About six in ten US hospitals are nonprofit, and in exchange for paying no income or property tax, federal law requires each of them to have a written financial assistance policy (FAP), to make it public, and to apply it before sending anyone to collections. Public hospitals have similar programs. Only fully for-profit hospitals are exempt, and many of those have policies anyway. Yet most patients who would qualify never apply, because nobody tells them the policy exists.
What the law requires
Section 501(r) of the tax code says a nonprofit hospital must:
- Have a written FAP stating who qualifies, what discount they get and how to apply, and make it available on its website, in the emergency department and in the admissions area.
- Offer a plain-language summary and translate it where a language is spoken by a significant share of patients.
- Never charge FAP-eligible patients more than the amounts generally billed to insured patients, which means the gross charge can never be used against them.
- Make "reasonable efforts" to determine whether a patient is eligible before taking extraordinary collection actions (lawsuits, wage garnishment, credit reporting). In practice this means at least 120 days from the first bill and a written notice that assistance is available.
Hospitals lose their tax exemption if they do not comply, so the policies are real, even where they are not advertised.
Who qualifies
Each hospital sets its own thresholds, and they are more generous than most people assume. Typical policies:
- Free care for households below 200 percent of the federal poverty level (about $62,000 for a family of four in 2026), and at many large systems below 300 percent.
- Sliding discounts of 50 to 90 percent up to 400 percent of the poverty level, and some systems go higher.
- Catastrophic provisions that cap a bill at a percentage of annual income regardless of income level, common at academic medical centers.
- Some states (California, Illinois, Washington, New York, Oregon, Colorado and others) set minimum thresholds by law, and a few require hospitals to screen every patient for eligibility before billing.
Insurance status does not matter: a person with insurance and a large deductible can qualify for assistance on the part they owe.
How to apply
- Find the hospital's FAP on its website; search for "financial assistance" or "charity care". If you cannot find it, the billing office must provide it.
- Fill in the application. It usually asks for household size, income (pay stubs or a tax return), and sometimes assets. Some hospitals accept a signed statement of income for smaller bills.
- Submit it before the bill is due, or as soon as you receive it. Approval is often retroactive to bills from the past several months, sometimes years.
- Ask for the decision in writing. If denied, ask for the reason and appeal; the policy must state how.
If a bill has already gone to collections, you can still apply. Under 501(r), a hospital that finds you eligible must refund what you paid above the discounted amount and reverse the collection action.
What to say
"I would like to apply for financial assistance under your financial assistance policy. Please send me the application and the policy, and please hold the account from collections while it is reviewed." Say it to the billing office, and repeat it in writing.
How this fits with the price files
The published cash price is what the hospital charges people who pay themselves and do not apply for assistance. For most households under the thresholds above, the FAP discount is better than the cash price, and it is not negotiable in the hospital's favor: the policy is the policy. Use the cash price to compare hospitals, and use the FAP to pay less at the one you choose.