Paid a hospital bill, then qualified for financial assistance?

It may not be too late to apply. A nonprofit hospital must accept financial assistance applications for at least 240 days after it sends you the first bill after you leave. If you send a complete application in that time and are found eligible, it must refund what you paid for that care above what you owe as an eligible patient, apart from an excess under $5. Other hospitals follow their own policies and any state rules.

The 240-day rule in one line

A nonprofit hospital must accept and process financial assistance applications until at least the 240th day after it first sends you a bill after you leave (26 CFR 1.501(r)-1).

What hospital financial assistance is

Hospitals use different names for it. Federal rules call it financial assistance, and some state laws, such as Washington's, call it charity care. It means free or discounted care for patients who meet the hospital's criteria.

Nonprofit hospitals must have a written financial assistance policy. Under federal tax rules, the policy has to cover all emergency and other medically necessary care the hospital provides, and it must say:

• who is eligible, and whether the help is free or discounted care
• how the hospital works out what eligible patients are charged
• how to apply

The federal rules leave the eligibility criteria to each hospital, so read the policy of the hospital that billed you, even if you are insured: the IRS says the federal limit on charges applies to eligible patients whether or not they have insurance. See what large health systems' policies say about patients with insurance.

Some hospital policies reach far above the federal poverty line. Free care may be available up to 600% of the poverty guidelines at NYU Langone Health, 400% at Stanford Health Care, and 400% at Cedars-Sinai, each for eligible patients under its own policy.

Which hospitals these federal rules cover

The rules come from section 501(r) of the tax code. They apply to organizations that run hospitals and are recognized under section 501(c)(3), often called nonprofit hospitals, and each hospital facility has to meet them.

Hospitals run by an organization that is not a 501(c)(3) organization, such as for-profit hospitals, are not covered by section 501(r). They may still have their own assistance policy, and some states have their own charity care laws (see Washington below). If you are not sure which kind of hospital billed you, ask the billing office. You can also look up the organization that runs the hospital in the IRS Tax Exempt Organization Search, which shows information about an organization's tax-exempt status.

How to find the hospital's policy

A nonprofit hospital must make its policy easy to find. Under the federal rules it must:

• post the policy, the application form and a plain language summary of the policy on a website
• give paper copies free on request, by mail and in public areas of the hospital, at least in the emergency room (if it has one) and the admissions areas
• print a notice about financial assistance on its billing statements, with a phone number and the web address where you can get the policy and the form

So start with your bill and look for that notice. You can also search for the hospital's name with the words "financial assistance policy".

The plain language summary is the short version. It must briefly describe who is eligible and what help is offered, explain how to apply, give contact details for help with the application, and state that an eligible patient may not be charged more than the amounts generally billed (AGB) for emergency or other medically necessary care.

The policy must also list the other providers who give emergency or other medically necessary care in the hospital, and say which ones it covers and which it does not. If a doctor or group billed you separately, check that list.

What the federal rules say about money you already paid

This is general information, not legal advice.

The application period. A nonprofit hospital must accept and process your application during the application period. It starts on the date of your care and ends no earlier than 240 days after the date the hospital mails or sends you the first bill after you leave, whether you were an inpatient or an outpatient. It can end later, for example when the hospital sends a written notice before collection actions with a later deadline.

A complete application during that period. If you send one, the hospital must, in a timely manner:

1. Decide whether you are eligible and tell you in writing, including the reason for its decision.
2. If you qualify for a discount rather than free care, send you a bill that shows what you owe as an eligible patient, how that amount was worked out, and either the AGB or how to get information about it.
3. If you are eligible, refund what you paid for that care above what you owe as an eligible patient. This includes payments you made to a collection agency or debt buyer the hospital sent or sold the bill to. It does not have to refund an excess under $5 (or another amount the IRS may set).
4. If you are eligible, take reasonably available steps to reverse most collection actions, such as removing negative information reported to credit bureaus, lifting a lien or vacating a court judgment.

An incomplete application during that period. The hospital must pause most extraordinary collection actions (explained below) and tell you in writing what is missing, with contact details for questions. If you complete it during the application period, or later within the time the hospital gives you to send what is missing, it counts as a complete application made during the application period.

After the application period. The refund rule above is written for complete applications made during the application period. A hospital may still accept and process an application made later, and the IRS says hospitals may continue to accept applications at any time. It is still worth applying and asking what would happen to what you paid.

Limits on what an eligible patient is charged. For a patient who is eligible under its policy, a nonprofit hospital may not charge more than AGB for emergency or other medically necessary care, and must charge less than its full prices (gross charges) for other care the policy covers. AGB means the amounts generally billed for that care to people who have insurance covering it. What counts is the amount you personally pay after insurance and discounts, such as copays, coinsurance and deductibles.

A hospital may bill more than AGB before you have sent a complete application or been found eligible, as long as it did not require that amount as a condition of giving you medically necessary care, and it refunds the excess if you later submit a complete application and are found eligible (again apart from an excess under $5).