Key takeaways:
- By law, all nonprofit hospitals must provide charity care based on a patient’s income. Some for-profit hospitals offer it, as well.
- Many people who qualify for this care don’t know it is available to them.
- You can apply for charity care at any point in the billing process — even if the hospital has sent your bill to collections.
According to data from the Census Bureau, 19% of American households carry medical debt. The average amount of medical debt for these households in 2017 was more than $12,400. Debt-related stress can increase a person’s risk of mental and physical illness. Medical debt that goes to collection will damage your credit rating, too. That, in turn, can increase your debt load by making it harder to get affordable loans and mortgages. But you may be able to lower, or even erase, your medical debt. One way is through the hospital financial assistance program known as charity care or indigent care.
What are charity care programs?
Charity care programs give free or low-cost medical treatment at hospitals for people who can’t pay. This includes all emergency room care. For patients who are admitted, it also includes any inpatient care they need.
Nonprofit hospitals in the U.S. must provide charity care in order to keep their favored tax status. (About 57% of the nation’s hospitals are nonprofit.) Some for-profit hospitals provide it, too. Uninsured or under-insured people may qualify, depending on the hospital.
How do I get started?
By law, nonprofit hospitals must post their charity care policies on their websites. The information must include:
- How patients can qualify for financial help
- Whether the medical care is free or discounted
- How the hospital calculates patients’ bills
- How patients can apply for help
The hospital must state this information in plain English that’s easy to read. There’s an additional rule in areas where 5% of the people (or 1,000, whichever is less) speak another language. The hospital must publish the information in those languages, too.
If you are at the hospital needing care, you’ll want to find out the details about its programs as soon as possible. Look for signs in the waiting room or at the patient check-in desk. Ask for any documents or forms you may need.
How do charity care programs work?
Each hospital has its own care policies, eligibility rules, and application process. You might apply for charity care on the hospital website, over the phone, or with a financial assistant or social worker at the hospital.
The application will ask for information about your income, expenses, and assets. You may have to provide proof of these items with paperwork such as tax forms, paycheck stubs, and benefits information. It usually takes a few weeks to get your results.
While the application process is similar at each hospital, every program has its own review and approval process for charity care. So, it is difficult to predict whether you will be approved. Here are three factors that could make the difference for you.
Income: Is it above or below the federal poverty line?
When you apply for charity care, most hospitals consider income, family size, and whether you have insurance coverage. Typically, they compare your income to the federal poverty guidelines based on the number of household members. Many nonprofit hospitals will “write off” (forgive) your bill if your household income is less than 100% of the federal poverty threshold.
| People in household | Annual income |
|---|---|
| 1 | $12,880 |
| 2 | $17,420 |
| 3 | $21,960 |
| 4 | $26,500 |
Patients who earn more than 100% of this limit can still get some cost reductions. For example, the charity care program advertised by University of North Carolina Hospitals accepts people who earn up to 250% of the federal poverty guidelines.
Unfortunately, though, many hospitals don’t help patients get through the application process. In 2019, Kaiser Health News reported that 45% of nonprofit hospitals send medical bills to patients whose incomes would have qualified them for free or discounted care.
Hospital: Is it nonprofit or for-profit?
You can be sure that a nonprofit hospital will have a charity care program in place. As noted above, for-profit facilities don’t have to offer this option.
Even so, many do provide need-based aid. For example, the country’s largest for-profit hospital (Methodist Hospital in San Antonio) will write off all costs for patients whose households earn less than 200% of the federal poverty guideline. It provides discounts to people with income up to 500% of that guideline.
Financial assistance programs at for-profit hospitals may or may not:
- Limit or remove copayments
- Give you a discount if you do not have insurance
- Reduce your overall bill based on income
- Give the same percentage discount to every qualifying patient
Location: Do your state’s hospitals have to provide charity care?
Many states have laws requiring some or all hospitals to provide free or low-cost care to patients below certain income levels. Currently, these states include:
- California
- Colorado
- Illinois
- Indiana
- Maine
- Maryland
- Massachusetts
- Montana
- New Hampshire
- New Jersey
- New Mexico
- New York
- Oklahoma
- Pennsylvania
- Rhode Island
- Texas
- Utah
- Virginia
- Washington
- West Virginia
- Wisconsin
In some states, including Maine and Washington, broad laws require all hospitals to offer charity care. In other states, charity care laws apply only to critical access, rural, public, or nonprofit hospitals. For example, New Jersey requires only acute care hospitals to offer charity care.
State social services organizations can often help you sort out your options.
Is charity care the same thing as medical debt forgiveness?
No. Both can reduce your debt burden, but there are important differences. With charity care, the hospital writes off some or all of your charges during the billing stage, before your account goes to collections. Applying for or receiving charity care will not lower your credit score.
Medical debt forgiveness happens after the account is overdue. In these cases, the bill has gone to collection. The collection agency would then settle your account for a fraction of the full balance. Although the debt goes away, this usually has a negative effect on your credit score. If your account goes to collections, don’t panic. It’s not too late to apply for charity care instead of negotiating debt forgiveness. If your charity care application is approved, you can put your money toward the overdue bill.
What other rules are there for charity care?
Even if you have private insurance or Medicare, you can still apply for discounts on your care. In fact, many hospitals require you to approach your insurer first. The hospital might even look into your Medicaid eligibility. The insurance plan, Medicare, or Medicaid would be expected to pay their share upfront. Charity care funds could then reduce the remainder of your bill.
If you receive a big hospital bill that you cannot pay, ask about charity care right away. It is important to start the application process promptly. Otherwise, the hospital may sue you — even if you qualify for financial assistance.
If you receive a collection notice for medical debt, read it carefully. In Washington state, for example, the notice must say if you were eligible for charity care. It must also state whether the hospital applied charity care to any portion of your costs. Information like this will help you negotiate a settlement. Remember that you can apply for charity care at any point in the process.
The bottom line
Charity care can help you keep your medical bills under control. Thousands of hospitals across the U.S. provide charity care programs. Some of them accept people who earn up to 400% of the federal poverty limit. To start the process, talk to your hospital’s billing department or check its website to see if you qualify.