Educational information, not legal, medical or financial advice. Federal law requires a policy to exist; each hospital sets its own thresholds, and some states require more. Your hospital's own published policy governs your application.
The rule
Section 501(r) of the Internal Revenue Code applies to hospitals that hold nonprofit, tax-exempt status — which is the large majority of hospitals in the United States. To keep that status, each one must:
- Maintain a written financial assistance policy setting out who is eligible and what relief is available.
- Publicise it widely, including on its website, free of charge, and in the languages its community speaks.
- Limit what it charges patients who qualify, to no more than the amounts generally billed to insured patients — not the sticker price on the chargemaster.
- Make reasonable efforts to determine eligibility before taking extraordinary collection action.
- Accept applications for at least 240 days after the first post-discharge billing statement.
The last two matter enormously and are the least known. A hospital is not supposed to send an account to collections without first checking whether you qualify for help — and the window to apply is long.
Who qualifies
Federal law requires a policy to exist. It does not dictate the thresholds — each hospital sets its own. That said, the shape is fairly consistent:
- At or below 200% of the federal poverty guideline — full assistance is common. The balance is written off entirely.
- Between 200% and 400% — partial, sliding-scale assistance is common. The higher your income within the band, the smaller the reduction.
- Above 400% — outside the usual range, though some hospitals go considerably higher, and most consider catastrophic or hardship cases individually regardless of income.
The guidelines themselves are published annually each January and scale with household size. The calculator works out where you sit.
Worked example. A household of three with a gross income of $52,000. The guideline for three is $15,960 plus two increments of $5,680, giving $27,320.
$52,000 ÷ $27,320 = 190% — just under the 200% mark at which most policies provide assistance in full. On a $9,400 bill that is the difference between owing everything and owing nothing, and it turns entirely on whether an application is submitted.
How to apply
- Find the policy. Search the hospital's name with "financial assistance policy". It is required to be published and free to obtain. Ask billing for a paper copy if you prefer.
- Ask for the application form by name, in writing if you can. Email creates a record of when you asked.
- Gather what it asks for. Typically recent pay stubs or a tax return, household size, and sometimes bank statements. If you have no income, say so — policies handle that case.
- Ask for collections to be paused while the application is considered. This is a normal request and is often granted as a matter of course.
- Submit it and keep a copy of everything, with the date you sent it.
- Follow up in writing after a couple of weeks. Applications get mislaid; a polite written chase is usually all it takes.
Common misunderstandings
"I have insurance, so this doesn't apply." It still can. Financial assistance policies generally cover what you owe after insurance — deductibles, co-insurance and uncovered balances routinely qualify.
"I earn too much." Perhaps, but the threshold is household income against household size, and a family of five on a single income is often further down the scale than expected. The application costs nothing but the time.
"I've already paid some of it." Ask anyway. Where a patient is found eligible for a period already billed, hospitals frequently apply the policy retrospectively and refund.
"It's gone to collections, so it's too late." Often not. The 240-day window runs from the first billing statement, and many hospitals will recall an account if a patient turns out to qualify.
If the hospital is for-profit
Section 501(r) does not apply, since it is a condition of tax-exempt status. In practice most for-profit systems still operate an assistance or hardship programme, partly because state law sometimes requires it and partly because collecting nothing is worse than collecting something. Ask for it explicitly, in writing, and by name.
Before you negotiate
This is the single most valuable thing on this page: apply before you agree to pay anything. Assistance can eliminate a balance. A negotiated reduction never does — it just makes the number smaller. Agreeing a figure first also weakens the case that you could not afford the original.
Applying does not waive anything, does not stop you negotiating afterwards, and does not commit you to a plan.
Based on the published requirements of Internal Revenue Code section 501(r) and the annually published federal poverty guidelines. Individual hospital policies set their own thresholds and some states require more. Educational information, not legal or financial advice.