Your Rights: What Hospitals Must Tell You About Financial Assistance

Did you know that nonprofit hospitals are legally required to help patients who can't afford their medical bills? The Affordable Care Act created specific requirements for hospital financial assistance—but many patients have no idea these protections exist. Here's everything you need to know about your rights.

The Law: Section 501(r) of the IRS Code

Under the Affordable Care Act, Section 501(r) of the Internal Revenue Code requires all nonprofit hospitals to:

• Maintain written financial assistance policies (FAPs)
• Publicize these policies to the community
• Limit amounts charged to financially eligible patients
• Follow specific procedures before taking extraordinary collection actions

Nonprofit hospitals that fail to comply risk losing their tax-exempt status—a powerful incentive to follow the rules.

Your Right to a Financial Assistance Policy (FAP)

What the FAP Must Include

Every nonprofit hospital must have a written Financial Assistance Policy that specifies:

• Eligibility criteria: Who qualifies (usually based on income and Federal Poverty Level)
• Discount levels: What percentage of bills will be reduced or eliminated
• Application process: How to apply for assistance
• Required documentation: What paperwork you need to provide
• Appeals process: How to challenge a denial
• Services covered: Which services are eligible for assistance (emergency and medically necessary care must be included)

How to Access the FAP

Hospitals must make the FAP widely available:

• Posted on the hospital's website
• Available in paper form upon request (for free)
• Provided in languages spoken by populations in the hospital's community
• Given to patients during intake and discharge

Your right: You can request a copy of the FAP at any time, and the hospital must provide it promptly at no charge.

Your Right to a Plain Language Summary

In addition to the full policy, hospitals must provide a Plain Language Summary (PLS) that includes:

• Brief description of financial assistance eligibility
• Summary of free or discounted care
• How to apply
• Contact information for assistance with the application
• Website where the FAP and application can be found
• Availability of translations

The PLS must be written in clear, simple language that anyone can understand—no medical or legal jargon.

Your Right to Notification

Before and During Treatment

Hospitals must notify you about financial assistance:

• During registration: At intake for scheduled services
• In patient rooms: Visible notices about financial assistance
• In emergency rooms: Information about your rights
• At discharge: Information about the FAP when you leave

On Your Bill

Every billing statement must include:

• A conspicuous notice about the availability of financial assistance
• The phone number for the financial assistance office
• The website where FAP information can be found

Check your bill: If this information is missing, the hospital may be violating federal law.

Your Right to Affordable Pricing (Amounts Generally Billed)

Even if you don't qualify for free care, you have protections:

The AGB Rule

Hospitals cannot charge financially eligible patients more than "amounts generally billed" (AGB) to insured patients. In practice, this typically means:

• You'll pay no more than what Medicare would pay (often 80% of charges or less)
• Uninsured patients who qualify can't be charged "sticker prices"
• You're entitled to negotiated rates similar to what insurance companies pay

Gross Charges Ban

Hospitals are prohibited from charging financially eligible patients "gross charges" (the full undiscounted prices). This means if you qualify for any level of financial assistance, you automatically get a significant discount.

Your Right to Time Before Collections

The 120-Day Rule

Hospitals must wait at least 120 days after sending the first bill before taking "extraordinary collection actions" (ECAs):

• Reporting to credit bureaus
• Selling debt to collection agencies
• Filing lawsuits
• Obtaining liens on property
• Attaching wages or bank accounts

Required Notifications Before ECAs

Before any extraordinary collection action, hospitals must:

1. Make reasonable efforts to determine if you qualify for financial assistance
2. Send you a written notice at least 30 days before taking action
3. Include in the notice:
   • The deadline to submit a financial assistance application
   • A summary of the financial assistance policy
   • How to get help with the application
   • The specific actions they plan to take if you don't apply

Pending Application Protection

If you submit a financial assistance application before the deadline:

• The hospital must STOP all collection actions
• They cannot proceed until your application is reviewed
• They must notify you in writing of their decision
• If approved, previously sent bills must be corrected

To understand whether you qualify for assistance, see our comprehensive charity care eligibility guide.

Your Right to Retroactive Financial Assistance

You can apply for financial assistance even after:

• You've been billed
• You've already paid (partial or full)
• You've been discharged (typically up to 240 days)
• Debt has been sent to collections (in many cases)

If approved: You may be entitled to a refund of overpayments or elimination of remaining balances.

