Most Hospitals ‘Legally Have to Forgive Your Medical Bills’ if You Make Under 300 Percent of the Federal Poverty Line

On September 23 2021, an Imgur user shared a TikTok video in which a user claims that most hospitals have to “legally forgive your medical bills” if you earn less than 300 percent of the federal poverty guidelines”:

The Video’s Claims About Hospitals Forgiving Medical Bills

The clip was highly popular. Its submitter marked the video as a repost, indicating they had reshared the content due to posts about bills exceeding a million dollars:

Recently started seeing some $1 MILLION+ covid-related hospital bills, just a reminder that this exists!

Favorite for later, you never know when you’ll need this info.

Edit: Check out https://dollarfor.org/ if your hospital says NO.

A TikTok handle, @dollarfor, was visible on the Imgur post. They had shared the clip in June 2021 and March 2021, having previously shared it on January 15 and 16 2021. The post embedded below was the most viewed of the four:

@dollarfor Original vid got removed! #moneytok #needtoknow #medicalbills #bills #whatilearned ♬ original sound – Dollar For

The video’s format was a common one on TikTok; it often features a separate person in the beginning posing a question: “What is a piece of information that you learned that feels illegal to know?” In response, @dollarfor says:

Most hospitals in America are non-profits. That means they must have financial assistance or Charity Care Policies[.]

This is gonna sound weird, but what that means is that if you make under a certain amount of money, the hospital will legally have to forgive your medical bills — let me show you how this works.

Type in the hospital name with “financial assistance after it,” should be the top link, let’s check. What you want to do is look for financial assistance and policies, let’s check them.

From here what you’re looking for is sliding scale benefits … [at] zero to 300 percent of poverty guidelines, they will forgive 100 percent of your medical bills.

@dollarfor added text that largely approximated the spoken portion of the video. Toward the end of the clip, a computer screen displayed what appeared to be a hospital’s financial assistance page.

It featured a table titled “Federal Poverty Levels [2020],” with household sizes ranging from one to eight, and percentages ranging from 138 to 400 percent of federal poverty guidelines. For example, a family of three earning $63,990 or less would ostensibly be eligible to have 100 percent of a hospital bill forgiven (text on the screen indicated the figures were “gross annual income,” not net):

A separate table from the same page showed a “Financial Assistance Adjustment Percent[age],” with zero to 300 percent of the guidelines qualifying for 100 percent forgiveness; 301 to 350 percent was eligible for 75 percent, and 351 to 400 percent was eligible for 55 percent of bills to be forgiven:

The user continued (text on the screen read “I crush hospital bills” and “TEST ME”):

If you wanna test it out i run a non-profit that does this, so so DM me and I will do it for you … let’s see if we can crush those medical bills.

@dollarfor also claimed that in the United States, most hospitals are not-for-profit. This is true according to Kaiser Family Foundation data, which says that as of 2019, more than 58 percent of American hospitals were nonprofits.

Important Follow-Up to the First Video [Don’t DM @dollarfor]

On or around September 18 2021, @dollarfor shared an important update due to the re-circulation of the video above, captioned:

Y’all it’s happening again. Please do this instead of dms. So sorry but this is much better ????#medical #healthcare #medicalbills

In the clip, @dollarfor requested that users “please stop” sending him direct messages (DMs), directing them instead to the website dollarfor.org:

@dollarfor Y’all it’s happening again. Please do this instead of dms. So sorry but this is much better ????#medical #healthcare #medicalbills ♬ Monkeys Spinning Monkeys – Kevin MacLeod

That clip walked TikTok viewers through the process of using dollarfor.org to deal with outstanding medical debt via the “Debt Forgiveness” tab. The first visible comment was from a TikTok user; it read:

[because] of your videos i was able to get my remaining debt (~$11.5k) from my labor forgiven by my hospital. thank you so much, you’re changing lives ❤️

Federal Poverty Guidelines, Briefly Explained

@dollarfor’s initial viral TikTok hinged largely on “federal poverty guidelines” or “federal poverty levels.”

The Federal Poverty Level (FPL) is a metric used by the United States government for a number of applications. On a Department of Health and Human Services (HHS) entry about the FPL, HHS defined the Federal Poverty Level and provided updated figures for 2021:

Federal Poverty Level (FPL)

A measure of income issued every year by the Department of Health and Human Services (HHS). Federal poverty levels are used to determine your eligibility for certain programs and benefits, including savings on Marketplace health insurance, and Medicaid and CHIP coverage.

The 2021 federal poverty level (FPL) income numbers below are used to calculate eligibility for Medicaid and the Children’s Health Insurance Program (CHIP). 2020 numbers are slightly lower, and are used to calculate savings on Marketplace insurance plans for 2021.

• $12,880 for individuals
• $17,420 for a family of 2
• $21,960 for a family of 3
• $26,500 for a family of 4
• $31,040 for a family of 5
• $35,580 for a family of 6
• $40,120 for a family of 7
• $44,660 for a family of 8

Federal Poverty Level amounts are higher in Alaska and Hawaii. See all HHS poverty guidelines for 2021.

