Hospital Financial Assistance: Nonprofit 501(r) Charity Care
By Dalton Goodyear · Fact-checked October 31, 2026 · 8 min read
The short answer
Nonprofit hospitals must have a written financial assistance policy under IRS section 501(r). Each hospital sets its own eligibility rules, often based on the federal poverty guidelines. You generally have 240 days from the first bill after discharge to apply, and a complete application pauses most serious collection actions while the hospital decides.
- Federal rules require every nonprofit hospital facility to publish a financial assistance policy (FAP), an application and a plain-language summary, free and online.
- The hospital picks its own income limits, often as a percent of the federal poverty guidelines, so read the real policy.
- You generally have at least 240 days from the first post-discharge bill to apply, even after the bill is past due.
- Before credit reporting, lawsuits or selling the debt, the hospital must wait at least 120 days from the first bill and give 30 days' written notice.
- If you qualify, the hospital must refund what you overpaid (if more than $5) and take reasonable steps to undo collection actions.
If you got care at a nonprofit hospital, you may be able to get part or all of your bill forgiven. This is often called charity care. The federal name is financial assistance, and the rules live in section 501(r) of the tax code.
These rules apply whether you are uninsured or have insurance with a high deductible. They also come with deadlines and collection limits that work in your favor, if you know them.
What is section 501(r)?
Section 501(r) sets extra requirements for hospital organizations that want to keep 501(c)(3) tax-exempt status. The IRS applies them facility by facility. There are four parts:
- A community health needs assessment, which the hospital must do and publish.
- A financial assistance policy (FAP) and an emergency medical care policy.
- Limits on charges to people who qualify for assistance.
- Billing and collection rules, including limits on extraordinary collection actions.
CMS puts it simply: nonprofit hospitals must give financial assistance to eligible patients who can't afford to pay.
Who qualifies for hospital financial assistance?
There is no single national income limit. The federal rules require each hospital's FAP to spell out its eligibility criteria for each level of help, including free or discounted care. The hospital decides what those criteria are.
Many hospitals set their limits as a percent of the federal poverty guidelines, often called FPL. A policy might offer free care below one level and a sliding discount up to a higher one. A 2021 study of nonprofit hospitals in BMC Health Services Research found average limits of about 186% FPL for free care and about 324% FPL for discounted care, with lower limits more common at rural and critical access hospitals. Here are the 2026 HHS poverty guidelines for the 48 contiguous states and DC, with common multiples:
| Household size | 100% FPL | 200% FPL | 300% FPL | 400% FPL |
|---|---|---|---|---|
| 1 | $15,960 | $31,920 | $47,880 | $63,840 |
| 2 | $21,640 | $43,280 | $64,920 | $86,560 |
| 3 | $27,320 | $54,640 | $81,960 | $109,280 |
| 4 | $33,000 | $66,000 | $99,000 | $132,000 |
Add $5,680 for each person beyond eight. Alaska and Hawaii have higher guidelines. Some hospitals update to the new year's numbers later than others, so check which year your hospital uses.
What does the hospital have to publish?
Every nonprofit hospital facility must make three documents widely available: the full FAP, the application form, and a plain-language summary. The rules require the hospital to:
- Post all three on its website, free to view, download and print, with no account or personal information required.
- Give free paper copies on request and in public places, at least in the emergency room and admissions areas.
- Offer the plain-language summary during intake or discharge.
- Put a conspicuous notice about financial assistance on billing statements.
- Translate the documents for language groups that make up the lesser of 1,000 people or 5% of the community served.
The plain-language summary must explain who is eligible, how to apply, where to get the forms, who to call, and that people who qualify can't be charged more than amounts generally billed to insured patients.
How much can they charge me if I qualify?
If you qualify, the hospital can't charge you more than its amounts generally billed (AGB) for emergency or other medically necessary care. AGB is based on what the hospital gets from patients who have insurance covering that care. For other care, it must charge you less than its gross charges, which are its full list prices.
How long do I have to apply?
The application period starts on the day you get care and generally ends 240 days after the hospital gives you the first billing statement after discharge. In some cases it runs later, such as when the hospital's written notice sets a later deadline.
That means you can often apply even if the bill is months old or already past due. Do not wait until the end. Apply as soon as you know the bill is more than you can pay.
Can a nonprofit hospital send me to collections?
