methodology available to the
discusses bad debt expense, “accounts
needed in the community (other than the
organization to report bad debt expense. If
receivable,” "allowance for doubtful
health professions education activities
only a portion of a patient’s bill for services
accounts," or similar designations, include
reported in Part I, line 7f).
is written off as a bad debt, include only
a statement in Part VI that the
Line 9. “Other” refers to community
the proportionate amount attributable to
organization's audited financial
building activities that protect or improve
the bad debt. Include the organization’s
statements don't include a footnote
the community's health or safety that
proportionate share of the bad debt
discussing these issues and explain how
aren't described in the categories listed in
expense of joint ventures in which it had
the organization's financial statements
lines 1 through 8 above.
an ownership interest during the tax year.
account for bad debt, if at all.
Refer to the instructions to Part I, line 7,
Describe in Part VI the methodology
Section B. In this section, (a) combine
columns (a) through (f), for descriptions of
used in determining the amount reported
allowable costs to provide services
the types of information that should be
on line 2 as bad debt, including how the
reimbursed by Medicare (don't include
reported in each column of Part II.
organization accounted for discounts and
community benefit costs included in Part I,
payments on patient accounts in
If the organization is filing a group
line 7), (b) combine Medicare
determining bad debt expense.
return or has a disregarded entity or an
reimbursements attributable to such costs,
ownership interest in one or more joint
and (c) combine Medicare surplus or
Line 3. Provide an estimate of the
ventures, the organization may find it
shortfall. Include in Section B only those
amount of bad debt reported on line 2 that
helpful to complete Part II separately for
allowable costs and Medicare
reasonably is attributable to patients who
itself and for each disregarded entity, joint
reimbursements that are reported in the
likely would qualify for financial assistance
venture in which the organization had an
organization's Medicare Cost Report(s) for
under the hospital's financial assistance
ownership interest during the tax year, and
the year, including its share of any such
policy as reported in Part I, lines 1 through
group affiliate. The organization should
allowable costs and reimbursement from
4, but for whom insufficient information
combine the amounts from all such tables,
disregarded entities and joint ventures
was obtained to determine their eligibility.
according to the combined instructions in
in which it has an ownership interest. Don't
Don't include this amount in Part I,
Purpose of Schedule, and include the
include any Medicare-related expenses or
line 7. Organizations can use any
combined information in Part II.
revenue properly reported in Part I, line 7f
reasonable methodology to estimate this
or 7g.
amount, such as record reviews, an
Part III. Bad Debt,
In Part VI, the organization should
assessment of financial assistance
Medicare, & Collection
describe what portion of its Medicare
applications that were denied due to
shortfall, if any, it believes should
incomplete documentation, analysis of
Practices
constitute community benefit, and explain
demographics, or other analytical
its rationale for its position. As described
methods.
Section A. In this section, (a) report
below, the organization also can enter in
combined bad debt expense; (b) provide
Describe in Part VI the methodology
Part VI the amount of any Medicare
an estimate of how much bad debt
used to determine the amount reported on
revenues and costs not included in its
expense, if any, reasonably could be
line 3 and the rationale, if any, for
Medicare Cost Report(s) for the year, and
attributable to persons who likely would
including any portion of bad debt as
can enter a reconciliation of the amounts
qualify for financial assistance under the
community benefit.
reported in Section B (including the
organization’s financial assistance policy;
Line 4. In Part VI, provide the footnote
surplus or shortfall reported on line 7) and
and (c) provide a rationale for what portion
from the organization's audited financial
the total revenues and costs attributable to
of bad debt, if any, the organization
statements on bad debt expense, if
all of the organization's Medicare
believes is community benefit. In addition,
applicable, or the footnotes related to
programs.
the organization must report whether it has
“accounts receivable,” "allowance for
adopted Healthcare Financial
Line 5. Enter all net patient service
doubtful accounts," or similar
Management Association Statement No.
revenue (for Medicare fee for service
designations. Alternatively, report the
15, Valuation and Financial Statement
(FFS) patients) associated with the
page number(s) on which the footnote or
Presentation of Charity Care and Bad
allowable costs the organization reports in
footnotes appear in the organization's
Debts by Institutional Healthcare
its Medicare Cost Report(s) for the year,
most recent audited financial statements,
Providers (“Statement 15”) and provide
Instructions for Schedule H
-5-

Download Instructions for IRS Form 990 Schedule H - Return of Organization Exempt From Income Tax for Hospitals 2018

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