Nonprofit hospitals have long been required to report the community benefit they provide, among other financial and non-financial policies and activities, on the Federal Form 990, Schedule H. In the fiscal year 2026 budget, New York State has enacted a provision requiring NYS hospitals to report similar information to the State on an annual basis.
What Hospitals Must Submit
The text (A3007C.pdf) of the law states hospitals are required to file certain information with the State by July 1 of each year. The required filing includes:
- The most recently filed IRS Form 990 (if applicable)
- For any hospital that is not required to file a Form 990, a similar report must be submitted “in a manner prescribed by the department.”
- The supporting information used to complete Schedule H (detailing how the community benefit expenses were calculated)
Timing and Submission Details
Because the law states that it is effective October 1, 2025, the first submission will likely be due on July 1, 2026.
It appears that the information submitted on July 1 will be for the most recently filed Form 990, so therefore a hospital organization does not need to gather information regarding community benefit expenses prior to them being reported on Form 990. The mechanism for the submission of the community benefit information in addition to the Form 990 is not yet clear. We await additional guidance from the Department of Health on the reporting process.
Pending Guidance and Intended Use of Data
The data reported will be used by the Governor, the Legislature, and public health committees, though the long-term purpose remains unclear at this time.
Increased Scrutiny of Tax-Exempt Hospitals
The tax-exempt nature of hospitals has been under federal scrutiny over the past several years, with legislation proposed to tighten requirements for tax-exempt hospitals, and continued IRS audits of tax-exempt hospitals, specifically of the information reported in Schedule H of Form 990. The IRS is reviewing hospital websites to ensure that policies are listed as required and are complete.
Preparing for Compliance: Next Steps for Hospitals
Now, more than ever, it is important to ensure that the policies disclosed in Form 990 are updated and compliant. The ability to capture all community benefit costs for the Form 990 reporting, and now NYS reporting, to exhibit the impact that hospitals have on communities, is vital.
Action steps in light of the newly enacted reporting requirements include:
- Review and update financial assistance and charity care policies, consulting legal counsel as appropriate
- Ensure mechanisms are in place to capture all community benefit expenses
- Coordinate with your CPA firm to ensure that calculations are correct and complete
- Monitor forthcoming guidance from the NYS Department of Health for additional information on the reporting and submission procedures
With the new NYS reporting requirement on the horizon, hospitals should take steps now to ensure readiness. Aligning policies, improving data capture, and coordinating with advisors will help maintain compliance and clearly demonstrate community impact. Early preparation will be key as we await further guidance from the Department of Health.
If you need further guidance or have any questions on this topic, we are here to help. Please do not hesitate to reach out to discuss your specific situation.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
