Hospital 501(r) / Financial Assistance Programs: FAQ

Many Americans suffer from medical debt at higher rates: About 6 in 10 adults in households making less than $40,000 carry medical debt, 50% higher than the average across all adults, according to Kaiser Family Foundation. Hospital visits, and specifically unexpected emergencies, are the biggest drivers of that debt.

But many of these families, including those that make well above $40,000, aren’t aware they could get their debt waived or lowered through their hospital’s 501(r) / financial assistance program. Under federal law, nonprofit hospitals — which comprise 60% of all hospitals in the United States — are required to offer free or discounted care to patients under a certain income threshold.

However, nonprofit hospitals have increasingly come under scrutiny for pocketing these federal tax breaks while failing to pre-qualify patients, and even hounding patients who were eligible for free care to pay first.

While there’s no authoritative data on how many Americans are 501(r) eligible, depending on the state and hospital, the qualification criteria is generally between 200% and 400% of federal poverty guidelines. In most states, that amounts to almost $125,000 for a family of four. In return for offering that aid, nonprofit hospitals get tax breaks from the government amounting to an estimated $60 billion a year.

Goodbill can help here! If the hospital has a documented policy, then once a bill or claim is created Goodbill will ask each patient to check to see if they might be eligible. We ask for household size, and household income. With that information, we run an instant check against the hospital policy, and then tell you whether you might qualify for a full (100%) discount, or a partial discount. The task takes around 30 seconds, so it’s worth checking. More information can be found here.

This depends on the hospital, but typically, it will mirror the household size filed in the most recent tax return. If no filing has been completed, then it’s typically the number of people in the household - Applicant plus spouse, plus any dependents.

Again, this depends on the hospital, but typically, hospitals will require:

• 2 or 3 most recent paystubs
  Goodbill can help you retrieve these automatically, or you can upload them manually.

• 2 or 3 most recent Bank Statements
  Goodbill can also help you import these automatically, or you can upload them manually.

• 1040 Tax Filing
  This is available from the IRS Website. Instructions on creating an account and locating a transcript is available at the link to this task.

This varies from hospital to hospital. Goodbill will check-in regularly on the progress of the application. Typically, applications are processed and completed within a few weeks.

In most instances, Goodbill will gather all the information we need to negotiate your bill, while the financial assistance application is pending. Then - if the application is denied, Goodbill can move in and negotiate the balance based upon the disputes we find. So - wherever possible, it’s great to get the financial application in first, and then Goodbill can negotiate based on the outcome.

If you're engaging with Goodbill from a claim, then we'll tackle 501(r) first.

Goodbill does not charge a fee for the financial aid application service.