US Healthcare · Bills & Rights
Hospital Financial Assistance
How nonprofit hospital charity care programs work — IRS 501(r) requirements, how to apply, income guidelines, and presumptive eligibility.
Patients who received hospital care and cannot afford to pay the bill, or who want to understand what financial assistance nonprofit hospitals are required to offer.
Hospital care in the US can generate bills large enough to cause serious financial hardship. Nonprofit hospitals — which constitute a significant portion of US hospitals — are required by federal tax law to maintain financial assistance programs for patients who cannot afford to pay. Understanding how these programs work, who qualifies, and how to apply is critical knowledge for anyone who has received hospital care and is struggling with the cost.
The legal foundation: IRS Section 501(r)
The requirements for hospital charity care come primarily from Section 501(r) of the Internal Revenue Code, which was enacted as part of the Affordable Care Act. Under these rules, nonprofit hospitals with 501(c)(3) tax-exempt status must:
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Maintain a written Financial Assistance Policy (FAP): This document describes who qualifies for financial assistance, how to apply, what assistance is available (free care, discounts, sliding scale), and what the income thresholds are.
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Have a written Billing and Collections Policy: This limits the billing actions hospitals can take against patients who may qualify for financial assistance and specifies the process that must be followed before extraordinary collection actions.
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Limit charges for assisted patients: Hospitals cannot charge patients who qualify for financial assistance more than the amounts generally billed (AGB) to insured patients. For uninsured patients who qualify for assistance, the hospital must use the same rates it would accept from an insurer.
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Provide wide notification: Hospitals must make the FAP widely available — posted in key areas, provided with billing statements, and available in the languages spoken by the community.
These requirements apply to all nonprofit hospitals, which represent a substantial share of US hospital beds. For-profit hospitals and public (government-owned) hospitals are not subject to the federal 501(r) requirements, though some states have enacted parallel requirements for all hospitals.
Income thresholds: who qualifies
The IRS requires nonprofit hospitals to provide free care to patients with income at or below 200% of the federal poverty level (FPL) — that is, twice the poverty threshold for a household of a given size, updated annually. Many hospitals set their thresholds more generously than this minimum:
- Some offer full free care up to 250% or 300% of FPL
- Many offer a sliding-scale discount for patients between the full-free threshold and 350%, 400%, or higher
- A few hospitals offer significant discounts at even higher income levels
The specific thresholds are in each hospital’s FAP. Requesting the FAP is the first step to determining whether you qualify at a given hospital.
How to apply for financial assistance
The application process typically involves the following steps:
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Request the FAP and application: Contact the hospital’s billing department, patient financial services office, or social work department. Many hospitals also post FAP applications on their websites.
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Complete the application: Provide information about your household size and income. Required documentation often includes recent pay stubs, a recent tax return, or bank statements. If you are unemployed, self-employed, or have variable income, the hospital may accept a self-attestation form.
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Submit before the deadline: Under 501(r) rules, nonprofit hospitals must provide a minimum 120-day window after the first billing statement before initiating most collection actions. During this period, you can apply for assistance. Apply as early as possible — apply before or immediately after receiving your first bill.
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Receive determination: The hospital is required to process applications and notify you of the decision within a reasonable time. If approved, the hospital will adjust your bill. If denied, you can appeal the decision.
Presumptive eligibility
Some hospitals use a presumptive eligibility process to identify patients who likely qualify for assistance without a full application. They may use publicly available data, prior Medicaid enrollment, or other indicators to automatically screen patients and provide provisional assistance. If you are determined to be presumptively eligible, you may receive a reduced bill immediately; the hospital may later ask you to complete a formal application to confirm eligibility.
State laws and additional resources
Many states have enacted laws that expand hospital charity care obligations beyond the federal requirements — applying them to for-profit hospitals, setting higher income thresholds, requiring specific outreach efforts, or establishing limits on interest rates for hospital payment plans. Check your state’s attorney general or insurance commissioner website for state-specific hospital billing and charity care rules.
Key terms
| Term | Plain meaning | Glossary |
|---|---|---|
| Charity care | Free or discounted hospital care for patients who cannot pay, required of nonprofit hospitals | → |
| Financial assistance | Hospital programs that reduce or eliminate bills for eligible low-income patients | → |
| Sliding fee | Reduced charges based on your income and family size | → |
| FQHC | Federally Qualified Health Center — another source of sliding-fee primary care | → |
| Medical debt | Unpaid bills for healthcare services that may be sent to collections | → |
Common questions
- Which hospitals are required to offer charity care?
- Nonprofit hospitals with 501(c)(3) tax-exempt status are required by the IRS (under Section 501(r) of the Internal Revenue Code) to have a written Financial Assistance Policy (FAP) and to provide financial assistance. For-profit hospitals and government hospitals are not subject to the same federal requirement, though some state laws impose similar requirements on all hospitals. Ask any hospital billing department about available assistance.
- How do I apply for hospital financial assistance?
- Request the Financial Assistance Policy (FAP) and application form from the hospital's billing department, patient financial services office, or social work department. Complete and submit the application with required documentation (proof of income, household size). The hospital must screen you for assistance before sending your account to collections.
- What income level qualifies for full charity care?
- The IRS requires nonprofit hospitals to provide free care to patients whose income falls at or below twice (200%) of the federal poverty level (FPL). Many hospitals set more generous thresholds — some offer sliding-scale assistance up to 300% or 400% of FPL. The specific limits are set in each hospital's written FAP.
- What if I was not told about financial assistance and my bill went to collections?
- Under IRS 501(r) rules, nonprofit hospitals must take several steps before sending a bill to collections, including providing billing statements that clearly describe available financial assistance, offering a minimum 120-day period for the patient to apply, and attempting to contact the patient about assistance. If these steps were not followed, you may be able to apply retroactively. Contact the hospital's patient financial services department.
- Can I negotiate my hospital bill even if I do not qualify for charity care?
- Yes. Even if you do not qualify for formal charity care, most hospitals have some flexibility to negotiate payment plans, reduce charges for uninsured patients, or apply discounts. Ask the billing department for a prompt-pay discount, ask about uninsured or self-pay rates (which should match the lowest rate paid by any insurer), and request an itemized bill to check for errors.
Sources
Last reviewed: September 2026