The Charity Care Your Hospital Owes You — and the Bill It Sent Anyway

Roughly 60 percent of American hospitals operate as nonprofit organizations. In exchange for exemptions from federal income tax, state property tax, and local levies, these institutions are legally obligated under the Affordable Care Act to maintain a financial assistance policy — commonly called charity care — and to make reasonable efforts to determine whether a patient qualifies before pursuing aggressive collections.

The obligation is real. The enforcement is not. And the gap between the two is where many uninsured and underinsured patients find themselves: billed at full chargemaster rates for care their hospital was, in a meaningful sense, subsidized to provide for free.

The Law on the Books

Under Section 501(r) of the Internal Revenue Code, nonprofit hospitals must:

• Maintain and widely publicize a written financial assistance policy (FAP);
• Limit charges to patients eligible for assistance to no more than the amounts generally billed to insured patients;
• Make reasonable efforts to screen for eligibility before engaging in 'extraordinary collection actions' such as selling debt to collectors, reporting to credit agencies, or filing lawsuits.

'Widely publicize' is where the system most often fails. Policies may exist on a website's twenty-third page or in a binder no patient sees. The consequence is predictable: patients who would qualify for 100 percent assistance pay thousands of dollars instead, or watch a hospital they funded through tax exemption send their account to collections.

A Checklist for Claiming What You Are Entitled To

1. Request the Financial Assistance Policy in writing. Every nonprofit hospital must provide its FAP and application form on request. Ask by email so you have a record.

2. Ask about the deadline. Hospitals must accept charity care applications for at least 240 days after the first billing statement. You have more time than you think — but not unlimited time.

3. Gather the required documents. Typically: proof of income (pay stubs, tax returns, benefit letters), household size, and the account numbers from your bills.

4. Apply even if you have insurance. Many FAPs cover underinsured patients facing large out-of-pocket costs, not just the uninsured.

5. Apply to affiliated providers separately. Hospital-based physicians, labs, and imaging groups may be separate nonprofit or for-profit entities with their own policies.

6. If you were sent to collections without screening, dispute it. Federal rules prohibit extraordinary collection actions before reasonable screening efforts. Document that you were never offered an application — this is grounds for a complaint to the hospital, the state attorney general, and the IRS.

7. Demand a refund if you already paid. If you paid a bill and are later approved for charity care covering that period, request reimbursement.

Why This Is a Fairness Question, Not a Favor

Charity care is not a gift extended at the hospital's discretion. It is the contractual consideration for a tax exemption that every American taxpayer effectively underwrites. When a nonprofit hospital bills an eligible patient at full freight without disclosing the assistance it is required to offer, it is not merely ungenerous — it is collecting money the public already paid for.

Patients who ask, in writing, for the policy and the application are exercising a right, not requesting a favor. The more patients who ask, the harder it becomes for institutions to keep that right hidden in a binder.