Sue Ducat
Director of Communications
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Melissa Blair
Robert Wood Johnson Foundation
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Nonprofit Hospitals' Community Benefit

A new policy brief from Health Affairs and the Robert Wood Johnson Foundation looks at new community benefit provisions in the Affordable Care Act (ACA), which apply to some 78 percent of this country's community hospitals. For some time, Section 501(c)(3) of the Internal Revenue Code has contained a "community benefit" standard, requiring nonprofit hospitals to generate activities promoting community health. However, researchers have determined that many hospitals devote less than 8 percent of their revenue to these initiatives, which led lawmakers to include new community benefit requirements in the ACA. This policy brief examines the new guidelines, part of a strategy to complement the ACA's preventive care and population health priorities.

Topics covered by this policy brief include:

  • What's the background and the law? The brief explains how the community benefit reporting requirements for hospitals have changed since the first income tax code was enacted in 1913. The most significant change came about in 2008, when the Internal Revenue Service (IRS) added the requirement that hospitals add a worksheet to their annual Form 990, detailing their community benefit activities. It also describes the new Section 501(r), added to the Internal Revenue Code as a result of the ACA, which spells out the requirements related to community benefits that nonprofit hospitals must meet to maintain their tax-exempt status.

  • What's the debate? According to the brief, as nonprofit hospitals fight to retain their tax-exempt status, there are disagreements over what should count as a community benefit and concerns about the capacity of the IRS to adequately enforce community benefit requirements. In the past, providing indigent care was an important part of a hospital's community service. Now, as the brief explains, a significant part of the debate is the extent to which hospitals should focus on broader community needs, since there are some disincentives in the current law for doing so.

  • What's next? The impact of the provisions of the ACA is in its infancy. As the brief notes, data from the new community benefit reporting requirements will allow analysis on types and amounts of community benefit expenditures as well as other changes in population health that will come about as a result of other ACA guidelines.

About Health Policy Briefs

Health Policy Briefs are aimed at policy makers, congressional staffers, and others needing short, jargon-free explanations of health policy basics. The briefs, which are reviewed by experts in the field, include competing arguments on policy proposals and the relevant research supporting each perspective.

Previous Health Policy Briefs have addressed:

  • High-Deductible Health Plans. As high-deductible health plans become more prevalent in both group and individual markets, it remains to be seen how they will affect health care access and outcomes.

  • Transparency in Clinical Research. Recent policy initiatives focus on improving the use of clinical research for patients, providers, and health systems.

  • Dietary Guidelines for Americans. Every five years the federal government publishes recommendations intended to shape people's diets based on the latest research.

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About Health Affairs

Health Affairs is the leading journal at the intersection of health, health care, and policy. Published by Project HOPE, the peer-reviewed journal appears each month in print and online, with additional Web First papers and health policy briefs published regularly at Read daily perspectives on Health Affairs Blog and customize the content you want to see in Health Affairs Alerts.

About the Robert Wood Johnson Foundation

For more than 40 years the Robert Wood Johnson Foundation has worked to improve health and health care. We are striving to build a national Culture of Health that will enable all to live longer, healthier lives now and for generations to come. For more information, visit Follow the Foundation on Twitter at or on Facebook at