Amounts Generally Billed: The Cap on What a Hospital Can Charge You

Updated August 25, 2026. Quick answer: once a non-profit hospital has decided you qualify under its financial assistance policy, federal regulation caps what you can be made to pay for emergency or medically necessary care at amounts generally billed — roughly, what insured patients are billed for the same care. It is a real number, usually a percentage of the hospital’s gross charges, and the hospital has to tell you what its percentage is and how it worked it out. In the regulation’s own worked examples that percentage is 50%, 40% and 62.5% of gross charges.

There are two limits, not one

Section 501(r)(5) sets one cap for the care most people are worried about and a separate, weaker one for everything else the policy covers.

26 CFR 1.501(r)-5(a)(1): “In the case of emergency or other medically necessary care, not more than the amounts generally billed to individuals who have insurance covering such care (AGB), as determined under paragraph (b) of this section”

— 26 CFR 1.501(r)-5(a)(1)

26 CFR 1.501(r)-5(a)(2): “In the case of all other medical care covered under the FAP, less than the gross charges for such care, as described in paragraph (c) of this section.”

— 26 CFR 1.501(r)-5(a)(2)

So for emergency and medically necessary care the ceiling is AGB. For any other care the policy covers, the only rule is that you must be charged less than gross charges — less by any amount. The two are often confused, and the difference is large.

Gross charges are still allowed to appear on the paper.

26 CFR 1.501(r)-5(c): “A billing statement issued by a hospital facility to a FAP-eligible individual for medical care covered under the FAP may state the gross charges for such care and apply contractual allowances, discounts, or deductions to the gross charges, provided that the actual amount the individual is personally responsible for paying is less than the gross charges for such care.”

— 26 CFR 1.501(r)-5(c)

So a statement showing the sticker price is not evidence you are being charged it. What matters is the line you are personally responsible for.

“Charged” means what is left after insurance

This is the paragraph that decides whether having insurance takes you out of the protection. It does not.

26 CFR 1.501(r)-5(b)(2): “a FAP-eligible individual is considered to be “charged” only the amount he or she is personally responsible for paying, after all deductions, discounts (including discounts available under the FAP), and insurance reimbursements have been applied.”

— 26 CFR 1.501(r)-5(b)(2)

Read it twice. The hospital and your insurer together may be paid more than AGB. What is capped is your share — the co-payments, co-insurance and deductible you are personally responsible for. A large deductible on a large hospital bill is exactly the case the paragraph is written for, and it is one of the commonest situations in which people pay in full without asking.

The regulation works the case through twice, and the second time the cap bites:

26 CFR 1.501(r)-5(b)(5), Example 6: “Because A is FAP-eligible under V’s FAP, paragraph (a)(1) of this section requires that A not be personally responsible for paying V more than $3y (the AGB for the care provided).”

— 26 CFR 1.501(r)-5(b)(5), Example 6

How the number is set: two methods, and only one at a time

A hospital may use two methods, and the choice changes what your ceiling is.

The look-back method ((b)(3)). The hospital divides what insurers actually allowed over a prior 12-month period by the gross charges for those same claims. The result is an AGB percentage, and your ceiling is that percentage of the hospital’s gross charges for your care. Which insurers go into the sum is not a free choice — it is one of these:

• (b)(3)(ii)(A) — Medicare fee-for-service.
• (b)(3)(ii)(B) — Medicare fee-for-service and all private health insurers that pay claims to the hospital facility.
• (b)(3)(ii)(C) — Medicaid, either alone or in combination with the insurer(s) described in paragraph (b)(3)(ii)(A) or (b)(3)(ii)(B) of this section.

The prospective method ((b)(4)). Instead of a percentage, the hospital prices your care as if you were a Medicare or Medicaid beneficiary:

26 CFR 1.501(r)-5(b)(4): “using the billing and coding process the hospital facility would use if the FAP-eligible individual were a Medicare fee-for-service or Medicaid beneficiary and setting AGB for the care at the amount the hospital facility determines would be the total amount Medicare or Medicaid would allow for the care”

— 26 CFR 1.501(r)-5(b)(4)

The two are not interchangeable, and the hospital does not get to apply whichever is lower on the day:

26 CFR 1.501(r)-5(b)(1): “A hospital facility may use only one of these methods to determine AGB at any one time, but different hospital facilities operated by the same hospital organization may use different methods. A hospital facility may change the method it uses to determine AGB at any time.”

— 26 CFR 1.501(r)-5(b)(1)

Two things follow that people get wrong. Two hospitals in the same system can be running different methods, so a percentage you were quoted at one is not evidence about the other. And a hospital may switch methods at any time, so a percentage you were told last year is not necessarily this year’s.

What the percentages actually look like

The regulation contains its own worked examples. They are illustrations, not a survey of real hospitals, but they show the shape of the arithmetic and the size of the numbers involved.

Note the second and third rows: a hospital may hold more than one percentage — here 40% for inpatient care and 62.5% for outpatient care. Asking for “the AGB percentage” may get you the wrong one of several.

Two timing rules sit underneath the arithmetic, and both matter if you are trying to check a figure. First, the twelve months are counted by when the claim was allowed, not when the care happened:

26 CFR 1.501(r)-5(b)(3)(i): “Whether a claim is used in calculating a hospital facility’s AGB percentage(s) depends on whether the claim was allowed by a health insurer during the 12-month period used in the calculation, not on whether the care resulting in the claim was provided during that 12-month period.”

