Guide 8: 501(r) Programs — How Nonprofit Hospitals Are Required to Help You
If you've ever received a hospital bill that felt impossible to pay, there's a program you may not know about that could significantly reduce or even eliminate what you owe. It's called a Financial Assistance Policy (FAP), and under federal law, every nonprofit hospital is required to have one.
What Is Section 501(r)?
Section 501(r) was added to the tax code by the Affordable Care Act and applies to all nonprofit hospitals operating under 501(c)(3) tax-exempt status. In exchange for significant tax benefits, these hospitals are legally required to provide financial assistance to patients who can't afford their care.
This isn't charity — it's a legal obligation. Nonprofit hospitals are required by federal law to meet a community benefit standard to maintain their tax-exempt status, and this standard is met in part by providing financial assistance to those who are not able to pay.
What Does This Mean for You?
Financial assistance is care provided for free or at a discount to patients who cannot afford to pay. Consumer Financial Protection Bureau Under 501(r), every qualifying hospital must have a written Financial Assistance Policy (FAP) that spells out:
Who is eligible for free or discounted care
How much assistance is available at each income level
How to apply
What documentation is required
Crucially, for emergency and other medically necessary care, hospitals may not charge patients eligible under the FAP more than the amounts generally billed to those with insurance coverage. This means if you qualify, the hospital cannot charge you full list price — they must bring your bill down to the insured rate or lower.
Who Qualifies?
Eligibility varies by hospital, but it is typically based on your income relative to the Federal Poverty Level (FPL). For example, patients with income below 200% of the Federal Poverty Guidelines who satisfy certain asset criteria may receive assistance for the full amount of their bill. Many hospitals extend partial discounts to patients earning up to 300–400% of the FPL.
You don't need to be uninsured to qualify. Patients with insurance who still face unmanageable bills after their coverage pays out may also be eligible.
Your Rights Under 501(r)
This is where most patients have significant leverage they don't know about.
The hospital must tell you assistance exists. Hospitals are required to offer patients a plain language summary of the FAP during intake or discharge, include notice of financial assistance on every billing statement, and post information about the program in public areas including the emergency room and admissions areas. If you weren't told about this program, the hospital still violated no rule — but you can still apply retroactively.
The hospital cannot pursue aggressive collection before checking your eligibility. Before engaging in extraordinary collection actions — such as sending your debt to collections, filing a lawsuit, or reporting to credit bureaus — a hospital must first make reasonable efforts to determine whether you are eligible for financial assistance and must provide you at least 30 days' written notice. If a hospital sends your bill to collections without doing this, they may be in violation of federal law.
You can apply even after receiving a bill. FAP applications are accepted throughout the billing process. Don't assume that because you've already received a bill or a collection notice it's too late to apply.
How to Apply
Step 1 — Find the hospital's FAP. Every qualifying hospital is required to make its FAP, application form, and a plain language summary available on its website and in paper form upon request at no charge. Search the hospital's website for "financial assistance" or "charity care," or call the billing department directly.
Step 2 — Gather your documentation. Most applications ask for proof of income (pay stubs, tax returns, or a letter from an employer), proof of household size, and sometimes bank statements. Requirements vary by hospital.
Step 3 — Submit your application. Applications can typically be submitted by mail, in person, or online. If you need help completing the form, hospitals are required to have staff available to assist you.
Step 4 — Follow up. If you don't hear back within a few weeks, follow up in writing. Keep copies of everything you submit.
What If You're Denied?
A denial is not always final. You can:
Ask the hospital to explain the specific reason for denial in writing
Request a review if your financial circumstances have changed
Submit additional documentation to strengthen your application
File a complaint with your state's attorney general or department of health if you believe the hospital is not complying with its FAP obligations
A Note on For-Profit Hospitals
Section 501(r) applies specifically to nonprofit hospitals operating under 501(c)(3) tax-exempt status. For-profit hospitals are not subject to these requirements, though many still offer financial assistance programs voluntarily. Always ask regardless of whether the hospital is nonprofit or for-profit.
Bottom line: If you received care at a nonprofit hospital and are struggling with the bill, a financial assistance program almost certainly exists. Most patients who qualify never apply simply because they don't know it's available. This is one of the most underused protections in the entire healthcare system — and BillCare makes sure you don't miss it.
Legal Disclaimer: The information provided in this guide is for general educational purposes only and should not be considered as legal, financial, or medical advice. While we strive to keep information accurate and up to date, healthcare billing practices and regulations may vary by location and provider. Always consult with your healthcare provider, insurance company, or a qualified professional for specific guidance about your medical bills. BillCare is not responsible for any decisions made based on this information.