Hospital financial assistance: how to ask for charity care before you pay

What the hospital is required to have, in patient terms

Section 501(r) requirement (IRS)	What it means for you
A written financial assistance policy and a written emergency medical care policy	The program exists on paper, with eligibility criteria and an application method, and the hospital must publicize it, including on its website and in a plain language summary
Charges to eligible patients limited to amounts generally billed	If you qualify, the hospital may not charge you more for emergency or other medically necessary care than the amounts generally billed to insured patients, and may not use gross charges for your bill
Reasonable efforts before extraordinary collection actions	The hospital must make reasonable efforts to determine whether you qualify before escalating collections. If it relies on notifying you rather than on deciding an application, that means waiting at least 120 days after the first post-discharge billing statement and giving at least 30 days' written notice of the specific action
An application period that runs at least 240 days	An application submitted within 240 days of the first post-discharge billing statement must be accepted and processed, and extraordinary collection actions pause while it is pending

The four requirements in the table are the hospital's obligations, stated by the IRS as conditions of tax exemption. Two of them do work for you before you ever file anything: the policy must be findable, and the collections clock cannot start early. The other two do their work when you apply: the charge cap defines the most you can be asked to pay if you qualify, and the application window defines how long you have to ask. None of the four requires you to use the words charity care, although the policy itself may use them: financial assistance, charity care, and free or discounted care are names different hospitals give the same Section 501(r) program.

How to read the plain language summary

The plain language summary is the document the whole program hangs on for a patient, and the Treasury regulation, 26 CFR 1.501(r)-1(b)(24), specifies what it has to tell you. It gives a brief description of the eligibility requirements and the assistance offered, whether that is free care below one income line, discounted care above it, or both. It summarizes how to apply. It gives the web address and physical locations where copies of the policy and the application form can be obtained, and how to get a free copy by mail. It gives the contact information for the office that provides information about the policy and for help with the application. It states whether translations are available. And it states that an eligible patient may not be charged more than amounts generally billed for emergency or other medically necessary care. Two things patients often look for are not on that list: the basis the hospital uses to calculate amounts charged, which is where the AGB method and percentage from the next section appear, and the list of which other providers delivering care at the hospital are covered by the policy and which are not. Both are required contents of the full policy under 26 CFR 1.501(r)-4, so open the policy itself for those. Read the summary for eligibility, the application method, and who to call. A summary that cannot answer those questions is not meeting the document's purpose, and asking the assistance office to walk through it with you is a normal request, not an imposition.

The notices you have already passed

One reason assistance goes unclaimed is that patients assume nobody told them about it, when the hospital was required to tell them several times. The policy must be publicized on the hospital's website. Conspicuous public displays or brochures are required in the emergency department and admissions areas. Billing statements must carry a conspicuous written notice about the availability of financial assistance under the policy, including the telephone number of the office that provides information and the web address where the documents live. Paper copies of the summary must be offered to patients on intake or discharge. If you are holding an unpaid bill from a tax-exempt hospital, turn the statement over before you call: the notice the IRS requires is printed on the documents already in your hand, and the phone number on it reaches the office that owns the process, which is often not the collections number printed in larger type beside the amount due.

What qualifying does to the amount

A financial assistance policy sets its own eligibility criteria and its own schedule of help: full assistance, where the covered bill is written down to nothing, or partial assistance at stated levels, usually tied to household income as the policy defines it. Read the criteria in the hospital's own summary rather than deciding in advance that you earn too much or too little: the test is the document's, and hospitals set the lines in different places.

Above whatever schedule the policy offers sits the federal cap. For emergency or other medically necessary care, a patient eligible under the policy may not be charged more than the amounts generally billed, called AGB: the amounts the hospital generally bills to patients who have insurance covering the care. The IRS lets the hospital compute AGB by looking back at what Medicare and private insurers actually paid over a prior period, or by a prospective method based on Medicare rates, and the policy documents publish the resulting percentage. The gross charge, the undiscounted list figure, is explicitly off the table for an eligible patient: Section 501(r) prohibits using gross charges for that bill. So qualifying does two things at once: the policy's schedule sets your amount, and the AGB cap guarantees that amount cannot exceed what insured care generally costs at that hospital.