As HHS noted, the figures for 2021 differed slightly from the 2020 FPL seen in the viral TikTok video. The figures for 2021 from HHS appear to be for 100 percent of the FPL, whereas the table in the screenshot started at 138 percent of the Federal Poverty Level.

Is It True Hospitals Have to Forgive Medical Bills as Described in @dollarfor’s TikTok Video?

On January 19 2021, The Mighty reported on the viral video’s popularity, explaining in part:

While many Americans qualify for medical debt forgiveness, hospitals often do not make this option visible to patients. There are different local and national organizations across the United States that can help you navigate charity care cases at hospitals, including Dollar For. If your medical bill has already been sent to collectors you can still apply for financial assistance and forgiveness … Medical forgiveness is covered under the Affordable Care Act.

In that excerpt, a part of “hospitals often do not make this option visible to patients” linked to an October 2019 Kaiser Family Foundation (KFF) post, “Patients Eligible For Charity Care Instead Get Big Bills,” subtitled “Nonprofit hospitals admit they sent $2.7 billion in bills over the course of a year to patients who probably qualified for free or discounted care.” The lengthy piece began with an example of a patient who purportedly sought financial assistance, and was met with major, intentional barriers:

When Ashley Pintos went to the emergency room of St. Joseph Medical Center in Tacoma, Wash., in 2016, with a sharp pain in her abdomen and no insurance, a representative demanded a $500 deposit before treating her.

“She said, ‘Do you have $200?’ I said no,” recalled Pintos, who then earned less than $30,000 at a company that made holsters for police. “She said, ‘Do you have $100?’ They were not quiet about me not having money.” But Pintos, a single mom with two kids who [was 29 in 2019], told state officials St. Joseph never gave her a financial aid application form, even after she asked.

Pintos said she was examined and discharged with instructions to buy an over-the-counter pain medication. Then St. Joseph sent her a bill for $839. When she couldn’t pay, the hospital referred the bill to a collection agency, which she said damaged her credit and resulted in a higher interest rate when she applied for a mortgage.

St. Joseph denied erecting barriers to charity care. But the hospital’s owner settled a lawsuit from the state attorney general earlier this year [2019] alleging such practices and agreed to pay more than $22 million in refunds and debt forgiveness.

In the very next paragraphs, KFF/KHN added:

Under the Affordable Care Act, nonprofit hospitals like St. Joseph are required to provide free or discounted care to patients of meager incomes — or risk losing their tax-exempt status. These price breaks can help people avoid financial catastrophe.

And yet nearly half — 45% — of nonprofit hospital organizations are routinely sending medical bills to patients whose incomes are low enough to qualify for charity care, according to a Kaiser Health News analysis of reports the nonprofits submit annually to the Internal Revenue Service. Those 1,134 organizations operate 1,651 hospitals.

KFF cited several specific examples, identifying the IRS as a data source. One excerpt indicated that the policies seen in the TikTok video might not be universally applied:

While some hospitals say they write off the debt of poor patients without ever resorting to collection measures, several hospitals whose practices were highlighted in news reports this year [2019] for aggressively suing patients admitted to the IRS they knew many unpaid bills might have been averted through their financial assistance policies … The IRS leaves it up to each hospital to decide the qualifying criteria. A comparatively generous hospital may give free care to people earning less than twice the federal poverty level — around $25,000 for an individual and $50,000 for a family of four — and may provide discounts for people earning up to double that.

The Mighty also linked to a citation that the average medical bill recipient might not easily find on the website of the Internal Revenue Service, IRS.gov: “Financial Assistance Policy and Emergency Medical Care Policy – Section 501(r)(4).” It was not easy reading, but its initial section held:

In addition to the general requirements for tax exemption under Section 501(c)(3) and Revenue Ruling 69-545, hospital organizations must meet the requirements imposed by Section 501(r) on a facility-by-facility basis in order to be treated as an organization described in Section 501(c)(3). These additional requirements are:

1. Community Health Needs Assessment (CHNA) – Section 501(r)(3),
2. Financial Assistance Policy and Emergency Medical Care Policy – Section 501(r)(4),
3. Limitation on Charges – Section 501(r)(5), and
4. Billing and Collections – Section 501(r)(6).

Section 501(r)(4) requires a hospital organization to establish a written financial assistance policy (FAP) and a written emergency medical care policy for a hospital facility it operates.

Its next section covered IRS requirements for a hospital’s Financial Assistance Policy, or FAP, decreeing it “must apply to all emergency and other medically necessary care provided by the hospital facility, including all such care provided in the hospital facility by a substantially-related entity”:

The written FAP must be widely publicized and include:

• Eligibility criteria for financial assistance, and whether such assistance includes free or discounted care
• The basis for calculating amounts charged to patients
• The method for applying for financial assistance
• For a hospital facility which does not have a separate billing and collections policy, the actions that may be taken in the event of nonpayment,
• If applicable, any information obtained from sources other than an individual seeking financial assistance that the hospital facility uses, and whether and under what circumstances it uses prior FAP-eligibility determinations to presumptively determine that the individual is FAP-eligible, and,
• a list of any providers, other than the hospital facility itself, delivering emergency or other medically necessary care in the hospital facility that specifies which providers are covered by the FAP and which are not.