It can collect, but it must follow limits before taking what the rules call extraordinary collection actions (ECAs). ECAs include:
- Reporting you to credit bureaus
- Selling your debt to another party
- Suing you, placing a lien, garnishing wages, or other actions that need a court process
- Delaying or denying needed care because of an unpaid past bill
Before any ECA, the hospital must make reasonable efforts to find out if you qualify for assistance. That generally means:
| Rule | What it means for you |
|---|---|
| 120-day wait | No ECAs for at least 120 days after the first post-discharge bill |
| 30-day written notice | At least 30 days before an ECA, the hospital must tell you in writing that assistance is available, which ECAs it plans, and a deadline. The plain-language summary must come with it. |
| Oral notice | The hospital must make a reasonable effort to tell you about the FAP by phone or in person, at least 30 days before its first ECA |
| Complete application | The hospital must suspend ECAs and decide in writing, with the reason |
| Incomplete application | The hospital must tell you what is missing and give you a fair chance to finish |
How do I apply for hospital financial assistance?
- Find the policy. Search the hospital's name plus 'financial assistance', or call billing and ask for the FAP, the application and the plain-language summary. You can also check our hospital pages.
- Read the eligibility rules. Note the income limits, which providers are covered, and any documents the policy requires.
- Gather proof. Policies may ask for pay stubs, a tax return, or a letter if you have no income. Send only what the policy or form asks for.
- Submit and keep a copy. Use the method in the policy. Write down the date you sent it.
- Ask for a hold. Ask billing to pause the account, and tell any collector you have applied.
- Follow up. Ask how long a decision takes and who to call. If they say something is missing, send it fast.
“Hi, I'm calling about account [account number] for [patient name]. I'd like to apply for financial assistance. Can you send me your financial assistance policy, the application and the plain-language summary? Please note on my account that I'm applying, and hold it from collections while my application is reviewed. Which doctors' bills from this visit are covered by your policy?”
A hospital can't deny you assistance for failing to provide information or documents that its FAP or application form did not ask for. If you are asked for something new, ask where the policy requires it.
What happens after I'm approved?
If you get free care, the hospital must tell you in writing that you owe nothing more. If you get a partial discount, it must send a bill showing what you owe and how it figured that amount.
If you already paid more than you now owe, the hospital must refund the difference, unless it is less than $5. It must also take reasonable steps to reverse ECAs, such as removing negative credit reporting or lifting a lien.
What if the hospital doesn't follow the rules?
Start with a written complaint to the hospital's billing manager or patient advocate office. Quote the rule you think was missed. If that fails, you can send a referral to the IRS through its complaint process for tax-exempt organizations. A nonprofit counselor can also help. See our list of free counselors.
If you live in Wyoming, also check Wyoming's medical bill rules.
Common questions
Does hospital financial assistance apply if I have insurance?
It can. Some financial assistance policies cover what you owe after insurance, such as a high deductible or coinsurance, but each hospital sets its own rules. Read the policy's eligibility section, or call the billing office and ask whether insured patients can apply for help with their remaining balance.
How long do I have to apply for charity care at a nonprofit hospital?
Under IRS 501(r) rules, the application period generally ends 240 days after the hospital provides the first billing statement after discharge, and sometimes later. You can usually apply even if the bill is past due or in collections. Apply as early as you can, and keep a dated copy of everything you send.
Can a nonprofit hospital report my bill to the credit bureaus?
Reporting to credit bureaus counts as an extraordinary collection action. A nonprofit hospital generally can't do it until at least 120 days after the first post-discharge bill, and only after giving 30 days' written notice about financial assistance. If you submit a complete application, the hospital must suspend these actions until it decides.
What income qualifies for hospital charity care?
There is no single national cutoff. Each nonprofit hospital sets its own eligibility in its financial assistance policy, often as a percent of the federal poverty guidelines. For 2026, 100% of the guideline is $33,000 for a family of four in the 48 contiguous states. Check your hospital's actual policy.
Do for-profit hospitals have to offer financial assistance?
The federal 501(r) rules apply to nonprofit, tax-exempt hospital organizations. For-profit and government hospitals are not covered by these specific rules, though some offer their own assistance programs and your state may have its own rules. Ask the billing office whether they have a financial assistance or self-pay discount program.
Sources
- Requirements for 501(c)(3) hospitals under the Affordable Care Act, section 501(r) · IRS
- Financial assistance policy and emergency medical care policy, section 501(r)(4) · IRS
- Limitation on charges, section 501(r)(5) · IRS
- Billing and collections, section 501(r)(6) · IRS
- 26 CFR 1.501(r)-1: Definitions · Cornell LII
- 26 CFR 1.501(r)-4: Financial assistance policy · Cornell LII
- Annual update of the HHS poverty guidelines (2026) · Federal Register
- Apply for medical bill financial assistance · CMS
- Family income eligibility limits for free and discounted care among U.S. not-for-profit hospitals, 2010 to 2017 · BMC Health Services Research
- IRS complaint process for tax-exempt organizations · IRS
Ahem is a self-help tool. It is not a law firm, a medical provider, or an insurer. This guide is general information, not advice about your situation. Rules change; we recheck each guide and show the date above. Spot an error? Tell us.