Where the AGB percentage comes from: the two IRS methods

The cap only helps if you can see where the hospital's number came from, and the Treasury regulation at 26 CFR 1.501(r)-5 says how it may be built. A hospital facility picks one method at a time, though facilities in the same system may use different ones, and it may switch methods.

• The look-back method. The hospital adds up the amounts that insurers allowed on its claims for emergency and other medically necessary care during a prior 12-month period, divides by the gross charges on those same claims, and applies the resulting percentage to gross charges. It must recalculate at least once a year and start applying a new percentage by the 120th day after the end of the 12-month period it used. The insurers in the calculation must be Medicare fee-for-service alone, Medicare fee-for-service plus all private insurers that pay the hospital, or Medicaid alone or combined with either of those. The hospital may use one percentage for everything or separate percentages by category, such as inpatient and outpatient care.
• The prospective Medicare or Medicaid method. The hospital codes your care as if you were a Medicare fee-for-service or Medicaid beneficiary and sets AGB at the total that program would allow, counting both the program's payment and the share the beneficiary would owe in copayments, coinsurance, and deductibles.

The regulation includes worked examples, and their arithmetic is the clearest way to read a percentage in a policy. In its first example, private insurers allowed $250 million and Medicare fee-for-service allowed $150 million on claims whose gross charges totaled $800 million; $400 million divided by $800 million gives an AGB percentage of 50 percent, which the hospital then applies to gross charges for the next year. In its second example, a hospital using Medicare alone finds inpatient claims allowed at $100 million on $250 million of gross charges and outpatient claims allowed at $125 million on $200 million, giving two percentages: 40 percent for inpatient care and 62.5 percent for outpatient care. Those are the regulation's illustrations, not figures for any real hospital. Their use for you is practical: when a policy states a percentage, it is a ratio of allowed amounts to list charges over a stated period, and the policy documents must state the basis for calculating amounts charged to eligible patients. If the summary does not show which method and which period, ask the assistance office how the percentage was calculated and for which period.

Two more rules sit beside the cap. For care covered by the policy that is not emergency or medically necessary, the hospital must still charge an eligible patient less than gross charges. And "charged" means only what you are personally responsible for paying after every discount, deduction, and insurance payment, which is why the next point matters to insured readers.

If you have insurance as well: the cap applies to your share

The regulation answers the insured case directly. A hospital meets the AGB limit for an eligible patient with coverage if the patient is not personally responsible for paying more than AGB, in copayments, coinsurance, and deductibles, after the insurer's payment, even when the insurer and patient together pay more than AGB. Its examples use an unspecified unit, y. With AGB of 3y and an allowed amount of 5y, a patient who owes 1y in copays and deductibles is under the cap, and the hospital may collect the full 5y between insurer and patient. Flip the split so the patient owes 4y and the insurer 1y, and the cap binds: an eligible patient may not be made personally responsible for more than 3y. For a person with a high deductible, that is the case to recognize. A large deductible balance at a tax-exempt hospital is not outside the program simply because insurance paid something; whether you qualify depends on the policy's criteria, and if you do, your share for emergency or medically necessary care is capped at AGB.

Hypothetical numbers: what a discount does to one balance

This illustration is hypothetical. The figures are invented for the arithmetic only and are not any hospital's charges or policy terms. Suppose a medically necessary service carries gross charges of $3,000 on the hospital's rate sheet, and the hospital's published financial assistance documents state an AGB percentage of 40 percent. The federal cap for an eligible patient is $3,000 multiplied by 40 percent, which is $1,200: whatever the policy's schedule produces, it cannot sit above $1,200 for this care. If the policy's schedule grants full assistance at your documented income, the amount is $0, under the cap. If it grants partial assistance that leaves you half of the capped amount, the figure is $1,200 divided by two, which is $600. The two steps are the whole calculation: cap first, by the published percentage, then the policy's own schedule at or under the cap. When an approval letter arrives, run both steps against it and ask the office to show its working if either step does not match the documents you read.

