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David Lowenthal Amy Ciminello
September 9, 2020 Article 2 min read
Many hospitals have expanded community benefit services during COVID-19 to meet the needs of the populations they serve. Is your organization capturing all eligible community benefit expenses? Our experts share key considerations.
Healthcare worker sitting at a table with his laptop and tablet

Tax-exempt hospitals find themselves under tremendous pressure to demonstrate the tangible value of their tax-exempt activities to the public, also known as community benefit. One way hospitals share the financial value of community benefit is by reporting via IRS Form 990, Schedule H. Many Schedule H disclosures apply to the current COVID-19 pandemic, but these are unprecedented times, and many hospitals may not be tracking the costs of COVID-19-related community benefit activities as closely as possible.

Expanded COVID-19-related services

During the pandemic, many hospitals have offered COVID-19-related services to their communities, which include, but aren’t limited to, the following:

  • Developing and running awareness campaigns.
  • Setting up telephone hotlines.
  • Expanding mental health services.
  • Establishing programs for social needs, such as for food.
  • Donating medical supplies, including personal protective equipment to other healthcare organizations.
  • Conducting additional staff training related to COVID-19.
  • Conducting COVID-19-related research and screening with other healthcare organizations.

The IRS defines community benefit-reportable expenses as costs that “strengthen the community health resilience by improving the ability of a community to withstand and recover from public health emergencies.” Many of the costs above fit the bill and should be tracked to present within the hospital’s community benefit reporting.

In addition, hospitals should be diligent in tracking new revenue sources that help support these additional COVID-19 service costs. Federal CARES Act appropriations, FEMA assistance, grants, and other sources of revenue should be used to, and reported as an, offset to community benefit expenses.

Avoid over-reporting

Certain amounts are specifically excludable from community benefit reporting. These include lost revenue due to cancelled appointments and procedures, opportunity costs, time spent by volunteers, and many others (you can find further details on community benefit reporting and compliance in our recent webinar). The takeaway here: Don’t overstate community benefit in your reporting — only include expenses that belong.

In conclusion

Many hospitals have expanded their community benefit services in the midst of the COVID-19 pandemic to meet the needs of the populations they serve. The costs of these new or expanded services should be reported via IRS Schedule H, among your other reporting and communications efforts, to demonstrate your hospital’s value to the community. Be sure to track carefully so you capture all eligible community benefit expenses, and be mindful not to over-report.

If you have questions about how to define, track, or report community benefit expenses, don’t hesitate to give us a call.

While you’re helping others, let us help you. Our COVID-19 healthcare experts are ready.

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