Charity Care at Nonprofit Hospitals: How to Apply Under IRS 501(r)

Every nonprofit hospital in the United States, roughly 2,900 facilities representing more than half of all community hospitals, is required by federal law to maintain a written Financial Assistance Policy (FAP) and to offer free or discounted care to patients who qualify. The requirement comes from IRS Section 501(r), which conditions a hospital's tax-exempt status on providing financial assistance to the community it serves. Most patients do not know this program exists.

What 501(r) requires

Section 501(r) does not set a national income threshold for charity care. It requires each nonprofit hospital to establish its own policy and to make that policy accessible. The requirements are procedural, not prescriptive:

• The hospital must have a written Financial Assistance Policy specifying which services are covered, who qualifies based on income and assets, how to apply, and what the patient owes after assistance is applied.
• The hospital must publicize the policy: on its website, on billing statements, in conspicuous locations within the facility, and in the languages commonly spoken in its community.
• The hospital must offer a plain-language summary of the FAP.
• The hospital cannot use extraordinary collection actions (wage garnishment, liens, lawsuits, credit reporting) against a patient until 120 days after providing the first post-discharge billing statement, and not until it has made reasonable efforts to inform the patient about the FAP.
• The hospital must give patients at least 240 days from the first billing statement to apply for financial assistance.
• The hospital cannot charge FAP-eligible patients more than the "Amounts Generally Billed" (AGB) to insured patients. AGB is calculated using either the Medicare method or the look-back method.

Typical income thresholds

While federal law sets no floor, most nonprofit hospitals follow a pattern:

↑ These are typical thresholds, not guaranteed. Each hospital sets its own. The only way to know what a specific hospital offers is to read its FAP or call the billing department and ask.

How to apply

The process is straightforward but rarely explained to patients proactively.

Step one: find the hospital's Financial Assistance Policy. Go to the hospital's website and search for "financial assistance" or "charity care." Every nonprofit hospital is required to post its FAP and application online. If you cannot find it, call the billing department and ask them to mail or email you the application.

Step two: complete the application. Most require proof of income (recent tax return, pay stubs, or a signed statement), household size, and sometimes a list of assets. Some hospitals accept a verbal attestation for emergency cases.

Step three: submit within the 240-day window. You can apply before the procedure (recommended), while the bills are arriving, or after receiving a bill. The 240-day clock starts from the first post-discharge billing statement.

Step four: follow up. If you do not hear back within 30 days, call. If you are denied, ask for the reason in writing and whether you can appeal. Some hospitals have a financial counselor who can help you resubmit with additional documentation.