Community Benefit

Community benefit is the set of programs, services, and unreimbursed costs that a nonprofit hospital provides to the community it serves. Under federal law, nonprofit hospitals must provide community benefit in exchange for their exemption from federal income tax — and they report it annually on Schedule H of IRS Form 990. Community benefit includes financial assistance (charity care) at cost, the unreimbursed cost of treating Medicaid patients, community health improvement programs, subsidized health services, health professions education, and research. It does not include bad debt (unpaid bills the hospital still tried to collect) or the shortfall from Medicare, which are reported separately. Because the IRS sets no minimum community-benefit requirement, the level varies widely from hospital to hospital — making it a frequent subject of journalistic and regulatory scrutiny. Comparing a hospital's community benefit to its revenue or to its tax-exemption value is a common analytical exercise.

A hospital with $1B in revenue that reports $30M of charity care plus $20M of unreimbursed Medicaid is claiming roughly $50M (5% of revenue) in direct community benefit.