Hospital Financial Assistance

Posted May 13, 2025, By Cole Ferrier

In our previous discussion, we highlighted Washington State's strong Charity Care law, which mandates significant financial assistance for hospital bills based on income. But Washington isn't an outlier. If you're facing daunting hospital bills, it's crucial to know that similar safety nets exist in many other states, potentially offering substantial relief. Understanding these programs, wherever you live, is key to managing healthcare costs.

The Federal Foundation and State Action

The federal Affordable Care Act (ACA) set a baseline requirement. It mandates that non-profit hospitals (which make up a majority of hospitals in the U.S.) must establish and widely publicize written Financial Assistance Policies (FAPs) and Emergency Medical Care Policies to maintain their tax-exempt status, as outlined in Internal Revenue Code Section 501(r)(4). You can learn more about these specific federal requirements directly from the IRS:

• IRS - Financial Assistance Policy and Emergency Medical Care Policy - Section 501(r)(4)

However, the ACA and related IRS rules don't dictate specific income levels for eligibility or minimum discount amounts beyond ensuring emergency care is provided regardless of FAP eligibility. This federal flexibility means the actual help available can vary dramatically from one hospital to another, even within the same state if no state law provides further specifics. Recognizing this gap, many states have enacted their own laws, creating more specific and often more generous requirements than the federal minimum.

Beyond Washington: A Closer Look at Similar State Programs

A significant number of states have implemented laws structurally similar to Washington's, requiring hospitals to provide free or discounted care based on income, often measured against the Federal Poverty Level (FPL). Here’s a quick look at some state requirements and where to find more information:

• California: Requires hospitals to offer financial assistance up to 400% FPL and limits charges for eligible patients, with simplified asset rules. Patients can find info and file complaints via the HCAI.

  • CA HCAI - Hospital Bill Complaint Program FAQ

• Colorado: Mandates discounted care up to 250% FPL, limiting bills to state-set rates, and requires pre-billing screening for the uninsured.

  • CO Dept. of Health Care Policy & Financing - Hospital Discounted Care

• Illinois: Requires free care up to 200% FPL (non-rural) or 125% FPL (rural) and discounted care up to 600%/300% FPL respectively, capping annual collections at 20% of income for eligible uninsured patients. State resources outline patient rights.

  • Illinois Hospital Report Card - Learn More About Your Rights as a Patient

• Maryland: Mandates free care up to 200% FPL and reduced-cost care up to 300% FPL (potentially higher), featuring presumptive eligibility for certain program participants.

  • MD HSCRC - Financial Assistance Policies

• New Jersey: Requires free care up to 200% FPL and discounted care on a sliding scale up to 300% FPL for eligible residents, regardless of immigration status.

  • NJ Dept. of Health - Charity Care

• New York: Provides free care up to 200% FPL and sliding scale discounts capped relative to Medicaid rates up to 400% FPL, with strong patient protections (effective Oct 2024).

  • NY State Dept. of Health - Hospital Financial Assistance Info for Patients

• Oregon: Requires assistance up to 400% FPL (free up to 200%, tiered discounts above), with mandatory pre-billing screening for certain patients.

  • ORS 442.614 Requirements for financial assistance policies

• Rhode Island: Requires free care up to 200% FPL and discounted care via hospital-determined sliding scales up to 300% FPL, primarily focused on the uninsured.

  • RI Dept. of Health - Hospital Charity Care

• Vermont: Requires free care up to 250% FPL and minimum 40% discounts up to 400% FPL, plus catastrophic assistance capping bills at 20% of income up to 600% FPL. Hospital-specific FAPs are linked via state report cards.

  • VT Dept. of Health - Hospital Report Cards (includes FAP links): 

This variety underscores why it's crucial to investigate the specific rules in your state and at the hospitals you use. Don't assume you won't qualify just because you have insurance or aren't at the lowest income levels – eligibility often extends further than you might think.

What If I'm Not in One of Those States?

The list above highlights states with particularly strong, mandated financial assistance laws similar to Washington's, but it is not exhaustive. Other states may have different types of regulations or rely primarily on the federal requirements for non-profit hospitals.

Here’s what to keep in mind:

• Healthcare is Local: Hospital policies, state laws, and available assistance can vary significantly. Information needs to be specific to your location and the hospital where you received care.

• Do Your Own Research: Use the resource links provided below (like your state's Department of Health) to investigate specific regulations or programs in your state.

• Contact the Hospital Directly: This is the most crucial step. Every non-profit hospital is required to have a Financial Assistance Policy (FAP). Call the hospital's billing department and specifically ask to speak with someone in the Financial Assistance office (sometimes called Patient Financial Services or similar). They are obligated to provide you with information about their policy and application process. Ask about eligibility criteria (income levels, residency, etc.) and what documentation is needed.

• Don't Assume: Even if your state isn't listed or doesn't have strong state-level laws, the individual non-profit hospital you used must have a financial assistance policy due to federal tax-exempt requirements. For-profit hospitals may also offer assistance programs voluntarily.

• The bottom line is to be proactive and inquire directly with the source – the hospital itself.

Financial Planning Implications

Unexpected medical bills are a major source of financial stress in the U.S., contributing significantly to debt and even bankruptcy. Even with insurance, high deductibles and out-of-pocket costs can create substantial burdens.

Hospital financial assistance programs are more than just charity; they are a vital financial planning tool:

• Protecting Savings: Qualifying for free or discounted care can mean the difference between paying a hospital bill and depleting your emergency fund or retirement savings.

• Avoiding Debt: These programs directly lower what you owe, reducing the need to rely on credit cards or loans for medical expenses.

• Preserving Credit: Medical debt sent to collections can severely damage your credit score. Financial assistance can prevent this. Some state laws also add protections against aggressive collection tactics.

• Crucial Timing: Generally, it is important to apply for financial assistance before you pay the hospital bill. Once a bill is paid, especially if you've transferred the debt to a credit card, the hospital may no longer consider it eligible for their assistance program because the debt is now owed to the credit card company, not the hospital.

Being aware of these programs and applying promptly provides a critical safety net, potentially protecting your financial well-being from the high cost of necessary medical care.

Conclusions

The crucial takeaway is that mandatory hospital financial assistance extends far beyond Washington State. Numerous states require hospitals to offer significant help, and all non-profit hospitals nationwide must have financial assistance policies. These programs provide a vital resource for residents facing unaffordable hospital bills. Don't assume you don't qualify, even if you have insurance or aren't in the lowest income bracket – eligibility often reaches further than many realize. These programs are there to be used, but accessing them requires knowing they exist and taking the initiative to inquire and apply before paying. Given the variations between states and hospitals, understanding your local rules and the specific hospital's policy is paramount.

Call to Action

Navigating healthcare bills and financial assistance programs can feel overwhelming. If you're dealing with hospital expenses or want to understand how these programs could factor into your financial strategy, please reach out. Contact us today for personalized assistance.

Resources

Here are some high-quality resources to learn more about hospital financial assistance and related topics:

• Federal Poverty Level (FPL) Guidelines: (U.S. Department of Health & Human Services - HHS) - Essential for understanding income eligibility thresholds.

• State Health Departments & Attorney General Offices: Your specific state's Department of Health or Attorney General website is the best source for state-specific laws, regulations, and consumer protection information.

• Dollar For: A non-profit specifically focused on helping patients access hospital charity care. (Note: Non-governmental. As with any third-party service, perform your own due diligence. You can check non-profit ratings and information on sites like Charity Navigator or GuideStar.)