— 26 CFR 1.501(r)-5(b)(3)(i)

Second, a newly calculated percentage cannot sit in a drawer — it has a deadline to come into use.

26 CFR 1.501(r)-5(b)(3)(iv): “the hospital facility must begin applying the AGB percentage by the 120th day after the end of the 12-month period the hospital facility used in calculating the AGB percentage.”

— 26 CFR 1.501(r)-5(b)(3)(iv)

That is the 120th day after the end of the 12-month period the percentage was calculated from.

And the cap is a ceiling, not a target. A hospital’s own policy may promise more than the regulation requires — in the regulation’s last example the AGB percentage is 60% but the policy charges a qualifying patient no more than 50% of gross charges, and the hospital is compliant because it charges less than it has to.

The refund almost nobody is told about

Here is the part that changes what to do about a bill you have already paid. A hospital is allowed to charge you more than AGB before it has decided you qualify. That is the safe harbour, and it comes with conditions.

26 CFR 1.501(r)-5(d)(1): “The charge in excess of AGB was not made or requested as a pre-condition of providing medically necessary care to the FAP-eligible individual (for example, an upfront payment that a hospital facility requires before providing medically necessary care)”

— 26 CFR 1.501(r)-5(d)(1)

And the third condition is the one to know:

26 CFR 1.501(r)-5(d)(3): “the hospital facility refunds any amount the individual has paid for the care (whether to the hospital facility or any other party to whom the hospital facility has referred or sold the individual’s debt for the care) that exceeds the amount he or she is determined to be personally responsible for paying as a FAP-eligible individual, unless such excess amount is less than $5”

— 26 CFR 1.501(r)-5(d)(3)

Read what that covers. If you are later determined to qualify, the hospital must refund what you already paid above your capped share — and explicitly including money you paid to a party the hospital referred or sold your account to. The only stated exception is an excess of less than $5.

The practical consequence: having paid is not a reason not to apply. The application window is long, and it is described on the charity-care page, which sets out the 240-day rule and the collection hold.

How to find your hospital’s number

You do not have to reconstruct any of this arithmetic. The hospital has to publish the answer, in the policy itself:

26 CFR 1.501(r)-4(b)(2)(i)(C): “the FAP also must state the AGB percentage(s) that the hospital facility uses to determine AGB and describe how the hospital facility calculated such percentage(s) or, alternatively, explain how members of the public may readily obtain such percentage(s) and accompanying description of the calculation in writing and free of charge.”

— 26 CFR 1.501(r)-4(b)(2)(i)(C)

So the request is specific, and it is worth making in these words: “What method does this facility use to determine amounts generally billed, and if it is the look-back method, what is the AGB percentage and how was it calculated?” If the policy does not state it, the policy must say how to obtain it in writing, free of charge. The plain-language summary carries the headline of the same rule:

26 CFR 1.501(r)-1(b)(24)(vii): “A statement that a FAP-eligible individual may not be charged more than AGB for emergency or other medically necessary care.”

— 26 CFR 1.501(r)-1(b)(24)(vii)

What else that policy has to contain is set out separately — there are six required elements, and one of them is a list of which doctors working in the building are not covered by it.

What this page does not tell you

What we could not confirm. There is no public register of hospitals’ AGB percentages, so this page cannot tell you what any particular hospital’s number is — only what to ask for and what the answer has to contain. We did not read the Form 990 Schedule H instructions, so we do not say what a hospital reports there. We did not test how the cap interacts with a state charity-care statute, several of which are stricter than the federal floor; where a state law gives you more, it is the state law that decides. The regulation leaves the definition of medically necessary care partly to the hospital: 26 CFR 1.501(r)-5(e) provides that “a hospital facility may (but is not required to) use a definition of medically necessary care applicable under the laws of the state in which it is licensed…” — so which care falls inside the AGB cap is not uniform across the country. And a drafting note from reading the source: Example 2 of paragraph (b)(5) opens by naming hospital facility X and then narrates the disclosure steps as “Y”, which appears to be an error in the published text and does not change the arithmetic.

Sources

• 26 CFR 1.501(r)-5, Limitation on charges, as in force August 24, 2026 — ecfr.gov (official XML)
• 26 CFR 1.501(r)-4, Financial assistance policy, as in force August 24, 2026 — ecfr.gov (official XML)
• 26 CFR 1.501(r)-1, Definitions, as in force August 24, 2026 — ecfr.gov (official XML)
• 26 U.S.C. § 501(r), the statute behind the regulation — uscode.house.gov

Related: Hospital charity care: the 501(r) rules · The No Surprises Act · How to audit a hospital bill · Hospital cash prices · Retroactive Medicaid · Medical bills after a death · What a hospital’s financial assistance policy must contain.

General information drawn from the Internal Revenue Code and the Treasury regulations named above, not legal, financial or medical advice. Section 501(r) applies to non-profit hospital facilities; a for-profit or government hospital may run an assistance programme but is not operating under this section. Every figure here is cited to the paragraph it comes from — read the policy of the hospital that billed you before relying on any general page, including this one. We sell nothing on these pages: no services, no advocacy, and no referral.