How To Tell If Your Hospital Is Nonprofit (And Why It Matters)

Most people do not realize that whether a hospital is nonprofit or for-profit can completely change what you owe on a bill. It is not just a technical tax status. It determines whether the hospital has to give you financial help or whether you are on your own.

About sixty percent of hospitals in the United States are nonprofits. That means they are required by federal law to offer something called a Financial Assistance Policy (or FAP). If yoiu meet income guidelines, they must lower or even eliminate your bill. For-profit hospitals do not have this requirements. Some may have programs of their own but those are voluntary.

Think about what that means. The same $5,000 bill could be reduced to zero at one hospital. At another hospital, the balance could follow you for years. Patients often call this "hospital bill forgiveness", and at nonprofits facilities it is a legal right if you qualify.

How Do I Know If My Hospital Is a Nonprofit?

This is one of the most common questions I get: How do I know if my hospital is nonprofilt?

The first thing I always tell people is not to asssume. Just because a hospital has "community" in the name or a faith-based symbol on the wall does not mean it is nonprofit. You have to check.

There are three ways to do it:

1. Search the hospital's website. Look for terms like "Financial Assistance Policy," "Charity Care Program," or "Help Paying Your Bill." Nonprofits are required to post their policy online, so it should be available if they qualify.

2. Use the IRS Tax Exempt Organization Search. Type in the hospital's name. If it is listed as a 501(c)(3), that means it is nonprofit.

3. Call the billing office. Ask directly: "Are you a nonprofit hospital?" Many patients never think to do this, but it is often the fastest way to get a clear answer.

Why NonProfit Status Matters

Consider Maria, a single mom in Ohio. She earns $36,000 a year and is raising two children. After her son's emergency appendectomy, she is left with a $12,000 bill.

If the hospital is a nonprofit, Maria falls around 150% of the Federal Poverty level for a household of three. Under federal law, that means her bill could be reduced to zero through the hospital's charity care program.

If the hospital is for-profit, there is no such requirement. Maria would have to negotiate on her own, set up a payment plan, or risk the account being sent to collections.

Same family. Same bill. Completely different outcome based only on the hospital's status.

Deadlines You Should Know

Even if you qualify, there are deadline that most people miss.

• 120 days: A nonprofit hospital cannot send you to collections until at least 120 days after your first bill

• 240 days: You have up to 240 days from your first bill to apply for financial assistance.

This means that even if you are already receiving calls from collections, it may not be too late. You can still apply for help.

Quick Take Away

If you do nothing else today, do this:

• Find out whether your hospital is nonprofit.

• If it is, download their Financial Assistance Policy and review the guidelines.

That one step could save you thousands of dollars in hospital bill forgiveness.

Want help figuring out where you land? Download my free FPL Cheat Sheet. It shows you exactly how your income compares to the Federal Poverty Level and what kind of discounts you might qualify for.