Helping you to understand the healthcare revenue industry in the simplest terms.
One of the most common questions we get asked is about hospital charity care. Whether you’ve heard of charity care or not, this program is one of the best ways for lower income patients to receive a discount or total bill forgiveness on their hospital bills.
You might also recognize charity care by its other names: hospital financial assistance, financial aid, or discount programs.
Every hospital treats charity care a little bit differently, so it’s important to understand the basics before you look into your local hospital’s policies.
This article is going to dive into what charity care is, how it works, and why it matters.
What is hospital charity care?
Patients are often extremely surprised when they realize they could get part of – or all of – their medical bills forgiven.
How charity care started
While many hospitals offer charity care, nonprofit hospitals are required to offer it, under the Affordable Care Act. They are required to provide information about their programs in multiple ways, including while patients are receiving their care and when they receive their bill after the care. It is intended to be used after insurance or Medicaid.
Who is eligible for charity care?
Because charity care is mainly based on income levels, patients should be sure to check how their local hospital quantifies their eligibility. Common income amounts of those who qualify are as follows:
- Household of one: $49,000
- Household of two: $65,000
- Household of three: $83,000
- Household of four: $100,000
Income levels depend on whether patients receive free or discounted care.
It’s important to note that every hospital handles charity care differently. There is a lot of flexibility for hospitals to set their own criteria, which means that one patient may be eligible at one hospital, and ineligible at another.
How to apply for charity care
Once a patient receives their bill, it’s a good idea to immediately apply for financial assistance. The application is usually online, and it often requires the patient to submit income-related documents, like tax returns, pay stubs and bank statements.
Patients should be mindful of how long their application is in review – it’s possible that the review time exceeds the amount of time the hospital allows before the bill gets sent to collections.
How charity care works
Trying to understand charity care in hospitals can get increasingly complicated and confusing – here are the basics of how it works.
What do hospitals provide as charity care?
Many hospitals differ, but some offer to both insured and uninsured patients.
According to KFF, half of all hospitals in the U.S. spent less than 1.5% of their operating expenses on charity care in 2020. Levels of charity care across hospitals can be highly variable, and can cost more or less, depending on how charity care is offered.
How charity care works in nonprofit hospitals
All nonprofit hospitals are required to offer charity care in order to maintain their nonprofit status with the IRS.
They must also provide community benefits, which could include patient benefits like charity care, system benefits, or community-building activities.
Still, federal regulations may cause weaker oversight on nonprofit hospitals, which means they might offer very low levels of charity care. It is extremely rare for a hospital’s nonprofit status to be revoked over its implementation of charity care, but it is still a potential consequence.
Which states have additional charity care requirements?
Many states require some form of charity care at all hospitals, regardless of nonprofit status.
More than half of U.S. states, including Washington D.C., require all hospitals to offer charity care programs to vulnerable patients. Many state-level regulations also set minimum eligibility standards, increase utilization of charity care among patients, and protect eligible patients from debt collection practices.
Why charity care matters
While many people living in the U.S. are still unaware of charity care, it’s one of the most important programs to help patients access care they otherwise couldn’t afford. In this section, we’re going to talk about a few important aspects of charity care, which point to its potential for positive impacts in the healthcare industry.
Undocumented immigrants
Charity care is one of the biggest protections against the high costs of medical care for undocumented immigrants, and for lawfully present immigrants. They still require medical care, but they often fall well below the poverty line and are uninsured.
Charity care is an important program that allows vulnerable people to receive care without becoming burdened with expensive medical bills and, ultimately, medical debt.
Government programs and charity care
Government-funded programs are an essential element of effective charity care programs. They help hospitals afford the costs they incur from offering charity care. Medicaid and Medicare supplement payments to hospitals to offset the costs, and many hospitals were able to receive these payments from the expansion of Medicaid through the Affordable Care Act.
Do hospitals benefit when they offer charity care?
Charity care amounts do not actually run out; patients are not taking money away from another patient who also applies for and requires charity care.
Finances from federal, state and local governments, as well as from donors, often cover or subsidize the costs hospitals incur from providing charity care. Tax exemptions often pay for the bulk of the expenses for nonprofit hospitals.
Final thoughts
We hope this article was useful in helping you understand everything you need to know about charity care. Whether you’re a patient looking for more information, or a healthcare professional wondering how to approach charity care at your facility, we want to provide as much information as we can.
A lot of information in this article came from a 2022 KFF issue brief. Check it out for even more details!
Be on the lookout for even more educational articles on our website!
If you’re a healthcare professional and you’re worried about implementing charity care at your facility, Marcam can help. Visit our website to learn more and get started.