Non-Profit Hospitals and Community Benefit

Florida's non-profit hospitals contribute more than $4 billion a year in services, programs and activities to promote the health and well-being of their communities. From free care for the uninsured to mentoring programs for at-risk youth, the range and variety of community benefit activities are as diverse and varied as our communities themselves. In recognition of this charitable contribution and work on behalf of the public good, non-profit hospitals are exempt from paying local, state and federal taxes.

As part of their commitment to transparency and being stewards of the public's trust, hospitals regularly report comprehensive financial, charity care and community benefit data to the federal and state governments. Data are widely and publicly available. Any hospital deemed by the IRS to provide insufficient community benefit risks loss of its non-profit, tax exempt status.

FHA priority: protect community benefit to advance the health, well-being and success of every Floridian.

View community benefit stories on missiontocare.org.

 

Resources

FAQs:

What is a non-profit hospital?

Non-profit hospitals are distinguished by certain charitable obligations that have evolved over time as they work to meet the changing health needs of their communities. Many hospitals in Florida operate as not-for-profit organizations, making them eligible for exemption from local, state and federal taxes. In exchange for tax-exempt status, these hospitals are expected to provide benefits to communities, known as "community benefit." This is a requirement of the IRS that was put in place in 1956 and continues today.

What is community benefit?

The community benefits that Florida's hospitals and health systems provide are unique and responsive to the needs of each community. They include free or discounted care, underpayments from government programs, education for health care professionals and medical research. Community benefits also include activities that improve a community's health, such as free health screenings and community health fairs and community building activities that invest in local socio-economic development and strengthen community partnerships.

The IRS defines what constitutes as community benefit and has identified eight distinct categories:

  1. Charity Care: cost of free or discounted services to people meeting criteria for receiving financial assistance.
  2. Unreimbursed Costs: difference between the hospital's costs incurred for treating Medicare and Medicaid patients and the payment received.
  3. Unreimbursed Costs from Other Means-tested Programs: difference between the hospital's costs incurred for treating patients without insurance or patients with high-deductible plans and the payment received.
  4. Community Health Improvement Services and Operations: activities or programs subsidized by the hospital with the goal of improving community health.
  5. Unreimbursed Health Professions Education: cost incurred on licensure training programs for health professionals.
  6. Subsidized Health Services that are Not Means-tested: clinical services provided to patients despite causing a financial loss to the hospital after incorporating the payments received.
  7. Unfunded Research: a study or investigation with a goal of communicating knowledge to the public.
  8. Cash and In-Kind Contributions: donations to other organizations to provide any of the seven community benefits described above.

The Affordable Care Act placed additional community benefit-related requirements on tax-exempt hospitals. The law requires that tax-exempt hospitals conduct Community Health Needs Assessments every three years and must "take into account input from persons who represent broad interests of the community served, including those with expertise in public health." Hospitals work with stakeholders and community partners including county health departments; other hospitals and health care providers; and members of medically underserved, low-income and minority populations to identify and prioritize significant health care needs in their communities.

For more information, contact Monica Corbett, senior vice president.