Subsequent sections were titled “FAP Must be Widely Publicized” and “Widely available on a website” — ironically including that a directive requiring information on the topic be easy to find and decipher:

Plain Language Summary of the FAP

The plain language summary of the FAP is a written statement that notifies an individual the hospital facility offers financial assistance under a FAP and that provides additional information in language that is clear, concise, and easy to understand.

The first portion of the IRS page excerpted above contained six links, which we opened in search of a minimum percent of the FPL in the regulations. Overall, the IRS citations were vague, lacking percentages of the FPL:

… However, a hospital facility may not define its community in a way that excludes medically underserved, low-income, or minority populations who live in the geographic areas from which it draws its patients (unless such populations are not part of the hospital facility’s target population or affected by its principal functions) or otherwise should be included based on the method the hospital facility uses to define its community.

… A hospital organization meets the requirements of Section 501(r)(5) with respect to a hospital facility it operates only if the hospital facility (and any substantially-related entity) limits the amount charged for any emergency or other medically necessary care it provides to a FAP-eligible individual to not more that the amount generally billed (AGB) to individuals who have insurance covering such care.

An August 2015 editorial published in the AMA Journal of Ethics, “IRS Rules Will Not Stop Unfair Hospital Billing and Collection Practices,” explained that the policies were mandatory but subject to a range of percentages:

There are two main gaps in the IRS rules’ protections. First, they do not apply to for-profit or government-run hospitals, which make up more than 40 percent of all hospitals in the US. Second, the rules give hospitals complete discretion to determine eligibility for financial assistance, which is the trigger for the rules’ protections. Under the rules, for example, a hospital could adopt a narrow financial assistance policy with very restrictive income requirements, exclude all patients with any form of insurance regardless of out-of-pocket expenses, or make applying for financial assistance so onerous that few are able to complete the process.

[…]

Furthermore, hospital financial assistance policies vary significantly in terms of generosity and terms. Among the sample of financial assistance policies from 140 hospitals, eligibility cutoffs for financial assistance ranged from an income of 100 percent of the federal poverty level (FPL) to 600 percent of the FPL. Many hospitals with financial assistance policies offered free care to those with incomes up to 100-200 percent of the FPL and sliding scale discounts above that threshold. However, some hospitals did not offer any free care and only offered moderate discounts even to the poorest patients. Of the hospitals in the sample that provided eligibility information based on insurance status, a quarter excluded those with insurance from their financial assistance policies altogether.

Another section stated:

Even if information about a hospital’s tax status, financial assistance, or bill collection practices were readily ascertainable, the uneven protections of the IRS rules remain problematic because these factors do not drive a patient’s choice of hospital. Most patients choose their hospitals based on their physicians’ referral or because it is the closest in an emergency. This means that whether or not a patient is protected by the IRS’s fair billing and collection rules is a matter of luck and fiat. Although the financial consequences for the patient may be dire, the current rules requiring fair prices and collection practices of some hospitals and not others creates a system of financial roulette.

A brief attempt to verify @dollarfor’s claims led to a maze of jargon-heavy IRS pages, and a clear picture of why the TikTok video kept spreading virally. Most people didn’t know about the Affordable Care Act (ACA) requirement, hospitals seemed to obscure the information, and it was “unevenly” available due to discretion on the part of hospitals.

Hospital Financial Assistance Policies [FAPs] by State

In 2019, the National Consumer Law Center [NCLC] published a report [PDF], “An Ounce of Prevention: A Review of Hospital Financial Assistance Policies in the States,” which was, in their own words, “not an exhaustive list or description of every free or discount care program available in each state.”

That document outlined state-specific FAP requirements, explaining:

The Affordable Care Act requires certain nonprofit hospitals with 501(c)(3) status to provide community benefits, including financial assistance for low-income patients. 26 CFR §1.501(r) (“501(r)”) requirements include establishing a written Financial Assistance Policy (FAP) and a written Emergency Medical Care Policy. However, these requirements apply only to nonprofit hospitals, and the ACA and its implementing regulations do not specify any minimum standards or eligibility criteria for financial assistance. If a nonprofit hospital fails to comply with these requirements, the patient does not have a private right of action under the statute to seek redress for noncompliance, as only the IRS can enforce these requirements.

This report provides a brief overview of the financial assistance policies in each of the 50 states and the District of Columbia, and looks at the level of financial assistance mandated, or not, in each jurisdiction.

Summary

A September 23 2021 Imgur repost of @dollarfor’s TikTok assertion that “most hospitals in the United States are non-profits,” and that “the hospital will legally have to forgive your medical bills” if your household income is less than a percentage of Federal Poverty Levels (FPL) went viral like previous iterations. Before the viral TikTok post appeared, medical journals and sites like KHN covered the ACA stipulation in question. Although hospitals do maintain some discretion in the parameters of the policy, @dollarfor’s claim is effectively True.