Charity care and other strategies to reduce medical bills, and organizing paperwork for bills you do have to pay
Hi Friendos,
Last week I promised to discuss practical considerations for using FSAs and HSAs, and tracking medical expenses in general. Before I get to that, I want to talk about steps you can take to see if you even owe that money at all.
If you have a bill from a hospital, step 1 can be: check whether you qualify for “charity care.” Since passage of the Affordable Care Act, non-profit hospitals (most hospitals), must engage in certain activities to maintain their non-profit status, such as providing free or discounted services to people who cannot afford to pay their hospital bills. We give non-profits this financially valuable tax status, so it is only fair that we require them to, you know…act like non-profits! Each hospital sets its own policy for charity care and each year they have to report on that assistance to the IRS.
Hospital policies vary widely in their generosity and you might be surprised that sometimes even people who have higher-than-average incomes can qualify for some level of discount. For example, in NY state, NYU Langone Hospitals provide some level of discount for people with incomes up to 800% of the federal poverty level. In 2025, 800% of the federal poverty level is an annual income of $125k for a household of 1 person, $169k for a household of 2 people, and higher amounts for larger households. Eligible patients with household income up to 6x the federal poverty level get their bills entirely written off by NYU. Most policies are not that generous, however.
If you think you might qualify for charity care for your hospital bill and would like help navigating this, check out Dollar For. They can help you every step of the way, including preparing applications, submitting documents, and all the other steps in the process.
Next up: if you have to pay the bill, make sure it is accurate. Request an itemized bill that includes medical billing codes. If you did not actually receive all those services, call the provider and ask them to make the correction and resubmit to your insurance company. Lots of medical bills contain mistakes; unfortunately, we all have been assigned the job of checking them over. You can also request a copy of your medical records from your provider and check that the written record supports the billed services. Also, compare your itemized bill to the insurance company EOB (Explanation of Benefits). Example: the doctor’s office coded something as diagnostic instead of preventative and therefore your insurance did not cover it. Call the doctor’s office and see if they will resubmit the insurance claim with a revised billing code. Some things have a strict mapping to a particular billing code, but others do not and the doctor has legitimate discretion. Or, perhaps your insurance company processed something incorrectly; if you examine the EOB and the itemized bill, you might discover this.
You can also try to get a bill reduced. If the billed amount seems out of line for the services provided, you can see what other providers in the area charge for those billing codes. If a provider is charging more than what is “usual, customary, and reasonable,” you can ask them if they will reduce your bill. Some providers also offer a discount if you pay a bill in one lump sum. It costs money for providers to chase after people for payment, so you might be suggesting a win-win to them.
Those are just a few ideas. The point is: never assume a medical bill is accurate and make sure you really do owe the money before you pay it.
Ok, so let’s say you are ready to pay a valid medical bill and want to use money in your FSA or HSA. There are two ways I know of to do this: (1) at point of sale, pay with a debit card associated with the account, or (2) pay with other money and then reimburse yourself from the FSA or HSA. Paying directly out of the FSA/HSA at point of sale is very easy because you don’t need to do any paperwork, but there are lots of scenarios where reimbursing yourself works better. For example, if you’re not sure there’s enough in the account to cover the charges, if you forgot about your FSA/HSA when you were paying, didn’t have your FSA/HSA card with you at checkout, or if you are buying non-eligible items in the same transaction and don’t want to slow down the checkout process with multiple transactions.
When you reimburse yourself, you’ll need to provide a receipt showing qualified medical expenses. If your doctor’s office just gives you a credit card receipt showing the total amount, ask them for an itemized receipt. “Can I please have an itemized receipt? I’ll need that to submit to my FSA.” I have never had any issue with this – everyone knows the drill. Sometimes I forget to get a receipt on the way out of an appointment, especially if I am worried about my medical situation, but I’ve always been able to get one e-mailed or snail mailed to me later if I call to request that. Or, if the amount I paid matches the amount I owe shown on my insurance EOB, I just submit the EOB along with my credit card receipt.
I try to save receipts whenever I have medical payments, meaning: I scan them to my computer. You can also take a picture with your phone and save that to your computer. But then my backup is to review my credit card bills and checking account statement once a month to check for any medical amounts and make sure I have copies of those receipts in the “medical” folder on my computer. This is just part of my regular monthly bill review process – not a separate step I take.
I also have a few online places I regularly use where I buy qualified medical items in the same transactions as other stuff, like buying contact lens solution and bandages along with paper towels and garbage bags. Those don’t show up as separate line items on my credit card bill like a payment to a doctor’s office, so they’re a little harder to track. If I have FSA money left at the end of the year, or if I’m looking to pull from my HSA, I check my order history at those places to see if there are any eligible items where I can reimburse myself.
My last tip for tracking medical expenses is to adopt a file naming system that supports your work. I like to use the date of service at the beginning of each file name. Let’s say I owe a $40 copay from a doctor visit that took place on August 2, 2025, the doctor’s office sent me a bill dated August 9th, and I actually paid the bill on August 14th after I verified the amount against my insurance EOB. I’ll save at least three files to my computer’s medical folder:
- A copy of the bill: “2025.08.02 Dr Smith visit – $40 bill.”
- A copy of the payment receipt: “2025.08.02 Dr Smith visit – $40 payment.”
- A copy of the insurance explanation of benefits: “2025.08.02 Dr Smith visit – EOB.”
Using the service date, rather than the date of each item, keeps all the files together from this one doctor appointment. Using the year, month, day format in the file name helps me view things in chronological order, which is helpful when there are many medical expenses in a year and I want to easily identify the paperwork for a specific medical expense.
There are lots and lots of systems people use to successfully organize their financial documents, these are just a few tactics I use. If you’ve identified other things that really work for you, I hope you’ll share them! I’d love to write a follow up newsletter to share other great ideas.
-Stephanie
Frequently Taxed Questions 