Every nonprofit hospital in the United States is legally required to offer charity care under IRS Section 501(r). If your household income is below a certain threshold, the hospital must reduce or completely eliminate your bill. Millions of eligible patients never apply because they don't know the program exists or assume they won't qualify. As of 2026, roughly 60% of U.S. hospitals are nonprofit, and every one of them has a financial assistance policy waiting to be used.
Quick Answer: Under IRS Section 501(r), nonprofit hospitals must offer free or discounted care to patients who qualify based on income. Most hospitals cover 100% of the bill at or below 200% of the federal poverty level, and partial discounts up to 400% FPL. You have 240 days from your first bill to apply.
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What Is IRS Section 501(r)?
Section 501(r) of the Internal Revenue Code was added by the Affordable Care Act. It created a set of rules that nonprofit hospitals must follow to keep their tax-exempt status. One of those rules, under Section 501(r)(4), requires every nonprofit hospital to maintain a written Financial Assistance Policy (FAP) that:
- Describes who qualifies for free or discounted care
- Explains how patients can apply
- Lists the income thresholds used to determine eligibility
- Explains how the hospital calculates charges for eligible patients
Section 501(r)(6) goes further. It prohibits hospitals from pursuing "extraordinary collection actions" -- such as lawsuits, wage garnishment, or sending accounts to collections -- before they make a reasonable effort to determine whether you qualify for assistance.
This matters because hospitals frequently send bills to collections before anyone tells you that charity care exists. If your bill went to a debt collector, charity care can still pull it back.
Who Qualifies for Charity Care?
Federal law gives hospitals flexibility to set their own income thresholds, so limits vary by hospital. However, patterns are consistent enough to give useful guidance. As of 2026:
- Most hospitals offer free care at or below 200% of the federal poverty level (FPL)
- Most offer discounted care at incomes up to 400% FPL
- Some hospitals use thresholds as high as 600% FPL for partial discounts
Both uninsured and underinsured patients can qualify. If you have insurance but your remaining out-of-pocket costs are unmanageable relative to your income, the hospital may cover the balance.
2026 Federal Poverty Level (FPL) Reference Table
| Household Size | 100% FPL | 200% FPL (free care threshold) | 400% FPL (discount threshold) |
|---|
| 1 | $15,960 | $31,920 | $63,840 |
| 2 | $21,640 | $43,280 | $86,560 |
| 3 | $27,320 | $54,640 | $109,280 |
| 4 | $33,000 | $66,000 | $132,000 |
| 5 | $38,680 | $77,360 | $154,720 |
| 6 | $44,360 | $88,720 | $177,440 |
| 7 | $50,040 | $100,080 | $200,160 |
| 8 | $55,720 | $111,440 | $222,880 |
Alaska and Hawaii use higher thresholds. Add $5,380 per person beyond 8 for larger households. These are the 2026 guidelines for the 48 contiguous states.
Even if your income exceeds these numbers, apply anyway. Some hospitals use asset tests, high medical expense ratios, or local cost-of-living adjustments that can shift eligibility in your favor.
How to Find Your Hospital's Financial Assistance Policy
The hospital is required to make its FAP easy to find. Check these places first:
- Hospital website -- Search for "financial assistance," "charity care," or "FAP" in the site search. Most hospitals post a dedicated page.
- Your billing statement -- By law, bills sent to patients who may qualify must include a plain-language notice about the FAP.
- Hospital signage -- Notices must be posted in emergency rooms, admission areas, and waiting rooms.
- Billing department -- Call the number on your bill and ask specifically for the Financial Assistance Department (not just billing).
If the hospital does not provide the FAP in your primary language and you have limited English proficiency, they are required to provide language assistance.
Step-by-Step: How to Apply for 501(r) Charity Care
Step 1: Gather Your Financial Documents
You will need documents that verify your household income and size. Collect:
- Most recent federal tax return (all pages, including schedules)
- Two to three recent pay stubs
- Bank statements from the past 30 to 90 days
- Social Security award letter (if applicable)
- Unemployment benefit letters (if applicable)
- Proof of address (utility bill, lease agreement)
- Documentation of any other income sources
Self-employed? Bring profit-and-loss statements or a letter from an accountant. No income at all? A signed statement explaining your situation, supported by bank statements showing low or zero deposits, is generally accepted.
Step 2: Download and Complete the Application
Get the hospital's application from their website or billing department. Fill it out completely. Incomplete applications are the most common reason applications get delayed or denied.
The form will ask for:
- Full name, date of birth, Social Security number
- Household size and the names of people in your household
- Annual household income (all sources)
- Insurance status at the time of service
- The hospital account number(s) on your bill
Step 3: Submit the Application
Submit your completed application with copies of all supporting documents. Do not send originals.
Recommended submission methods, in order of reliability:
- In person -- Walk the application directly to the hospital's financial assistance or billing office. Get a dated receipt.
- Fax -- Fax to the number on the application. Save the fax confirmation sheet.
- Certified mail -- If mailing, use USPS certified mail with return receipt.
Avoid submitting by standard mail without tracking. Applications get lost.
Step 4: Confirm Receipt
Call the financial assistance department three to five business days after submitting. Confirm they received your documents and ask for a reference number. Ask how long review takes and whether they need anything additional.
Step 5: Stop Collection Activity During Review
Once you have submitted a completed application, federal rules prevent the hospital from pursuing extraordinary collection actions against you while the application is pending. Tell the hospital's billing department in writing that you have submitted a FAP application. If your account is already with a collector, notify the collection agency and provide your application confirmation number.
