We are all aware that there are for profit hospitals and not for profit hospitals. Most hospitals in the US are non-profit hospitals. This means they have agreed with the IRS to be a non-profit and they are not allowed to make profits like a business would. In the past, hospitals used to charge the Insurance companies lower medical rates than they did the general public. This resulted in the public paying much higher medical bills than insurance companies paid out. It also made charging the individual and not the insurance more profitable because the individual paid a higher rate.

On January 1, 2015 a new federal statute came into effect. It is known as 501 C 3 (r) which says individuals must be charged the same rate or less than the insurance industry. That to charge people more than insurance is engaging in profit making. So the most an individual can be charged is no more than the hospitals HMO would be charged.

The other part of this same law also states that some people, based on family income,  will owe nothing or will owe a reduced amount lower than insurance would pay.

This is known as the federal poverty level. It applies to people with family incomes up to $80,000 a year. Review the chart below to learn where your family falls within the Federal Poverty level and what amount of discounted rate you qualify for.

2020 Federal Poverty Guidelines

In the chart above, find the family size residing under your roof then go across and find what the amount was on Last years Federal Tax form on line 37. This is where your family falls in the Federal poverty level. As the new statute states, anyone under 400% of the poverty level is entitled to a discounted rate lower than what it would charge the HMO. If you are under 100% of the poverty level, you owe nothing if you have no large assets. Each Hospital is required to post their policy on their web site. You can usually locate this information by putting the hospital’s name and the words charity care in a google search. Many hospitals write off the entire bill if you are under 200% of the poverty level.  Checking the hospital policy is worth looking into as it may save your family tens of thousands of dollars. The billing department does not handle this but the department usually goes by the name Charity Care write offs.

Many IAES members have saved their family from unnecessary financial hardship by following this advice.  Most notably was an AE patient whose family income was under 200% of the poverty level and owned a $100,000 home. IAES’ leading financial and Insurance advocate took on her case, a free service IAES provides, and the California hospital dismissed her hospital bill of $47,000 and wrote off the loss. Because hospital employees were not familiar with this federal law, our advocate contacted the Chief Financial Officer of the hospital who immediately complied and dismissed the bill saying the hospital would write it off so they could continue to keep their not for profit status.

If this is all sounds too complicated and you receive a large hospital bill, make a copy of the following story below by the American Bar association titled: Crafting a Compliant Financial Assistance Policy. Give it to an attorney. The attorney can handle it from there. Exercise your rights under the law. 
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