How to apply, in order

1. Get the policy and its plain language summary. Search the hospital's website for its financial assistance policy page, or ask the billing office for both documents. The hospital must make the policy, the application form, and the plain language summary available, including free paper copies on request. The summary is the short version written for patients; start there.
2. Read three things: the eligibility criteria and the application method with its deadline, both in the summary, and the list of providers the policy covers and does not cover, which is in the policy itself. Note the deadline as a date: 240 days from your first post-discharge billing statement at a tax-exempt hospital, or the policy's own date if it allows longer.
3. Ask about presumptive screening. Some hospitals also determine eligibility from information they already hold, without an application. Ask whether you were screened, and apply yourself regardless: the application is the route with a paper trail and a decision you can read.
4. Complete the application with exactly the documents it names. The form lists the income and household documentation the hospital requires; assembling that list completely is most of the work. If the hospital finds the application incomplete, it must tell you what is missing and give you the opportunity to complete it, so an incomplete notice is a step, not a refusal.
5. Submit it inside the application period and note the date, the method, and who received it. Submitting an application inside the period, even an incomplete one, suspends extraordinary collection actions while it is pending, which is a second reason to file before any deadline is close.
6. Know what the suspension protects against, in the IRS's own category. Extraordinary collection actions include reporting the debt to consumer credit agencies, selling the debt to another party, and legal or judicial steps taken to collect it, among others the regulation lists. A tax-exempt hospital may not begin those actions until it has made reasonable efforts to determine whether you are eligible. It can meet that test by deciding a complete application, or, if you have not applied, by notifying you about the policy, which includes waiting at least 120 days after the first post-discharge billing statement and sending a written notice at least 30 days before the action. If any of those actions is threatened or taken before those dates, the dates on your statements and your application receipt are the evidence: put both in front of the assistance office and ask how the action squares with the reasonable efforts requirement. How a reported item is checked and disputed with the bureaus is covered in medical debt and your credit report.
7. Read the determination against the policy. If you are approved, the adjusted amount should reflect the policy's schedule and sit at or under the AGB cap for medically necessary care. Ask for the adjusted bill in writing. If you already paid more than the capped amount for the same care, ask the office, in the same conversation, how the excess is handled, and get the answer in writing.
8. If you are denied, ask which criterion the application failed and whether the policy has an appeal or reconsideration step. A denial that names a criterion can be answered with a document; a denial that names nothing is a question to escalate to the hospital's patient advocate or financial counseling office. If an account is with a collector meanwhile, see what to do when a medical bill goes to collections.

The federal clocks on one calendar

The two numbers people remember, 120 and 240, run from the same date and do different jobs. The application period begins on the date the care is provided and ends on the later of the 240th day after the first post-discharge billing statement or certain later deadlines a hospital may set in its notices. The 120 days are a waiting period for the hospital, not a deadline for you: if it relies on notification rather than on deciding an application, it may not start most extraordinary collection actions until at least 120 days after that first statement, and it must give you a written notice, with a plain language summary, at least 30 days before the first such action, naming the action and a deadline. It must also make a reasonable effort to tell you about the policy orally. The regulation's own example puts dates on it, and the figure below plots them.

Show the dates behind this figure

Day	Date in the example	Event	Rule
0	March 3	First post-discharge billing statement	Starts both counts
90	June 1	Third statement with plain language summary and written notice naming credit reporting and a July 1 deadline; phone call about the policy	1.501(r)-6(c)(4)(i)
120	July 1	Notice deadline; at least 30 days after the notice and 120 days after the first statement	1.501(r)-6(c)(3)(i), (c)(4)(i)
121	July 2	Hospital may report to credit agencies if the patient neither paid nor applied	Example 1, (c)(4)(iv)
134	July 15	Incomplete application filed; collection actions suspended until the September 22 date the hospital set	Example 1, (c)(5)(iii)
204	September 23	Documents not received by September 22; collection actions may resume	Example 1, (c)(5)(iii)
221	October 10	Missing documents sent; the complete application must be decided	Example 1, (c)(5)(iii)(ii)
240	October 29	Application period ends	1.501(r)-1(b)(3)