Step 6: Receive the Decision
The hospital must notify you in writing of their decision. The letter should state:
- Whether you are approved for full or partial assistance
- The percentage of your bill covered
- The remaining balance, if any
- Any payment plan options
Processing typically takes 30 to 60 days.
If You Are Denied
Denials happen, but they are not final. A meaningful share of appeals are reversed.
Request the denial reason in writing. You are entitled to a written explanation of why you were denied.
Check the numbers. Errors in income calculation or household size are common. If they used the wrong income figure, provide corrected documentation.
Submit additional documentation. High medical expenses, unusual circumstances, or one-time income events may justify reconsideration if you explain them in a letter.
Ask for a formal appeal. Most hospitals have a formal appeal process. The denial letter should include the deadline and instructions.
Contact your state attorney general. Several state AG offices have healthcare consumer divisions that take complaints about nonprofit hospitals not following their charity care obligations.
Charity Care vs. Other Hospital Discounts
| Type | Who It Covers | How Applied |
|---|
| Charity care (501r) | Uninsured and underinsured | Based on income, applied to your balance |
| Uninsured discount | Uninsured patients only | Automatic at some hospitals, request at others |
| Payment plan | Anyone | Spreads balance over time, does not reduce amount |
| Prompt-pay discount | Anyone who pays quickly | Usually 10-20% off for paying within 30 days |
| Medical debt forgiveness | Varies | One-time write-off, sometimes through charity programs |
Charity care is the most powerful option because it can eliminate the bill entirely. It is not a loan. If approved, you owe nothing on that amount.
Common Mistakes to Avoid
Assuming you don't qualify. Many people skip the application because they assume they earn too much. Apply anyway -- the threshold may be higher than you expect.
Waiting too long. You have 240 days from your first billing statement. After that, the hospital is no longer required to consider your application, though some still will. Apply as soon as you receive a bill you cannot afford.
Applying to the wrong entity. If your hospital bill includes separate charges from a physician group or anesthesiologist, those are different billing entities with their own policies. The hospital FAP may not cover those charges. Apply separately to each provider.
Not applying retroactively. If you already paid a bill you were eligible to have reduced, you can apply retroactively. The hospital owes you a refund of the overpaid amount. If it went to collections, charity care approval can recall it from the collector.
Ignoring the application deadline. The 240-day clock starts from the first billing date, not the date of service. Do not wait.
What If the Hospital Is For-Profit?
Section 501(r) only applies to nonprofit hospitals. For-profit hospitals have no federal obligation to offer charity care, though many do voluntarily. If your hospital is for-profit:
- Ask the billing department directly whether a financial assistance program exists
- Check your state's laws -- some states require all hospitals, including for-profit facilities, to offer financial assistance
- Ask about hardship discounts, uninsured discounts, or payment plans
For-profit hospitals also negotiate. If you call and explain you cannot pay, many will accept a reduced lump sum.
Check Your Bill for Errors First
Before applying for charity care, review your bill for errors. Studies estimate that 80% of hospital bills contain at least one error. Common billing mistakes include duplicate charges, services you did not receive, charges at the wrong billing code, and insurance processing errors.
Upload your hospital bill to our free analyzer at CoveredUSA -- find errors and charity care options in 30 seconds.
Catching errors can reduce your bill before charity care is even applied, which matters because errors can inflate the amount you are evaluated on.
Frequently Asked Questions
What is IRS Section 501(r) and how does it relate to charity care?
IRS Section 501(r) is a set of federal rules that nonprofit hospitals must follow to maintain their tax-exempt status under 501(c)(3). One requirement, under 501(r)(4), mandates that nonprofit hospitals publish and apply a written Financial Assistance Policy. This is the legal basis for charity care at roughly 60% of U.S. hospitals. Failure to comply can cost a hospital its tax exemption or result in a $50,000 IRS penalty.
Does charity care apply to bills already in collections?
Yes. If your bill was sent to a collector before the hospital determined whether you qualify for financial assistance, the hospital may have violated Section 501(r)(6). File a charity care application with the hospital even if the bill is with a collector. If approved, the hospital must recall the account from collections and adjust your balance.
Can I apply for charity care after I have already paid?
Yes. If you were eligible at the time of service but paid before applying, you can file a retroactive application. If approved, the hospital owes you a refund for the portion you overpaid. There is no standard time limit for retroactive claims, though the 240-day rule applies to the initial application obligation.
Do I need to be uninsured to qualify for charity care?
No. Underinsured patients qualify. If you have insurance but your deductibles, copays, or out-of-pocket maximums create a financial hardship relative to your income, you may qualify for assistance on the remaining balance after insurance.
What income does the hospital look at?
Hospitals generally look at total household gross income from all sources: wages, self-employment income, Social Security, unemployment, alimony, rental income, and investment income. Household size is typically defined as everyone who lives with you and shares expenses. Some hospitals subtract high medical expenses from income, which can lower your effective income figure and improve eligibility.
What happens if the hospital violates 501(r) rules?
Noncompliance can trigger a $50,000 IRS excise tax for failure to conduct required community health needs assessments, or loss of 501(c)(3) tax-exempt status for more serious violations. Patients can also report hospitals to the IRS using Form 13909, which is a tax-exempt organization complaint form.
How long does charity care approval take?
Most hospitals process applications within 30 to 60 days. Some may request additional documentation, which resets the clock. After you submit, call to confirm receipt and ask for an estimated timeline. During review, the hospital cannot pursue extraordinary collection actions against you.
Can charity care cover bills from my doctor, not just the hospital?
Only if the physician bills through the hospital's own billing system. Most physician groups -- including surgeons, radiologists, and anesthesiologists -- bill separately and are not covered by the hospital's FAP. Contact each provider separately to ask about their own financial assistance programs.
