Charity Care: How to Get Hospital Bills Reduced or Forgiven

If the hospital that billed you is a nonprofit, federal tax law requires it to keep a written financial assistance policy, to publicize that policy, and to check whether you qualify for it before it reports you to a credit bureau, sells your debt, or takes you to court. Almost nobody is told that. The rule arrived with the Affordable Care Act, which added section 501(r) to the tax code, and the assistance it requires is what hospitals call charity care.

It goes unclaimed because finding it is left to the patient. The policy exists, usually as a PDF three clicks deep on the billing page, and the bill that lands in your mailbox mentions it in small type if at all. Here is how to turn it into something you can use.

What charity care actually is

Charity care is free or discounted hospital care for patients who cannot afford to pay. The CFPB describes it as a program covering both people without insurance and people who have insurance but still can't cover their share.

At a nonprofit hospital, it isn't discretionary. Section 501(r) adds four requirements to any organization operating a hospital facility that wants to keep its 501(c)(3) exemption. Three of them are what make charity care claimable:

• 501(r)(4) requires a written financial assistance policy, or FAP, and requires it to be widely publicized.
• 501(r)(5) caps what an eligible patient can be charged for emergency or other medically necessary care at no more than the amounts generally billed to insured patients, abbreviated AGB in the regulations.
• 501(r)(6) bars certain aggressive collection steps until the hospital has made reasonable efforts to determine whether you qualify.

The middle one is quietly powerful. Under 26 C.F.R. § 1.501(r)-5, AGB is calculated either by looking back at what insurers actually allowed on the hospital's claims over a prior twelve months, or by pricing the care the way Medicare or Medicaid would. Once you are eligible under the policy, the uninsured sticker price stops applying. Even a partial discount moves you off the chargemaster rate and onto something closer to what an insurer would have paid.

Which hospitals actually have to offer it

Section 501(r) reaches hospital organizations described in section 501(c)(3). That is most community hospitals, most academic medical centers, and most large religious and secular systems. It does not reach for-profit hospitals, and it does not automatically reach a government hospital that never sought 501(c)(3) recognition.

Two things follow. The requirement runs facility by facility, not system by system, and the IRS is explicit that an organization with several hospital facilities needs a written FAP for each one. And a for-profit hospital being outside 501(r) doesn't mean it has no program; many publish one anyway, and in some states the law reaches them regardless.

That second point carries real weight. The CFPB notes that California, Connecticut, Illinois, Maine, Maryland, Nevada, New Jersey, New York, Rhode Island, and Washington have charity care protections applying to all hospitals, while Louisiana, Oregon, and Texas have protections limited to nonprofit or state hospitals. Three examples of how far a state can go past the federal floor:

• Washington legislates the minimums. Under RCW 70.170.060, patients at hospitals in three-or-more-hospital systems get full charity care up to 300% of the federal poverty level, with 75% and 50% discounts out to 400%. Billing statements must carry the line "You may qualify for free care or a discount on your hospital bill, whether or not you have insurance," and income can be measured up to two years after the date of service.
• Colorado requires screening rather than waiting to be asked. Its Hospital Discounted Care program makes hospitals screen every uninsured patient, and any insured patient who requests it, for Medicaid, CHP+, Medicare, and financial assistance. Households at or below 250% of the guidelines qualify, and monthly payments are capped as a share of income.
• Illinois runs an uninsured patient discount reaching 600% of the poverty level at non-rural hospitals and 300% at rural and critical access hospitals, and caps annual collection from an eligible patient at 25% of family income. The deadline is short, 60 days from discharge, so move fast there.

California, for its part, raised its own threshold to 400% of the poverty level and, in 2025, removed asset tests from eligibility decisions entirely. If you aren't sure of your hospital's tax status, the IRS Tax Exempt Organization Search will tell you, but the faster test is to search the hospital's name plus "financial assistance policy" and see what comes back.

What income qualifies for charity care?

There is no national cutoff, and any page that gives you one is guessing. The policy sets the criteria, and the regulations require it to spell out every discount available, the eligibility rule for each, and the method used to calculate AGB. What is near-universal is the yardstick: eligibility gets expressed as a percentage of the HHS poverty guidelines for your household size.

