The Complete Guide to Hospital Charity Care

What charity care is — and why it exists

Charity care is a hospital financial assistance program that provides free or reduced-cost care to patients who cannot afford to pay their medical bills. It is not a government program. It is a legal obligation imposed on nonprofit hospitals by the IRS as a condition of their tax-exempt status.

The legal basis is Section 501(r) of the Internal Revenue Code, added by the Affordable Care Act. Under 501(r), every nonprofit hospital — which accounts for more than 60% of hospitals in the United States, according to American Hospital Association data — must maintain a written financial assistance policy, apply it consistently, publicize it in the languages of the community, and make it available to any patient who requests it.

The amounts involved are significant. A hospital that fails to comply with 501(r) risks losing its federal tax-exempt status — worth hundreds of millions of dollars for large health systems. This gives the legal obligation real weight.

Who qualifies for charity care

Eligibility is determined by household income relative to the Federal Poverty Level (FPL). Each hospital sets its own thresholds within IRS guidelines. Common structures include:

Full assistance (100% of the bill forgiven): Most frequently available to households earning up to 200% of the FPL. For 2025, 200% of the FPL is approximately $31,200 for an individual and $64,000 for a family of four, based on HHS poverty guidelines.

Partial assistance on a sliding scale: Many hospitals extend partial assistance to households earning between 200% and 400% of the FPL — approximately $124,000 for a family of four. Some large academic medical centers extend eligibility to 600% of the FPL.

Insured patients also qualify. Having insurance does not disqualify you from charity care. The program applies to your remaining balance after insurance has processed the claim — which is particularly relevant for patients with high-deductible health plans who are left with significant out-of-pocket obligations.

To find a specific hospital's financial assistance policy, search the hospital's name plus "financial assistance policy" or visit the hospital's billing page. Under 501(r), it must be publicly available. The CMS hospital compliance database can help verify a hospital's nonprofit status.

Why most eligible patients don't receive charity care

The application process is intentionally complex. Hospitals have no financial incentive to make it easy — collecting the full bill is always preferable to forgiving it. As a result, charity care applications require specific documentation, must be submitted to the correct department within a specific timeframe, and must follow each hospital's exact format.

Applications that are incomplete — even by a single document — are routinely denied without substantive review of the underlying eligibility. Applications submitted after the hospital's internal deadline are routinely denied regardless of eligibility. And patients who receive a denial letter often don't realize that the denial is frequently appealable.

What the application typically requires

Most charity care applications require documentation of household income and size. Commonly requested documents include:

Proof of income: Most recent federal tax return, or — if income has changed — recent pay stubs (typically 2–3 months). For self-employed applicants, a profit and loss statement or bank statements may be required.

Proof of household size: Birth certificates for dependents, or a signed household size declaration.

Bank statements: Some hospitals assess assets in addition to income, particularly for patients seeking full assistance at higher income levels.

Insurance information: Even if insured, you must provide your insurance information so the hospital can apply charity care to the balance remaining after insurance processing.

Documentation requirements vary by hospital. Submitting incomplete documentation is the most common reason applications are denied on technical grounds before the eligibility determination is made.

Deadlines: the most important thing to know

Every hospital's charity care policy specifies a deadline for applications — typically expressed as a number of days after the date of service or the date of the first billing statement. Common deadlines are 90, 120, or 240 days. Some hospitals allow applications up to one year after service.

Missing the deadline is one of the most common reasons eligible patients are denied. Under 501(r), hospitals are required to make reasonable efforts to determine charity care eligibility before engaging in extraordinary collection actions — but this obligation does not extend indefinitely. Once the deadline passes, your options narrow significantly.

What to do if your application is denied

Charity care denials are frequently appealable. The most common reasons for denial include: application submitted after the deadline, incomplete documentation, income reported incorrectly, or the patient was assessed as ineligible under the hospital's specific thresholds.

For deadline-related denials, an appeal can sometimes succeed if you can document that the hospital failed to make reasonable efforts to notify you of the program — a 501(r) compliance obligation. For documentation-related denials, submitting the missing documentation with a written appeal is often sufficient to reverse the decision.

For income-threshold denials, verify that the hospital used the correct FPL percentage and the correct household size. If you believe the determination was incorrect, request a written explanation of the eligibility calculation and submit a formal written appeal challenging the specific basis for the denial.

Not sure if you qualify? Get a free consultation — our case managers screen your eligibility and handle the complete application.

Charity care at for-profit hospitals

For-profit hospitals are not subject to 501(r) and are not legally required to offer charity care. However, many for-profit systems maintain voluntary financial assistance programs, either as a matter of corporate policy or as a requirement under state licensing regulations. Several states — including California, New York, and Illinois — have enacted laws requiring all hospitals, including for-profits, to provide financial assistance to qualifying patients.

California's Hospital Fair Pricing Act, for example, requires hospitals to provide free care to patients earning up to 350% of the FPL and to cap charges for patients earning between 350% and 600% of the FPL. The California DHCS maintains resources on these requirements.

How charity care affects your credit

Applying for charity care does not affect your credit score in any way. The application process is between you and the hospital's billing department and involves no credit inquiry. What does affect your credit is an unpaid medical bill that goes to collections — which is exactly what charity care prevents. Under rules proposed by the CFPB in 2024, medical debt may be removed from credit reports entirely for purposes of lending decisions.