Context: The Affordable Care Act is drawing increased attention to the Internal Revenue Service (IRS) Community Benefit policy. To qualify for tax exemption, the IRS requires nonprofit hospitals to allocate a portion of their operating expenses to certain "charitable" activities, such as providing free or reduced care to the indigent.
Objective: To determine the total amount of community benefit reported by Wisconsin hospitals using official IRS tax return forms (Form 990), and examine the level of allocation across allowable activities.
Design: Primary data collection from IRS 990 forms submitted by Wisconsin hospitals for 2009.
Main outcome measure: Community benefit reported in absolute dollars and as percent of overall hospital expenditures, both overall and by activity category.
Results: For 2009, Wisconsin hospitals reported $1.064 billion in community benefits, or 7.52% of total hospital expenditures. Of this amount, 9.1% was for charity care, 50% for Medicaid subsidies, 11.4% for other subsidized services, and 4.4% for Community Health Improvement Services.
Conclusion: Charity care is not the primary reported activity by Wisconsin hospitals under the IRS Community Benefit requirement. Opportunities may exist for devoting increasing amounts to broader community health improvement activities.