Taking Advantage of Section 501(r)(4)

Under Section 501(r)(4) of the IRS tax code, in order for hospitals to keep their 501(c)(3) status, they must setup a financial assistance program (called Charity Care), which provides free or discounted care to patients who meet the eligibility criteria. For example a patient making below a certain income level and unable to pay for the medical care received.

Below is an overview of the requirements.

The eligibility criteria varies from hospital-to-hospital, the application process is often quite extensive, and determination can take as long as 60 days. All of these factors make navigating the process alone very difficult for most patients. Add a major medical issue or procedure into the mix and the process becomes more difficult.

Below is an overview of the process at Northside Hospital.

The good news is non-profits likes Dollar For are working to spread the word about these financial assistance programs and offering assistance to patients burdened by medical bills. Through their Debt Forgiveness program they help patients determine if they would qualify for assistance, help them through the hospital application process, and act as an advocate on their behalf. I’ve also seen some self-insured health plans and free market exchanges incorporating these 501(r)(4) assistance services into their offering as well.

Disclaimer: I’m not affiliated with Dollar For in any way other than a supporter and fan of their mission.

Although the entire process requires some work and diligence these financial assistance programs are a way to reduce the cost of individuals medical claims and the overall cost of an employer’s health plan.

At the very least, it’s a great value-add to share with employees during Open Enrollment.