Those guidelines publish each January. For 2026, in the 48 contiguous states and DC, the figure is $15,960 for a household of one and $33,000 for a household of four, plus $5,680 per additional person, with higher numbers for Alaska and Hawaii. A policy offering free care up to 200% of the guideline therefore covers a family of four earning up to $66,000.

Where hospitals land varies enormously. A 2024 Health Affairs study of 2,989 nonprofit hospitals found free-care income limits from 41% to 600% of the guideline, mean 216% and median 200%. For discounted care, the 77% of hospitals that named a limit averaged 373%, with a median of 400%. The same study found almost two-thirds of policies (64.0%) treat assets as a factor, and that many carry a separate hardship track for people whose income clears the standard test but whose bill is enormous relative to it; the median trigger there was a bill worth 20% of income.

What a nonprofit hospital can't do until it checks

This is the most useful part of the rule and the least known. Under 26 C.F.R. § 1.501(r)-6, a hospital facility may not take an extraordinary collection action, an ECA, against you until it has made reasonable efforts to determine whether you qualify. Both terms are defined narrowly enough to check against your own paperwork.

Collection action	An ECA?	What has to happen first
Reporting adverse information to a credit bureau	Yes	Written notice, plain language summary, an attempt at oral notice, and at least 120 days from the first post-discharge bill
Selling your debt to another party	Yes, unless a qualifying written agreement exists	The same notice steps, or a contract barring the buyer from ECAs and from interest above the federal rate
Filing a civil suit against you	Yes	The same notice steps, plus a written deadline no earlier than 30 days out
Garnishing wages or seizing a bank account	Yes	A judgment, which required the notice steps first
Placing a lien on your property or foreclosing	Yes	The same notice steps
Demanding payment before further medically necessary care	Yes	An application form and written notice; the 30-day rule can be shortened here
Filing a claim in your bankruptcy case	No	Nothing under section 501(r)
A lien on personal-injury settlement proceeds	No	Nothing under section 501(r)

• Collection actionReporting adverse information to a credit bureau

  An ECA?

  Yes

  What has to happen first

  Written notice, plain language summary, an attempt at oral notice, and at least 120 days from the first post-discharge bill

• Collection actionSelling your debt to another party

  An ECA?

  Yes, unless a qualifying written agreement exists

  What has to happen first

  The same notice steps, or a contract barring the buyer from ECAs and from interest above the federal rate

• Collection actionFiling a civil suit against you

  An ECA?

  Yes

  What has to happen first

  The same notice steps, plus a written deadline no earlier than 30 days out

• Collection actionGarnishing wages or seizing a bank account

  An ECA?

  Yes

  What has to happen first

  A judgment, which required the notice steps first

• Collection actionPlacing a lien on your property or foreclosing

  An ECA?

  Yes

  What has to happen first

  The same notice steps

• Collection actionDemanding payment before further medically necessary care

  An ECA?

  Yes

  What has to happen first

  An application form and written notice; the 30-day rule can be shortened here

• Collection actionFiling a claim in your bankruptcy case

  An ECA?

  No

  What has to happen first

  Nothing under section 501(r)

• Collection actionA lien on personal-injury settlement proceeds

  An ECA?

  No

  What has to happen first

  Nothing under section 501(r)

26 C.F.R. § 1.501(r)-6(b) and (c). Routine billing statements and collection calls are not ECAs, though the FDCPA and Regulation F still govern how an agency may contact you.

Two details make this enforceable rather than theoretical.

The clock is concrete. Before starting an ECA, the hospital must give written notice that financial assistance is available, identify which ECAs it intends to begin, state a deadline no earlier than 30 days out, include a plain language summary of the policy, and make a reasonable effort to tell you about it by phone. Then it waits at least 120 days from the first post-discharge billing statement.

And the hospital owns what its collector does. The regulation deems the hospital to have engaged in an ECA if any purchaser of your debt, any agency it referred you to, or any substantially related entity took that step. There is no outsourcing around the waiting period. If a medical account surfaced on your credit report and no notice ever reached you, that gap is worth documenting, and it belongs in a dispute with the credit bureaus as much as in a letter to the hospital.

