Non-profit hospitals with tax-exempt 501(c)(3) status are federally required to maintain a written financial assistance policy that covers all emergency and medically necessary care. This obligation comes from Section 501(r) of the Internal Revenue Code, added as part of the Affordable Care Act in 2010. The requirement is broad and enforceable: hospitals must publish their policy publicly, use clear income-based eligibility criteria, screen patients before sending bills to debt collectors, and cap charges at amounts insured patients actually pay. If a hospital fails to comply, the IRS can impose penalties or revoke its tax-exempt status.
Official resources:
- Read the official guidance from Irs — Use this primary source to verify the official guidance.
- Explore the official data from Consumerfinance — Use this primary source to review the underlying data.
Table of Contents
- The Federal Requirement and Who Must Comply
- What the Policy Must Specify
- Limits on What You Can Be Charged
- How to Access Assistance and Your Protections
- Enforcement and Penalties
- Frequently Asked Questions
The Federal Requirement and Who Must Comply
Every hospital classified as a 501(c)(3) non-profit organization is required under Section 501(r) of the Internal Revenue Code to maintain written financial assistance and emergency care policies. This applies regardless of hospital size—large academic medical centers and small community hospitals alike must have these policies in place. The policy must cover all emergency and medically necessary care provided by the hospital and substantially-related entities. This means the obligation applies to your bill whenever a non-profit hospital provides you care, not just in specific departments or circumstances.
What the Policy Must Specify
Hospitals must spell out exactly who qualifies for what level of assistance. The policy must include explicit eligibility criteria for each assistance level, stating the income thresholds or other factors that determine eligibility for free care, discounted care, or sliding-scale payments. Most hospital policies provide free care to patients with household income below 200% of the federal poverty level (about $30,120 per year for a single person in 2026), discounted care at 200–400% of poverty level, and sliding-scale assistance up to 600% of poverty level. Some states mandate higher thresholds—for example, requiring 300% of poverty level for free care. The policy must also state the basis for calculating what the hospital charges you, so you can verify accuracy.
Limits on What You Can Be Charged
Non-profit hospitals cannot bill you the full list price (the "chargemaster rate") while insurance companies pay a fraction. Hospitals must limit charges to FAP-eligible patients to "amounts generally billed" (AGB) to insured patients, typically calculated using either actual claims data or Medicare rates. This protection prevents hospitals from exploiting uninsured and underinsured patients by charging them inflated rates that no insurance company would accept.
If you qualify for financial assistance, the hospital applies the AGB calculation to your bill—meaning you pay roughly what an insurer would negotiate, not the uninsured sticker price. If your bill appears higher than what insured patients pay, you can request a correction.
How to Access Assistance and Your Protections
Start by asking the hospital's billing or financial assistance department for its policy. Hospitals must make their policy widely available on their website and in paper form in high-visibility locations like the emergency room and billing office, and must include a plain-language summary on every billing statement. Request a paper copy free of charge if you prefer one. Before sending your bill to a debt collector or filing a lawsuit, the hospital must make reasonable efforts to determine whether you qualify for assistance and must provide at least 30 days' written notice that collections actions may begin. If you receive a collection notice, use that 30-day window to apply for assistance.
Enforcement and Penalties
Hospitals that fail to maintain a written financial assistance policy or that ignore eligibility requirements face substantial penalties. The IRS can impose a $50,000 excise tax per violation, and repeated or severe non-compliance can result in revocation of the hospital's tax-exempt status. Loss of tax-exempt status is institutional catastrophe—it means paying corporate income taxes and losing donor incentives—so compliance is a serious priority.
If you believe a hospital has violated its financial assistance obligations, you can file a complaint with the IRS, your state attorney general, or your state's department of health. These agencies investigate and enforce the regulations.
Frequently Asked Questions
How do I know if my hospital is a non-profit?
Non-profit hospitals are 501(c)(3) organizations. Search the hospital name on the IRS Tax Exempt Organization Search tool at irs.gov, or ask the billing department directly.
What if I missed the deadline to apply for assistance?
Contact the financial assistance office immediately. Many hospitals will backdate eligibility if you apply after receiving a bill, especially before collections begin.
Can a non-profit hospital deny me assistance if I meet the income criteria?
No. If your income falls within the published thresholds and you provide required financial information, the hospital must provide the stated assistance level.
Does this rule apply to for-profit hospitals?
No. For-profit hospitals are not required to maintain financial assistance policies under Section 501(r). However, some states impose their own requirements on all hospitals, so check your state's laws.