How to Fill Out IRS Form 990 Schedule H: Parts I–VI and Filing

To fill out IRS Form 990 Schedule H, a tax-exempt hospital works through six parts covering financial assistance and community benefit at cost (Part I), community building activities (Part II), bad debt and collections (Part III), management companies and joint ventures (Part IV), facility-by-facility information and Section 501(r) compliance (Part V), and supplemental narrative (Part VI). The schedule attaches to Form 990, must be e-filed, and is due by the 15th day of the 5th month after your fiscal year ends.¹

Confirm You Have to File

Schedule H applies to any organization that files Form 990 and operated at least one hospital facility at any point during the tax year. A hospital facility is one that a state requires to be licensed, registered, or similarly recognized as a hospital; multiple buildings under a single state license count as one facility. Direct operation, operation through a disregarded entity, and operation through a joint venture treated as a partnership all pull the facility onto your schedule.² Even a partial year of operation triggers the filing.

One boundary worth flagging: government-owned hospitals holding a separate 501(c)(3) determination letter remain subject to Section 501(r) but are exempt from filing Form 990, so they do not file Schedule H.

What to Pull Together Before You Start

Schedule H draws on data spread across finance, compliance, and community outreach. Assembling everything up front is the difference between a clean filing and weeks of back-and-forth.

Policies and Assessments

You need the current written Financial Assistance Policy (FAP) for each hospital facility. The FAP must spell out eligibility for free or discounted care, explain how charges are calculated, and describe the application process.³ You also need the written emergency medical care policy confirming care for emergency conditions regardless of ability to pay.

Pull the most recent Community Health Needs Assessment (CHNA) report and its adopted implementation strategy. The CHNA must have been conducted within the current tax year or either of the two preceding tax years, and the implementation strategy must have been adopted by an authorized body of the hospital facility on or before the 15th day of the fifth month after the end of the taxable year in which the CHNA was conducted.⁴

Financial Records

Your most recent audited financial statements anchor Part I’s cost-to-charge ratio. Also gather total patient charges, bad debt expense, Medicare shortfalls, Medicaid provider taxes and assessments, and the cost of any subsidized health services. Your records need to distinguish gross charges from actual costs; the IRS wants to see what care cost, not what was billed.²

Community Building and Related-Party Data

Compile spending on community building activities like housing improvements, workforce development, coalition building, and environmental health programs; these are reported separately from direct medical care. For joint ventures or management contracts, gather ownership details, profit-sharing terms, and any interests held by officers, directors, or trustees.

Part I: Financial Assistance and Community Benefits at Cost

Part I is the heart of the schedule. It converts charity care and community benefit spending from gross charges into actual costs, then presents the totals against your overall expenses.

The key tool is Worksheet 2, which produces your ratio of patient care cost to charges. Start with total operating expenses (excluding bad debt) from the audited financial statements. Subtract the cost of nonpatient care activities, such as food sold to visitors or medical records abstracting. Subtract Medicaid provider taxes and any community benefit expenses already counted elsewhere on the form to avoid double-counting.⁵ Divide the result by total gross patient care charges. Apply that ratio to convert charity care charges into estimated costs.

Then report the total number of people served under each financial assistance program and the expenses for Medicaid, other means-tested government programs, and community health improvement services. If your organization uses a cost accounting system rather than the worksheet ratio, that is acceptable. Just be consistent, and don’t mix methods within a single line item.

Part II: Community Building Activities

Part II captures spending on activities that improve conditions affecting health without being direct medical care. The IRS uses eight categories:

Physical improvements and housing, such as developing affordable housing or eliminating lead paint in low-income neighborhoods.
Economic development in underserved areas.
Community support, such as bringing fresh food into underserved areas.
Environmental improvements, including reducing asthma triggers or cleaning up local hazards.
Leadership development and training to build community capacity for health improvement.
Coalition building with other organizations on community safety or health.
Advocacy, such as promoting smoke-free public spaces.
Workforce development creating job opportunities for at-risk populations.

For each category, report the total cost, the number of activities or programs, and the number of persons served. Use Part VI to describe how these activities promoted health in the communities you serve; bare numbers without context leave reviewers guessing.

Part III: Bad Debt, Medicare, and Collection Practices

Part III addresses bad debt expense, Medicare shortfalls, and collections. Explain the methodology used to calculate bad debt at cost, not at charges. If Medicare reimbursement fell below the cost of providing care to Medicare patients, report the shortfall.

This section also asks whether the organization has a written debt collection policy and how it handles patients who may qualify for financial assistance but haven’t applied. Under Section 501(r)(6), a hospital facility cannot initiate extraordinary collection actions (wage garnishment, liens, lawsuits, credit reporting, or selling debt) until at least 120 days after providing the first post-discharge billing statement.⁶ The hospital must also notify the patient about the FAP and give a deadline for submitting a financial assistance application no earlier than 240 days after that first billing statement.

