Non-Profit Hospitals, IRS Community Benefit Standard, and CHNAs
- Prior to 1965, a hospital qualified as a tax exempt "charitable organization" if it provided medical care to people who could not afford to pay.
- With introduction of Medicare in 1965 covering previously uncompensated care, the IRS established the Community Benefit Standard as the basis for tax-exemption. Free and discounted care continued to count toward justifying tax exemption, investments to promote community health also qualified toward meeting nonprofit hospitals’ obligations. However, the lion's share of community benefit dollars still go towards uncompensated care.
- Following the passage of the Affordable Care Act in 2010, those IRS rules were modified. Nonprofit hospitals are now required to perform a CHNA and an Implementation Plan every three years.
- In addition, the IRS expanded the ways hospitals can satisfy community benefit requirement — including leadership development, community coalitions, cash and in-kind contributions to community groups. For more information, visit: https://www.chausa.org/communitybenefit/community-benefit
- A non-profit hospital's current CHNA, Implementation plan, and how it's community benefit dollars are spent are publicly-available documents. To find these documents, check the hospital's website, or contact the hospital directly.