Texas has 5.1 million uninsured residents — the highest total of any state — yet the state did not expand Medicaid under the ACA and has no state law mandating charity care income thresholds. What Texas does have: powerful federal rules that require every nonprofit hospital to provide financial assistance, and a significant head-of-household wage garnishment exemption. BillKarma’s analysis of 900+ Texas hospitals shows the 10 largest health systems in the state mark up procedures a median of 4.8× over Medicare — but the same systems collectively reported $4.2 billion in charity care that went underutilized in 2024. This guide shows you how to claim your share.
1. Who must provide charity care in Texas?
Texas has no state law mandating hospital charity care income thresholds. But federal law fills much of the gap: every nonprofit hospital in the United States must comply with IRS Section 501(r) as a condition of keeping its federal tax-exempt status. This requirement covers the majority of large hospitals in Texas, including major systems like Baylor Scott & White, UT Southwestern, Houston Methodist, and Christus Health.
Under IRS 501(r), every nonprofit hospital must:
- Maintain a written Financial Assistance Policy (FAP) and make it publicly available on its website
- Provide a plain-language summary of the FAP to patients at admission and discharge
- Screen patients for financial assistance eligibility before pursuing extraordinary collection actions (ECAs)
- Limit charges to qualifying patients to the amounts generally billed (AGB) — roughly what Medicare or insurers pay, not the full chargemaster rate
- Accept financial assistance applications for at least 240 days after the first billing statement
For-profit hospitals in Texas (like many HCA Healthcare facilities) are not required to offer charity care, but many maintain hardship discount programs. Always ask.
2. How to apply for financial assistance at a Texas hospital
Because Texas lacks a uniform state standard, the application process and income thresholds vary by hospital. Here is the universal approach that works at any Texas facility:
Step 1: Call the billing department and ask for the Financial Assistance Application
Use the number on your bill or the hospital’s website. Say: “I’d like to apply for financial assistance under your charity care or financial assistance policy.” If the billing representative cannot help, ask to be transferred to the Patient Financial Services or Patient Financial Counselor department. They must provide the application.
Step 2: Gather documentation
- Most recent federal tax return (Form 1040, pages 1–2)
- Two to three recent pay stubs, or unemployment/disability benefits statement if applicable
- Proof of household size (birth certificates, tax dependents)
- Any other documentation of financial hardship: layoff notice, other medical bills, bank statements
Step 3: Apply within the 240-day window
IRS 501(r) requires hospitals to accept applications for 240 days after the first billing statement. Even if you have made partial payments or been contacted by a collections department, you can still apply retroactively.
Step 4: Compare your charges to Medicare rates first
Knowing the Medicare rate for your procedures gives you leverage on two fronts: it identifies overcharges to dispute, and it shows the hospital you understand what “reasonable” looks like. Use our calculator:
| Major Texas Nonprofit Health System | Charity Care Policy Notes | How to Apply |
|---|---|---|
| Baylor Scott & White Health | Free care ≤200% FPL; sliding scale to 300% FPL for most facilities | bswhealth.com/billing or call billing dept. |
| Houston Methodist | Free care ≤200% FPL; discounts to 400% FPL at some locations | houstonmethodist.org/financial-assistance |
| UT Southwestern Medical Center | Free care ≤200% FPL; sliding scale to 400% FPL | utswmed.org/billing |
| Christus Health | Free care ≤200% FPL; sliding scale to 350% FPL | christushealth.org/financial-assistance |
| Texas Children’s Hospital | Free care ≤200% FPL; generous sliding scale for pediatric patients | texaschildrens.org/financial-assistance |
Policy thresholds are subject to change. Always verify directly with the hospital billing department before applying.
3. Texas Indigent Health Care Act (IHCA)
For patients who do not qualify for Medicaid and whose income is very low, the Texas Indigent Health Care Act (IHCA) provides a separate safety net. The IHCA requires Texas counties to provide — or arrange for — a defined set of health services for residents who meet all of the following:
- Income at or below 21% of the Federal Poverty Level (approximately $3,287/year for a single person in 2026)
- Do not qualify for any other government-funded health program (Medicaid, CHIP, Medicare)
- Are residents of the county providing the services
- Have not already received the maximum benefit for the year
The IHCA covers emergency services, primary and preventive care, inpatient and outpatient hospital services, and prescription drugs within the benefit package. Funding and access vary significantly by county — Harris County (Houston) and Travis County (Austin) have the most robust programs. For large uncompensated bills at a public hospital like Harris Health (Ben Taub), ask about the county indigent care program directly.
