On March 23, 2010, President Obama enacted the Patient Protection and Affordable Care Act (also known as ACA, or Obamacare). The ACA made many changes to existing law, among them the tax code. These changes include additional requirements for tax exempt, or non profit, hospitals. In order to remain its tax exempt status (i.e. not pay property taxes, etc.), a hospital now must have a written policy that addresses financial assistance available to patients. This financial assistance policy (FAP) must address the eligibility criteria for the assistance and must explain what type of financial assistance (discounted or free) the hospital provides. The FAP must also explain the application process and must be publicly available. As an example, here is Boulder Community Hospital’s FAP.
Nonprofit Hospitals are now also required to determine if a patient is eligible for financial assistance before taking extraordinary collection actions. Extraordinary collection actions generally include lawsuits, liens, and similar collection methods. However, this also includes reporting to collection agencies. Therefore, a hospital cannot report your debt to a collection agency before they have ensured that you are not eligible for their financial assistance program. Because reporting to a collection agency can have a significant impact on a credit score, this requirement adds a layer of protection to the consumer.
Be Prepared! Next time you are headed to the ER, make sure you have read the hospital’s FAP in advance. Most hospitals have customer help lines who will be happy to assist you in case you have questions.