Can you still get charity care after the bill goes to collections?

Usually, yes, and this is the opposite of what most people assume when the first collection letter arrives.

The regulations define an application period during which the hospital must accept and process a request in order to have made reasonable efforts. It starts the day care was provided and ends on the later of 240 days after the first post-discharge billing statement, or the deadline stated in the ECA notice you were sent. Nothing in that definition stops when the account is referred out. A bill sitting with a collection agency is still a bill the hospital has to consider.

Apply inside that window and be found eligible, and the obligations get specific:

The hospital must also suspend collection activity while a complete application is pending, and if yours is incomplete it has to tell you in writing what's missing and give you a fair chance to supply it rather than simply denying you.

Past 240 days the federal obligation ends, but the door often doesn't close. The regulations expressly permit a hospital to accept an application filed outside the period, and many policies say they will. State law can extend it outright, as Washington's two-year look back does. If the account has already moved to a debt buyer rather than an agency, who owns the debt now changes what the hospital can undo, which is one more reason to apply early rather than perfectly.

Charity care won't address the parts of the problem sitting outside the hospital. A collector's conduct, your right to make it prove the debt is yours, the rules for how medical debt gets reported, and what happens once a medical bill is in collections all run on separate tracks.

How do you find a specific hospital's policy?

The publicity rules tell you where to look, because they tell the hospital where to put it. A facility must make the policy, the application form, and the plain language summary free on a website, with no account and no personal details required to download them. Paper copies go out by mail on request and sit in public areas including the emergency room and admissions. A summary is offered during intake or discharge. And billing statements must carry a conspicuous notice naming the phone number and the direct URL.

In order of speed:

1. Search the hospital's exact name plus "financial assistance policy" or "charity care policy." The plain language summary is the short version: eligibility, how to apply, a phone number.
2. Read the small print on the billing statement, which is required to carry that number and URL.
3. Call and ask for the financial assistance office or a financial counselor. Ask them to mail you all three documents free of charge, which they must do. Translations are required where the hospital serves a large limited-English-proficiency population.

Confirm you have the right facility's policy, and check which providers it covers. The policy has to list which outside providers delivering care inside the hospital are covered and which aren't, and the anesthesiologist or radiologist who billed separately is often in the second column. That one is a hospital bill negotiation problem, not a charity care one.

What do you need to apply?

Each hospital sets its own list, and the policy has to state what it will ask for, so read the application form first. The requests are conventional, though, and having this folder assembled before you start turns a three-week back-and-forth into one submission.

• The application form for that specific hospital facility

  Not a generic form and not another hospital's. Download it from the page where the policy lives.

• Photo ID and proof of where you live

  A utility bill or lease usually settles residency. Some state programs, Illinois among them, require in-state residency.

• Proof of household income for the period the policy names

  Recent pay stubs, a Social Security or unemployment award letter, disability statements, or a self-employment summary.

• Last year's tax return, or a written statement if you didn't file

  Hospitals routinely accept a signed statement explaining why no return exists. Ask rather than assume you're disqualified.

• Household size, counted the way the policy defines it

  This drives the poverty-guideline math, and the policy's definition may not match who is on your lease.

• The itemized bill and every account number attached to it

  Ask for an itemized statement if you only have a summary. One episode of care can generate several account numbers.

• Any insurance denial or explanation of benefits

  Evidence that the balance is genuinely yours to pay rather than a claim still in process.

• Asset statements, but only if the policy asks

  About two-thirds of policies weigh assets. Several states restrict or forbid it, and California dropped asset tests in 2025.

• A short written statement of what changed

  One factual paragraph: job loss, hours cut, a new diagnosis. It supports a hardship track when the income test alone is borderline.

What to send, and to whom

Send the application to the hospital's financial assistance office, and send a copy of the cover letter to any collection agency or law firm working the account. The hospital's duty to suspend collection doesn't automatically reach a third party nobody has told. The CFPB's guidance is blunt about this: notify the collector that you're seeking assistance and tell them to pause while it's pending. Keep copies and note the date you sent them.