If your organization sells patient debt, the sale is generally treated as an extraordinary collection action unless the purchaser agrees in writing not to pursue extraordinary collection actions, not to charge interest above the federal underpayment rate, and to return the debt if the individual turns out to be eligible for financial assistance.⁷

Part IV: Management Companies and Joint Ventures

Part IV requires disclosure of any management company or joint venture arrangement involving hospital facilities. For a managing entity, report the name, compensation, and services provided. For a joint venture, disclose ownership interests, profit-sharing terms, and whether any officer, director, or trustee of the organization holds an interest. The IRS uses this section to confirm that a tax-exempt hospital’s assets aren’t being diverted to private parties through management fees or venture profits.

Part V: Facility Information and 501(r) Compliance

Part V requires a separate entry for each hospital facility. List facilities from largest to smallest using a reasonable measure like patient volume or total revenue. For each one, provide name, address, website, and state license number.⁵

Section B of Part V then walks through facility-by-facility compliance. For each hospital facility, check whether:

A CHNA was conducted within the required three-year window.
The CHNA took input from public health officials, representatives of underserved populations, and written comments on the prior CHNA.
A written implementation strategy was adopted.
A written FAP was in place with the required eligibility criteria, charge calculations, and application procedures.⁸
The FAP was widely publicized within the community.
The facility complied with billing and collection requirements.

Line 12a asks whether the organization was liable for the $50,000 excise tax under Section 4959 for failing to conduct a CHNA and adopt an implementation strategy. If the answer is yes, you report and pay that excise tax on Form 4720, not on Schedule H itself.⁹

Part V also confirms compliance with the limitation on charges: patients eligible for financial assistance cannot be charged more than the amounts generally billed to insured patients for the same care.

Part VI: Supplemental Narrative

Part VI is where you explain the numbers. The IRS expects descriptions of how your community building activities promoted health, how you determined community benefit categories, and any other context that makes your financial data meaningful. If your CHNA identified needs that the organization chose not to address, explain why. This is also where you describe your broader community benefit strategy and any reports prepared for state or local governments.

Don’t treat Part VI as an afterthought. Reviewers and members of the public read the narrative to understand what bare dollar figures can’t convey. A hospital that spent $2 million on community health improvement looks very different depending on whether the money funded a diabetes prevention program in an underserved neighborhood or a marketing campaign with a health theme.

Filing and Public Disclosure

Schedule H attaches to Form 990 and must be filed electronically. The Taxpayer First Act requires all tax-exempt organizations to e-file their information returns for tax years beginning after July 1, 2019.¹⁰

The return is due by the 15th day of the 5th month after your fiscal year ends. For a calendar-year filer, that means May 15. If you need more time, file Form 8868 before that deadline for an automatic six-month extension.¹¹

Once filed, your Form 990 and all schedules become publicly available. The organization must make them available for public inspection for three years from the later of the due date (with extensions) or the actual filing date.¹² Journalists, community groups, and competing hospitals routinely pull these filings.

What Errors Cost You

Failing the CHNA and implementation strategy requirement triggers a $50,000 excise tax per facility, per year, under Section 4959.¹³ The tax applies even if the organization ultimately loses exempt status over the failure.

For a multi-facility organization, the IRS can tax the income of a noncompliant facility rather than revoking the entire organization’s exemption. That tax uses the regular corporate rate and is reported on Form 990-T. It applies to the net income of the noncompliant facility, calculated separately from other facilities.¹⁴

Not every slip counts. Minor errors that are inadvertent or due to reasonable cause won’t be treated as a failure to meet Section 501(r) if the facility corrects the problem promptly and reviews its compliance procedures. More significant failures that are neither willful nor egregious can also be excused under Rev. Proc. 2015-21, provided the facility corrects the issue, restores affected individuals (for example, refunding excess charges above $5 to FAP-eligible patients), and discloses the failure with an estimate of the number of affected people and dollar amounts involved.¹⁵

1
Internal Revenue Service. Annual Exempt Organization Return: Due Date
2
Internal Revenue Service. Instructions for Schedule H (Form 990)
3
eCFR. 26 CFR 1.501(r)-4 – Financial Assistance Policy and Emergency Medical Care Policy
4
eCFR. 26 CFR 1.501(r)-3 – Community Health Needs Assessments
5
Internal Revenue Service. 2025 Instructions for Schedule H (Form 990)
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Government Publishing Office. 26 CFR 1.501(r)-6
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Internal Revenue Service. Billing and Collections – Section 501(r)(6)
8
Internal Revenue Service. Financial Assistance Policy and Emergency Medical Care Policy – Section 501(r)(4)
9
Internal Revenue Service. Consequence of Non-Compliance With Section 501(r)
10
Internal Revenue Service. E-File for Charities and Nonprofits
11
Internal Revenue Service. Instructions for Form 8868
12
Internal Revenue Service. Public Disclosure and Availability of Exempt Organizations Returns and Applications
13
Office of the Law Revision Counsel. 26 U.S.C. 4959 – Taxes on Failures by Hospital Organizations
14
Internal Revenue Service. Taxes for Failure to Meet the Requirements of Section 501
15
Internal Revenue Service. Rev. Proc. 2015-21