4. Annotated Texas ER bill
The following example shows a Texas emergency room visit with four common billing problems: split facility and physician bills from the same visit, upcoded evaluation and management level, supply charge inflation, and an out-of-network ER physician balance bill.
Action items for each problem:
- E&M upcoding (Level 5 vs. Level 3): Request your medical records and the ER physician’s note for the visit. Under CPT guidelines, Level 5 requires “high medical decision making” — a laceration repair with no complicating factors does not qualify. Submit a written dispute citing the medical documentation.
- Supply charge inflation: Request the hospital’s supply charge schedule (available under CMS price transparency rules). A $45/pair charge for exam gloves is indefensible. Dispute with a written request for reduction to a reasonable cost-plus amount.
- Out-of-network ER physician balance bill: Send a written dispute citing the No Surprises Act (42 U.S.C. § 300gg-111). File a complaint with the Texas Department of Insurance and the CMS No Surprises Help Desk at 1-800-985-3059.
5. Your rights before and during collections
Texas law and federal law together give you important protections before a hospital bill reaches collections:
- Right to an itemized bill: Texas hospitals must provide an itemized statement upon request within a reasonable time. Send your request in writing and keep a copy.
- IRS 501(r) screening requirement: Nonprofit hospitals cannot take extraordinary collection actions (lawsuits, liens, wage assignments) until they have made a reasonable effort to determine whether you qualify for financial assistance and notified you of your eligibility.
- Debt validation right (FDCPA): Once a collections agency contacts you, you have 30 days to request debt validation in writing. The collector must verify the debt before continuing collection efforts.
- Hill-Burton Act: Some Texas hospitals that received federal Hill-Burton construction funds before 1997 must still provide free or reduced-cost care to low-income patients. Check the HRSA database to see if your hospital has remaining Hill-Burton obligations.
6. Texas statute of limitations: 4 years
Texas has a flat 4-year statute of limitations on both open accounts and written contracts under Texas Civil Practice and Remedies Code Section 16.004. This applies to medical debt regardless of whether you signed a financial responsibility agreement.
| Debt Type | Texas SOL | Notes |
|---|---|---|
| Open account (hospital bill without contract) | 4 years | Starts from date of last payment or when debt became due |
| Written contract (signed financial agreement) | 4 years | Same 4-year limit; Texas does not distinguish |
| Court judgment | 10 years (renewable) | Never ignore a lawsuit summons — a default judgment is a 10-year collection tool |
What resets the Texas 4-year clock: any payment on the debt, a written promise to pay, or a written acknowledgment of the debt. Do not make any payment on old medical debt without first verifying the date of last activity and comparing it to the 4-year limit.
7. Wage garnishment and the head-of-household exemption
Texas allows wage garnishment for medical debt after a creditor obtains a court judgment. The standard limit is 25% of disposable earnings. However, Texas has a significant protection:
Under the Texas Constitution and the Texas Property Code, the current wages of a head of a family (a person who provides for a spouse, child, or other dependent) are exempt from garnishment in Texas in most circumstances. This is one of the broadest wage protections in the nation for heads of household.
If you support dependents and a collections agency or hospital seeks to garnish your wages, consult a Texas consumer attorney. Asserting the head-of-household exemption must typically be done in a court filing — it is not automatic.
8. Real patient results
Case study 1: $12,400 eliminated under Houston Methodist financial assistance — Houston
Situation: An uninsured patient in Houston underwent emergency surgery for appendicitis at Houston Methodist Hospital. Total bill: $12,400. The patient had no insurance at the time of service.
Patient profile: Family of 2 (patient and spouse), combined household income $38,000/year. At approximately 227% of the Federal Poverty Level for a 2-person household.
Action: The patient applied for financial assistance through Houston Methodist’s Patient Financial Services department within 45 days of receiving the bill. Houston Methodist’s FAP provides full write-off for patients at or below 200% FPL and a sliding scale discount to 400% FPL. At 227% FPL, the patient qualified for an 80% discount.
