Hospital Charity Care by State: Income Limits, How to Apply, and What to Say

More than 2,600 nonprofit hospitals operate in the United States. Every one of them must maintain a written charity care program under IRS Section 501(r) rules—or risk losing federal tax-exempt status. Yet studies consistently find that fewer than half of eligible patients ever apply. The most common reason: nobody told them the program existed. This guide covers exactly how charity care works, how it varies by state, and what to say when you call.

The federal 501(r) requirement

Section 501(r) of the Internal Revenue Code, added by the Affordable Care Act, creates four requirements for every nonprofit hospital as a condition of maintaining tax-exempt status:

1. Written Financial Assistance Policy (FAP): The hospital must maintain and publicize a written policy that describes who qualifies, what assistance is available, and how to apply. The FAP must be posted on the hospital’s website and be available in paper form on request, in plain language, and translated into the primary languages spoken in the community.
2. Limits on charges: Patients who qualify for financial assistance cannot be charged more than “amounts generally billed” (AGB)—the rate Medicare or Medicaid would pay. At most hospitals, AGB is 20–40% of the chargemaster (sticker) price. Even partial qualification results in meaningful savings.
3. Billing and collections restrictions: Before taking any “extraordinary collection action”—credit reporting, lawsuits, wage garnishment, property liens—the hospital must wait at least 120 days after the first billing statement and must make a “reasonable effort” to screen you for financial assistance eligibility.
4. 240-day application window: The hospital must accept financial assistance applications for at least 240 days after the first post-discharge bill. An approved application during this window can result in refunds of amounts already paid.

These are federal minimums. Many states layer additional protections on top—mandatory income thresholds, time limits on billing, limits on interest charges, and expanded eligibility rules.

Typical income thresholds (FPL percentages)

Most hospital charity care programs use the Federal Poverty Level as the eligibility benchmark. The FPL for a single person in 2026 is $15,650; for a family of four, it is $32,150 (contiguous U.S.). Here is what assistance typically looks like at different income levels:

• 0–200% FPL: Full charity care. Bill reduced to zero or to a nominal administrative amount (some hospitals charge $20–$50).
• 200–300% FPL: Significant discount, commonly 50–75% off the remaining balance.
• 300–400% FPL: Partial discount, typically 25–50% off. At minimum, charges are capped at the AGB rate.
• Above 400% FPL: Most hospitals stop here, though some large systems extend to 500% or even 600% FPL with smaller discounts.

These are typical ranges. Each hospital sets its own thresholds within (and sometimes beyond) these parameters. Always look at the specific hospital’s FAP rather than assuming.

Charity care thresholds: 10 major states

Several states have enacted laws that set minimum charity care standards for hospitals—either raising the income threshold floor or imposing caps on billing for lower-income patients. The table below reflects the state legal minimum where a mandatory law exists, and the typical range for voluntary hospital programs in states without such laws.

Sources: State hospital association websites, state attorney general guidance, KFF State Health Facts. Thresholds are subject to change—verify with your hospital’s Financial Assistance Policy.

How to find your hospital’s policy

Every nonprofit hospital must post its Financial Assistance Policy publicly. Here is how to find it:

1. Search the hospital website. Look for links labeled “Financial Assistance,” “Charity Care,” “Patient Financial Services,” or “Billing & Insurance.” Most large systems have a dedicated page.
2. Look for the plain-language summary. 501(r) requires a plain-language summary in addition to the full policy. This version is shorter and easier to understand.
3. Call and ask directly. Ask the billing department for “the financial assistance policy and the application form.” They are legally required to provide it. If they resist, ask for the financial counseling department.
4. Check the IRS Form 990. Nonprofit hospitals file Form 990 annually. Schedule H shows the charity care policy and how much the hospital spent on community benefit. You can find these on IRS Tax Exempt Organization Search or ProPublica’s Nonprofit Explorer.

Documents to bring

Financial assistance applications require proof of income and household composition. Most hospitals accept the following:

• Most recent federal tax return (Form 1040) with all schedules
• Last 2–3 months of pay stubs (if income has changed since the last tax year)
• Unemployment benefit statements or termination letter if recently laid off
• Social Security or disability award letter (SSA-1099)
• Bank statements (2–3 months) if self-employed or if income is irregular
• Your hospital account number and itemized bill
• Explanation of Benefits from your insurer showing what they paid and your remaining balance

If your income fell below the tax filing threshold and you did not file a return, most hospitals will accept a signed self-attestation letter. Ask the financial counselor what alternative documentation they will accept before assuming you cannot apply.

Exactly what to say when you call

Call the hospital billing department and use this script as a starting point:

“Hi, I’m calling about account number [XXXXX]. I would like to apply for financial assistance under your charity care program. Can you transfer me to your financial counseling department? I also want to request a hold on any collection activity while my application is being reviewed.”

Key phrases to use:

• “Financial assistance application” — This is the legal term under 501(r). Using it signals you know your rights.
• “Billing hold while under review” — Request this explicitly. Most hospitals will agree to 30–60 days.
• “Written confirmation of the application deadline” — Ask for the exact date your 240-day window closes.
• “Self-pay discount” — Even if you don’t qualify for charity care, ask about a self-pay or uninsured discount. This often yields 30–60% off independently.

What to do if you’re denied

If your charity care application is denied, you have options:

1. Request the denial in writing with the specific reason. Vague denials like “income too high” are insufficient—ask for the exact income figure they used and how they calculated it.
2. Appeal with additional documentation. If you had significant unreimbursed medical expenses, a recent income drop, or other hardship factors not reflected in your tax return, submit a letter explaining the circumstances with supporting documentation.
3. Ask about alternative programs. Some hospitals have separate hardship funds, sliding-scale discounts, or community assistance programs that operate independently of the standard FAP.
4. Contact your state attorney general. In states with mandatory charity care laws (California, Illinois, Washington, Massachusetts, New York), violations can be reported to the state AG or the state department of health.
5. File an IRS complaint. If you believe a nonprofit hospital violated 501(r) requirements—for example, by failing to screen you for eligibility before sending you to collections—you can report this to the IRS using Form 13909.

Sources

• IRS: Section 501(r) Requirements for Tax-Exempt Hospitals
• KFF: Hospital Charity Care—How It Works and Why It Matters
• HHS ASPE: Federal Poverty Level Guidelines 2026
• IRS: Tax Exempt Organization Search
• CFPB: Medical Billing and Debt Collection Resources