Your Right to Presumptive Eligibility

Hospitals may determine you're eligible for financial assistance based on:

• Enrollment in assistance programs: Medicaid, CHIP, SNAP, WIC, SSI, etc.
• Homelessness
• Deceased patients with no estate
• Other indicators of financial hardship

If you qualify under presumptive eligibility, the hospital should automatically apply financial assistance without requiring a full application.

Your Right to Language Access

Hospitals must provide FAP materials in:

• English
• Any language spoken by 10% or more of the community or 1,000 people, whichever is less
• At least the top 15 languages spoken in the state (in some cases)

Your right: If you don't speak English, you have the right to FAP materials and assistance in your language.

Your Right to Receive Help with Applications

Hospitals must:

• Provide assistance to help you complete the application
• Offer financial counseling services
• Help you gather required documentation
• Answer questions about the FAP
• Provide contact information for the financial assistance office

Don't struggle alone: Ask for help from hospital financial counselors or patient advocates.

State-Specific Protections

Many states have additional protections beyond federal law:

• California: Hospital Fair Pricing Act requires discounts for low-income uninsured patients
• Illinois: Hospital Uninsured Patient Discount Act provides strong protections
• Maryland: Rate-setting system controls hospital prices
• New York: Financial Assistance Law requires clear policies and application processes
• Oregon: Hospital charity care requirements based on income thresholds

Research your state: Browse our state-by-state charity care guides for detailed information.

Already in Collections? You Can Still Apply

If your medical bill has already been sent to collections, don't assume you've lost your right to financial assistance. Many hospital FAPs accept applications even after a bill has gone to a collection agency. In fact, research suggests that 25-50% of medical debt in collections is held by patients who would have qualified for charity care.

• Contact the hospital directly — not the collection agency — to request a financial assistance application
• Organizations like Dollar For can help you apply for charity care even after collections
• If approved, the hospital should recall the debt from the collector and adjust your balance

For a complete guide on navigating this situation, see our article on medical bills in collections.

What to Do If Your Rights Are Violated

Document Everything

• Save all bills and correspondence
• Take screenshots of the hospital website
• Note dates and details of collection calls or letters
• Keep records of any payments made

Contact the Hospital

• Explain which rights were violated
• Reference Section 501(r) requirements
• Request immediate correction
• Ask to speak with a supervisor or patient advocate

File Complaints

• IRS: File Form 13909 (Tax-Exempt Organization Complaint) for 501(r) violations
• State Attorney General: Report unfair billing practices
• State Department of Health: File complaints about hospital violations
• CMS: Centers for Medicare & Medicaid Services accept complaints
• Consumer Financial Protection Bureau: For debt collection violations

Seek Legal Help

• Legal aid organizations (free for low-income patients)
• Patient advocacy organizations
• Healthcare lawyers specializing in billing disputes
• Medical billing advocates

Frequently Asked Questions

Can hospitals require payment plans before considering financial assistance?

No. Hospitals cannot require you to accept a payment plan or make payments as a condition for reviewing your financial assistance application.

Can hospitals check my credit report when evaluating financial assistance?

It depends on the hospital's FAP, but many hospitals do not require credit checks. Read your hospital's policy carefully.

Do I have to provide tax returns?

Hospitals can require reasonable documentation of income, which often includes tax returns. However, if you don't have tax returns, they should accept alternative documentation like pay stubs or benefit statements.

What if I already paid my bill?

You can still apply for financial assistance retroactively (usually up to 240 days). If approved, you may receive a refund.

Can hospitals send me to collections while I'm applying for financial assistance?

No. If you submit a complete application before the deadline, collection actions must stop until the application is reviewed.

How Health Bill Central Helps

Health Bill Central can help you exercise these rights by:

• Automatically checking if you qualify for financial assistance based on your income
• Identifying billing errors and violations
• Generating professional charity care application letters
• Providing templates for dispute letters citing your legal rights
• Tracking deadlines so you don't miss the window to apply

The Bottom Line

Federal law provides strong protections for patients struggling with medical bills, but these protections only help if you know about them and use them. Hospitals are counting on you not knowing your rights—that's why so many patients pay bills they could have reduced or eliminated through financial assistance.

Don't wait until you're in collections to explore your options. As soon as you receive a medical bill:

1. Check if the hospital is a nonprofit (most are)
2. Request the Financial Assistance Policy
3. Calculate your income as a percentage of the Federal Poverty Level
4. Apply for assistance if you qualify
5. Don't pay until your application is reviewed

Remember: These protections exist because Congress recognized that medical costs can be catastrophic for families. Using financial assistance isn't charity—it's exercising your legal rights as a patient.