Result: $12,400 bill reduced to $2,480. The patient set up a 12-month interest-free payment plan at $206.67/month.
Savings: $9,920.
Case study 2: $8,700 ER bill covered by Texas IHCA — Harris County
Situation: An uninsured day laborer in Harris County was treated for a severe hand laceration at Ben Taub Hospital (Harris Health System) and received an $8,700 emergency room bill. He did not qualify for Medicaid or any other state program.
Patient profile: Single individual, income approximately $12,000/year — approximately 77% of the FPL. Resident of Harris County for more than 12 months. No other government coverage.
Action: A Harris Health financial counselor identified that the patient met the income threshold for the Harris County Gold Card program under the Texas Indigent Health Care Act. The patient enrolled in the program at the time of his follow-up visit.
Result: The $8,700 ER bill was covered under the IHCA indigent care program. The patient was enrolled in the Gold Card program for ongoing primary and preventive care.
Savings: $8,700.
Case study 3: $840 duplicate lab charge refunded after dispute — Dallas
Situation: A patient in Dallas reviewed her ER bill and noticed that a comprehensive metabolic panel (CPT 80053) had been billed twice — once under the hospital’s revenue code 0301 and once as a standalone line item — for a total duplicate charge of $840.
Action: The patient submitted a written dispute to the hospital billing department, attaching the itemized bill with the two identical lab charges highlighted. She cited the specific CPT codes, quantities, and revenue codes and requested a written response within 30 days.
Result: The hospital billing department confirmed the duplicate charge, reversed the second $420 lab fee, and issued a credit of $420 to the patient’s account within 21 days. Because the patient had insurance with a 20% coinsurance, she received a refund of $84 (20% of $420) toward her patient responsibility balance.
Savings: $84 direct refund; $336 credited against outstanding balance.
Frequently asked questions
Do Texas hospitals have to provide charity care?
Nonprofit hospitals must provide charity care under IRS Section 501(r) as a condition of their federal tax exemption. Texas does not have a state law setting a mandatory income threshold, so each nonprofit hospital sets its own policy. For-profit hospitals are not required to offer charity care under federal or Texas law, but many have hardship programs. Always ask.
What is the income limit for charity care at Texas hospitals?
It varies by hospital because Texas has no state mandate. Most major nonprofit systems in Texas provide free care at or below 200% FPL and sliding-scale discounts up to 300%–400% FPL. Check the specific hospital’s Financial Assistance Policy on its website or call patient financial services. Our hospital directory lists charity care thresholds for major Texas facilities.
Can Texas hospitals garnish my wages for medical debt?
Texas allows wage garnishment after a court judgment, up to 25% of disposable earnings. However, Texas’s head-of-household exemption protects the current wages of a person who supports dependents from garnishment in most cases. If you have dependents, consult a Texas consumer attorney before responding to any garnishment action. Never ignore a lawsuit summons — a default judgment removes most defenses.
What is Texas’s statute of limitations on medical debt?
Texas has a uniform 4-year statute of limitations for both open accounts and written contracts under Texas Civil Practice and Remedies Code Section 16.004. After 4 years from the last payment or date the debt became due, the debt is time-barred. Any payment, written promise to pay, or acknowledgment of the debt resets the 4-year clock, so verify the debt age before taking any action on old medical bills.
What should I do if a Texas hospital sends me to collections?
Request the full itemized bill in writing. Apply for financial assistance at the nonprofit hospital (still available up to 240 days after the first bill, even during collections). Send a debt validation letter to the collector within 30 days of first contact. Dispute any billing errors in writing with both the hospital and the collector. Check the date of last activity against the 4-year Texas SOL. If the hospital is nonprofit and failed to screen you for financial assistance before collections, file a complaint with the IRS or your state attorney general.
Sources
- Texas DSHS: Indigent Health Care Act Overview and County Programs
- Texas Department of Insurance: File a Consumer Complaint
- IRS Section 501(r): Financial Assistance Requirements for Charitable Hospitals
- Texas Civil Practice and Remedies Code § 16.004: Statute of Limitations
- CMS: No Surprises Act Overview and Patient Rights