Read the example as the regulation tells it. The hospital sends the first statement on March 3, each statement carrying the required notice about the policy. With the third statement, postmarked June 1, it encloses the plain language summary and a letter saying it will report the debt to credit agencies if the patient neither pays nor applies by July 1, and it calls her about the policy. She does neither, and the regulation says the hospital may report as of July 2. The example continues: on July 15 she files an application without the income documents, the hospital calls and writes to say what is missing and sets September 22 for the documents, and it takes no new or further collection action in between. She misses that date, so collection may resume on September 23. She then sends the documents on October 10, still inside an application period that ends October 29, so the hospital must decide her application and, if she qualifies, take the reversal steps described below. The lesson is in the overlap. Collection actions can begin while the application period is still open, and an application filed after they begin still has to be processed.

One extraordinary collection action follows a shorter route. Deferring or denying medically necessary care, or requiring payment before providing it, because of unpaid bills for earlier care covered by the policy, is itself an extraordinary collection action. For that one, the hospital may give the notice less than 30 days ahead, but it must hand you an application form, state any deadline for applying for the earlier care, which may not be earlier than the later of 30 days after the notice or 240 days after the first statement, and process an application on an expedited basis.

Before service counts too

Assistance is usually discussed after a bill, but nothing in the structure requires that order. For a scheduled procedure at a tax-exempt hospital, the policy exists today, the summary can be read today, and you can ask whether the hospital will take an application against expected care. The federal application period runs from the date care is provided, but the regulation says a hospital may accept and process an application submitted outside that period, so whether it will decide one before the service is the hospital's policy to answer. Ask the question on the pre-service billing call, in the form the billing-questions checklist adds this question: if I cannot pay the confirmed price, do you have a financial assistance policy, and can I apply before the service? An approval in hand before the procedure converts the largest unknown in the worksheet into a settled figure, and it does so while every deadline is still comfortably in the future. Where the care has already happened, the same program runs on the 240 day clock described above, and the negotiation guide places the application inside the wider negotiation call. Because the determination is made under the hospital's policy rather than by whichever office is currently holding the account, it stands even if the balance is later serviced by a different billing office or an outside agency.

What an approval does not settle by itself

An approval letter answers the largest question and leaves three smaller ones open. First, the adjusted bill still has to be checked: approval sets the amount you owe under the policy, and the itemized check in the itemized-bill check is how you confirm the statement that arrives actually reflects that amount, for the services that were actually delivered, before you pay it. An approval followed by an unadjusted statement is a paperwork mismatch to raise with the letter in hand, not a new negotiation. Second, a partial approval leaves a balance, and the balance is ordinary billing from that point: the CMS sequence in the negotiation guide, payment plan terms in writing and all, applies to it unchanged, and assistance having reduced the starting figure makes the plan smaller, not unnecessary. Third, an approval covers what it says it covers: the accounts, dates of service, and period named in the determination. Care outside that scope, a later visit, a different account, may need its own application or a confirmation that the existing determination extends to it. Ask that question while the file is open rather than assuming the approval follows you to the next episode.

A hospital is not the only provider with an income-based price. Federally funded health centers must keep a sliding fee schedule tied to the poverty guidelines, with a full discount at or below 100 percent and none above 200 percent, as set out in the sliding fee scale guide. If a payment product is being considered, the payment plan and medical credit card guide explains why the assistance application should come first.

If you already paid, or collections already started

Approval reaches backwards. When a hospital finds you eligible on a complete application, the regulation requires three things beyond the decision letter. If the assistance is anything other than free care, it must send a billing statement showing the amount you owe as an eligible patient, how that amount was determined, and the AGB for the care or how to get that information. It must refund anything you paid for the care, to the hospital or to anyone it referred or sold the debt to, above what you are now personally responsible for, unless the excess is less than $5. And it must take all reasonably available measures to reverse extraordinary collection actions taken for that care, which the regulation says generally include vacating a judgment, lifting a levy or lien, and removing adverse information reported to a credit bureau. Two actions are outside that reversal duty: a sale of the debt, and deferring or denying care for past nonpayment.