[Your full name] [Your street address] [City, State ZIP] [Phone] · [Email]

[Date]

[Hospital name], Financial Assistance Office [Address from the plain language summary]

cc: [Collection agency or law firm name and address, if any]

Re: Request for financial assistance under your Financial Assistance Policy Patient: [name] · Date(s) of service: [dates] · Account number(s): [numbers] · Balance billed: [$X,XXX]

To the Financial Assistance Office:

I am applying for financial assistance under [hospital facility name]'s Financial Assistance Policy for the account(s) above. The completed application form and supporting documents are enclosed: [list what you enclosed].

My household is [N] people and my current gross household income is approximately [$X] per [month / year]. [One or two factual sentences: My hours were cut in March and have not been restored. / I was out of work for eleven weeks after surgery.]

This request covers all care listed above, including any portion already referred to collections. I understand that under 26 C.F.R. § 1.501(r)-6 the application period for this care runs at least 240 days from the first post-discharge billing statement, and I ask you to accept and process this application for the full balance.

I am asking you to do the following:

(1) Suspend collection activity on these accounts while this application is pending, and notify [collection agency name] to do the same.

(2) Determine my eligibility and notify me in writing of the decision and the basis for it.

(3) If I am found eligible, apply the discount to the full balance, refund any amount I have already paid above what I owe as an eligible patient, and take all reasonably available measures to reverse any collection action already taken, including removing any adverse information reported to the credit bureaus.

(4) If this application is incomplete, tell me in writing what is missing and give me a reasonable opportunity to provide it rather than denying it as submitted.

Please send all correspondence to the address above.

Sincerely,

[Signature] [Printed name]

Replace everything in [brackets] with your own details. Keep a copy of what you send and the date you sent it.

What if the hospital denies you?

Find out which kind of denial it is, because the two have different fixes. An incomplete-application denial is a paperwork problem, and the hospital was supposed to tell you in writing what was missing before it got that far. Supply the item and resubmit; a complete application filed later in the window still counts.

An eligibility denial means the criteria were applied and you fell outside them. Ask for that in writing with the specific criterion named, then check three things: the household size they used, the income period they measured, and whether they applied an asset test your state no longer permits. Any of those supports a written appeal through the process the policy describes.

If the appeal fails and you believe the hospital ignored its own policy or the federal rule, three escalation routes cost nothing. Your state attorney general or health department enforces state charity care statutes; Illinois names the attorney general directly on its patient rights page. The CFPB takes complaints about a collector pursuing a bill that should have been covered, or about how it appears on your credit file, and the mechanics are in how to report a debt collector. And the IRS accepts referrals about tax-exempt organizations on Form 13909. That last lever is slow and won't fix your bill, but 501(r) compliance is precisely what it exists for. The CFPB, citing a 2015 study, reported in 2022 that only 44% of hospitals said they notified patients about eligibility before trying to collect, so the compliance gap is documented.

If you genuinely don't qualify, charity care was never the only lever. Ask for the AGB or self-pay rate, ask for an interest-free plan, and negotiate the balance: start with negotiating the hospital bill itself, then the general playbook for settling a debt on your own and what percentage to open at. When the bill is one of several and cash is short, deciding which bills come first comes before any of it, and a hardship letter reuses most of the documents you gathered above. One sequencing note: how long a collection stays on your report and what actually removes one are worth reading first, because an approval that obliges the hospital to reverse its own reporting beats a paid collection.

Where Felix fits

Charity care is something you apply for yourself, directly with the hospital, at no cost. Felix doesn't file these applications and doesn't stand between you and a financial assistance office, because there's nothing useful for a company to add there. Use the letter above, or call the number on your bill.

What Felix handles is everything downstream: the accounts charity care doesn't cover, the balance left after a partial discount, and the other debts that piled up while the medical bill went unpaid. Felix drafts each creditor letter, you review and sign it, and it goes out in your name from your own return address. Nothing is sent without your signature. Pricing is a flat subscription rather than a share of anything forgiven, which you can see in the pricing section, and the FAQ covers how your information is handled. Creditors are never obliged to negotiate, and no result described here is a promise about yours.