2008 Instructions For Schedule H (Form 990) (Page 4 of 15) in pdf

pollution, safe removal or treatment of

1. Bad debt attributable to

$________

Part III. Bad Debt,

garbage or other waste products, and

patient accounts

2. Ratio of Patient Care cost to

$________

other activities to protect the community

Medicare, & Collection

charges (from Worksheet 2,

from environmental hazards. The

Practices (Optional for

line 11)

organization may not include on this line

3. Estimated cost of bad debt

$________

or in this part expenditures made to

2008)

attributable to patient

comply with environmental laws and

accounts (line 1 x line 2).

regulations that apply to activities of itself,

Section A. This section requires the

Enter in Part III, line 2.

its disregarded entity or entities, a joint

organization to report aggregate bad debt

venture in which it has an ownership

expense, at cost, provide an estimate of

Line 3. Provide an estimate of the

interest, or a member of a group

how much bad debt expense, if any,

amount of cost reported on line 2 that

exemption included in a group return of

reasonably could be attributable to

which the organization is also a member.

persons who likely would qualify for

patients who likely would qualify for

Similarly, the organization may not

financial assistance under its charity care

financial assistance under the hospital’s

include on this line or in this part

policy, and provide a rationale for what

charity care policy as reported in Part I,

expenditures made to reduce the

portion of bad debt, if any, the

lines 1 – 4, but for whom sufficient

environmental hazards caused by, or the

organization believes should constitute

information was not obtained to make a

environmental impact of, its own

community benefit. In addition, the

activities, or those of its disregarded

determination of their eligibility. Do not

organization must report whether it has

include this amount in Part I, line 7.

entities, joint ventures, or group

adopted Healthcare Financial

exemption members.

Organizations may use any reasonable

Management Association Statement No.

methodology to estimate this amount,

Line 5. “Leadership development and

15, Valuation and Financial Statement

such as record reviews, an assessment of

training for community members” may

Presentation of Charity Care and Bad

charity care applications that were denied

include, but is not limited to, training in

Debts by Institutional Healthcare

due to incomplete documentation,

conflict resolution; civic, cultural, or

Providers, (Statement 15) and provide the

analysis of demographics, or other

language skills; and medical interpreter

text of its footnote, if applicable, to its

analytical methods.

skills for community residents.

audited financial statements that

Line 6. “Coalition building” may include,

describes the bad debt expense.

Line 4. In Part VI, line 1, provide the

but is not limited to, participation in

rationale and the costing methodology

community coalitions and other

used to determine the amounts reported

Line 1. Indicate whether the

collaborative efforts with the community to

on lines 2 and 3. Describe how the

address health and safety issues.

organization reports bad debt expense in

organization accounts for discounts and

accordance with Statement 15. Statement

Line 7. “Community health improvement

payments on patient accounts in

15 has not been adopted by the AICPA.

advocacy” may include, but is not limited

determining bad debt expense. Also,

The IRS does not require organizations to

to, efforts to support policies and

describe the method the organization

adopt Statement 15 or use it to determine

programs to safeguard or improve public

used on line 3 to determine the amount

bad debt expense or charity care costs.

health, access to health care services,

that reasonably could be attributable to

Some organizations may rely on

housing, the environment, and

patients who likely would qualify for

Statement 15 in reporting bad debt

transportation.

financial assistance under the

expense and charity care in their audited

organization’s charity care policy if

Line 8. “Workforce development” may

financial statements. Statement 15

sufficient information had been available

include, but is not limited to, recruitment

provides instructions for recordkeeping,

to make a determination of their eligibility.

of physicians and other health

valuation, and disclosure for bad debts.

professionals to medical shortage areas

Also, provide the footnote from the

or other areas designated as

organization’s financial statements on bad

underserved, and collaboration with

Line 2. Use the most accurate

debt expense, if applicable, or the

educational institutions to train and recruit

system and methodology available to the

footnotes related to “accounts receivable,”

health professionals needed in the

organization to report bad debt expense

“allowance for doubtful accounts,” or

community (other than the health

at cost. If using a cost accounting system

similar designations. If the footnote or

professions education activities reported

or other costing methodology, enter the

footnotes address only the filing

in Part I, line 7f).

estimated cost of patient care services

organization’s bad debt expense or

attributable to charges written off to bad

Line 9. “Other” refers to community

“accounts receivable,” “allowance for

debt. If using a cost-to-charge ratio

building activities that protect or improve

doubtful accounts,” or similar

methodology, filers may use Worksheet A

the community’s health or safety that are

designations, provide the footnote or

not described in the categories listed in

(optional). If only a portion of a patient’s

footnotes verbatim. If the organization’s

lines 1 – 8 above.

bill for services is written off as a bad

financial statements include a footnote on

debt, include only the proportionate

Refer to the instructions to Part I, line

these issues that also includes other

amount of the cost of providing those

7, columns (a) through (f), for descriptions

information, report in Part VI only the

services that is attributable to the bad

of the types of information that should be

relevant portions of the footnote. If the

debt. Include the organization’s

reported in each column of Part II.

organization is a member of a group with

proportionate share of the bad debt

consolidated financial statements, the

If the organization is filing a group

expense of joint ventures in which it had

organization may summarize that portion,

return or has a disregarded entity or an

an ownership interest during the tax year.

if any, of the footnote or footnotes that

ownership interest in one or more joint

apply. If the organization’s financial

ventures, the organization may find it

statements do not include a footnote that

helpful to complete Part II separately for

Worksheet A (Optional)

itself and for each disregarded entity,

discusses bad debt expense, “accounts

receivable,” “allowance for doubtful

joint venture in which the organization

Estimated Bad Debt Expense

had an ownership interest during the tax

accounts,” or similar designations, include

(at Cost)

a statement in Part VI that the

year, and group affiliate. The organization

This worksheet may be used to estimate

organization’s audited financial

should aggregate the amounts from all

the bad debt expense reported in Part III,

such tables, according to the aggregation

statements do not include a footnote

line 2 using one of the cost accounting

discussing these issues and explain how

instructions in Purpose of Schedule, and

methods identified in the organization’s

include the aggregated information in Part

the organization’s financial statements

response to Part III, line 4.

account for bad debt, if at all.

II.

-4-

2008 Instructions For Schedule H (Form 990) Page 4

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