Crowdfunding Health Care Costs: What to Do
When Jennifer Merritt’s tween daughter, Lila, needed treatment for severe depression and anxiety, she turned to her insurance. It was a struggle and took many appeals, but she succeeded in getting her plan to cover one of the biggest costs — about 6 months of Lila’s care at $12,000 per month in an out-of-state residential treatment center and school. But there were more expenses, and Jennifer knew she couldn’t cover them on her own.
The deductibles and out-of-pocket payments alone amounted to $34,000, and she expected Lila to stay there for at least a year. Plus, Merritt, a 46-year-old editor, would have trips from New York to visit Lila in Montana throughout her stay.
“I just didn’t have the money, but I also felt like that was the only way to save my child’s life,” she says. “I believe as a parent, you will always do whatever it takes, and for me that was asking strangers for money.”
So in March 2021, Merritt set up “Lila’s Love Bucket Challenge” on GoFundMe. She asked friends, families, and the public to contribute to the cause.
Crowdfunding platforms like GoFundMe are an increasingly popular route for people or families who need financial assistance covering medical costs. People fundraise for everything from the everyday expenses of dealing with chronic conditions to one-time catastrophic medical events with seemingly insurmountable bills.
GoFundMe, the most popular of such platforms, hosted more than 250,000 medical fundraisers in 2022, bringing in more than $650 million. But such numbers belie a harsher reality: Most health-related crowdfunding campaigns fail. Researchers at the University of Washington analyzed more than 400,000 GoFundMe campaigns from 2016 to 2020 and found that about 1 in 6 campaigns didn’t bring in any donations at all.
Lila’s Love Bucket Challenge outperformed many other fundraisers, with Merritt receiving nearly $83,000 from 883 donors, close to the final goal of $90,000. Lila stayed in treatment for 15 months. She’s back home now with her family and thriving. She still gets several expensive treatments, including individual and family dialectical behavioral therapy, which costs Merritt $695 per week. Insurance may cover some of that, but Merritt has to pay for it up front and submit the expense to her insurance company.
Thinking of starting or contributing to a health care crowdfunding campaign? Keep these pointers in mind:
If You’re Creating a Campaign
Start with a smaller goal. Merritt’s original goal was $14,200, just enough to cover the cost of a deposit at Lila’s facility. She says that the attainable goal may have helped encourage people to donate, and then, as she raised the amount requested, she explained what she needed the funds for in subsequent updates.
Share it widely on social media. Merritt says her campaign hit a tipping point with donations when she shared it on a work Slack channel. She also shared it on LinkedIn and with local Facebook groups, although the idea of doing so made her uncomfortable at first. “You’re making yourself extremely vulnerable to people you don’t know, or who see your life from the outside and think everything is great because you are successful and your kids seem fine,” she says.
Consider the commitment. Donors may expect you to regularly update the campaign page or otherwise share information going forward. “A crowdfunding campaign may require more than just putting your story out there,” says Lauren Ghazal, PhD, a nurse practitioner and research fellow who has researched crowdfunding at the University of Michigan’s Center for Improving Patient and Population Health and Rogel Cancer Center. “You have to think about what’s going to be expected of you and whether you can emotionally do that right now,” Ghazal says.
Don’t expect it to cover everything. That Washington University study found that the median total raised by a crowdfunding campaign was about $2,000. Even though Merritt nearly reached her goal, she still had to borrow about $40,000 and downsize in home to cover the additional costs. Her last resort plan, which she didn’t need to use, was taking money out of her 401(k).
Look into other ways to reduce your medical costs. There may be nonprofits or other resources that can help reduce the burden, says Bruce McClary, senior vice president at the National Foundation for Credit Counseling. He suggests checking your state’s department of health website for resources such as the Patient Advocate Foundation, which offers copay relief and financial aid. You can also reach out to your provider to see if they offer a payment relief plan for patients struggling to cover their cost of care.
If You’re Donating to a Campaign
Start out skeptical. Look for clues that the story is legit, such as supportive comments from friends and family, and details about how exactly they plan to use the money they raise. “If there’s any doubt about the validity of the story or the identity of the individuals, I’d advise people not to donate,” McClary says.
If you know the fundraiser, connect offline. By reaching out off of the crowdfunding site, you can check on the legitimacy of the campaign and also see whether they’d prefer a different type of donation, such as a check or gift card, Ghazal says. Such contributions would also allow you to avoid paying the fee charged by most of the crowdfunding sites to process the donation.
Don’t expect a tax break. Keep in mind that the IRS considers most contributions to crowdfunding sites as gifts, rather than charitable donations. Since the recipient is not a verified charitable 501(c)3 organization, you can’t write off the contribution on your taxes.