A debt sale has its own limits. Selling the debt is an extraordinary collection action unless, before the sale, the hospital signed a binding agreement under which the buyer may take no extraordinary collection actions, may charge interest no higher than the federal underpayment rate in effect at the time of the sale, must return the debt or let the hospital recall it if you are found eligible, and, if the debt stays with the buyer, must ensure you never pay the buyer and hospital together more than your eligible amount. If a buyer or an agency is now calling about a bill from a tax-exempt hospital, the hospital's billing and collections policy, or its financial assistance policy where it has no separate one, which must describe the actions it may take and the office with final authority to decide reasonable efforts were made, is the document to ask for. The collections guide covers the call itself.

Three things a hospital cannot use to get around the process are written into the same regulation. A signed waiver, such as a statement that you do not wish to apply, does not count as a determination that you are ineligible and does not satisfy the reasonable efforts requirement. A determination based on information the hospital has reason to believe is unreliable, or that was obtained under duress or coercive practices, does not count either; the regulation names delaying or denying emergency care until you provide eligibility information as a coercive practice. And if the hospital thinks you may qualify for Medicaid, it may hold your assistance decision until the Medicaid application is decided, which is a reason to file both promptly rather than a reason the assistance file can sit unanswered.

How assistance applications fall through

• Deciding you earn too much to qualify without reading the policy's criteria, when the criteria are the hospital's to set and vary widely.
• Paying the gross charge amount while an application was available, when an eligible patient may not be charged on gross charges at all.
• Letting the 240 day application window lapse because the bill looked settled or went quiet.
• Assuming the hospital's approval covers a separate clinician group's bill, when the policy's covered provider list is the document that decides that.
• Filing an incomplete application and treating the notice of missing documents as a denial.
• Accepting an adjusted amount verbally, without the written adjusted bill to hold the next statement against.

Medicaid and financial assistance often run side by side. From January 1, 2027, the period Medicaid can reach back for an application shrinks to one month for expansion adults and two months for others, as set out in our guide to Medicaid retroactive coverage in 2027, so applying for both promptly after a hospital stay matters more than it did.

A hospital's assistance policy covers hospital care, not pharmacy bills. For people with Medicare, prescription costs have their own federal protections: a yearly ceiling explained in the Part D out-of-pocket cap guide, and an option to pay that spending in monthly installments, explained in our Medicare Prescription Payment Plan guide.

The application period runs 240 days from the first statement, which is why it often outlasts the first collection notice; the dated timeline in what happens if you do not pay a hospital bill shows how the two overlap. A person on Medicare with limited income may also qualify for a state program that pays premiums or cost sharing, covered in Medicare Savings Programs.

Financial assistance questions

IRS and CMS sources

Internal Revenue Service, Requirements for 501(c)(3) hospitals under the Affordable Care Act, Section 501(r), including the written financial assistance policy, the limitation on charges, and reasonable efforts before extraordinary collection actions, checked October 29, 2026. Internal Revenue Service, Limitation on charges, Section 501(r)(5), amounts generally billed rules, checked October 29, 2026. Centers for Medicare and Medicaid Services, Talk to your provider about your bill, CMS medical bill rights help guide, checked October 29, 2026.

• eCFR, 26 CFR 1.501(r)-1, definitions, including the application period, amounts generally billed, gross charges and the plain language summary. Text current as of October 27, 2026; checked October 29, 2026.
• eCFR, 26 CFR 1.501(r)-4, financial assistance policy contents, including the covered provider list, and the duty to widely publicize the policy. Checked October 29, 2026.
• eCFR, 26 CFR 1.501(r)-5, limitation on charges: the look-back and prospective AGB methods, the meaning of charged, and Examples 1, 2, 5 and 6. Checked October 29, 2026.
• eCFR, 26 CFR 1.501(r)-6, billing and collection: the list of extraordinary collection actions, debt sales, reasonable efforts, the 120 day and 30 day notice rules, incomplete and complete applications, refunds above $5, reversal of collection actions and the waiver rule. Checked October 29, 2026.

General billing information, not legal or tax advice. Eligibility is set by each hospital's own policy. Confirm your price in writing before service.