Crowdsourcing Medical Expenses

It is estimated that one of the leading causes of bankruptcy in America are medical bills.

 

Insurance premiums and out-of-pocket expenses are just a few of the charges that can leave some Americans with enormous financial debt. Using loans and credit cards to pay off these expenses can exacerbate debt and drive a patient closer to bankruptcy. Crowdsourcing has become a popular tool in helping to pay for large financial burdens associated with medical procedures, such as ambulance fees, medications, procedures and hospital stays. Crowdfunding, a type of crowdsourcing, allows sizable portions of the public to contribute to a specific fund with the goal to reach a financial target. Some crowdfunding sites have rated medical expenses as their highest form of funding. Even countries with universal healthcare or subsidized health care still use crowdfunding to help pay for mounting bills.

Types of Crowdsourcing

There are two main types of crowdsourcing that can be used to pay for medical expenses. While monetary contributions are essentially at the core, the methods in which you can collect them vary.

Online Crowdfunding

Crowdfunding websites allow members of the public to ask for donations into a private account. Different restrictions apply to each crowdfunding website, but their objectives are the same. A patient can launch a campaign that explains how much money they need to raise and then share that profile will as many people as he or she wishes. People can donate as much or as little as they like until the goal is reached. Gift incentives can be used for certain amounts as a way to encourage higher donations. These online crowdfunding pages can be for almost any subject, and cover whatever the patient requires. This enables each person to customize the profile with his or her own pictures, breakdowns and incentives.

In-Person Crowdsourcing

Although this method has been around for many years in the form of charity events and fundraisers, it is still an effective tool for drawing upon large crowds to help fund the costs of a cause. This type of crowdsourcing is useful for smaller financial goals and engaging an audience with the patient or family in question. It is important to take the overhead cost into consideration and make sure the cost of the event does not cancel out the amount raised. Bake sales, walkathons and sponsored runs are a few of the crowdsourcing events that can be utilized when looking for help paying medical expenses.

Medical Forums

Online medical forums crowdsource the advice and expertise of varies medical professionals and patients alike. Depending on the insurance plan of the individual, a doctor’s visit for minor health issues may result in expensive out-of-pocket costs. From pregnancy advice to preliminary diagnoses, these forums harness the crowd to answer questions for free. Using online forums for medical advice is not always advisable and should be used with caution.

 

Advantages to Crowdsourcing for Medical Expenses

There are many advantages to crowdsourcing for medical expenses. Traditional loans usually come with restrictions, eligibility and caps. A patient can set almost any monetary goal when crowdsourcing, allowing him or her more freedoms and less restrictions when raising funds. Similarly, the money raised is realized upfront and not borrowed. Once the financial goal is reached, a patient can pay the bill and get rid of debt.

  • Variety in coverage – There are almost no restrictions on what patients can raise funds for. They are not limited to the actual dollar amount of their charges. For example, patients facing further fees, such as prescriptions and ongoing appointments, can included these expenses in their funds if they wish. Equally, a patient can raise funds for items that are not covered by his or her medical insurance, such as relocation fees for moving closer to a medical facility.
  • Wide reach – The concept of asking friends and family for money is not always available, nor it is always fruitful. For those who are in low-income families, the access to those who are able to give large amounts of money may not be available. Crowdfunding websites allow individuals to reach a far bigger pool of people than their own private circles. Harnessing the power of social media helps to open up these circles and connect those who would otherwise be ignorant with the person needing help. This method requires the general public to care about the plight of an individual or family. While this is not always guaranteed, crowdsourcing allows the possibility of a cause reaching those it would not normally reach.
  • Funeral costs – The average funeral can cost upwards of $7,000. Sometimes, these costs can be overwhelming for families dealing with the death of a loved one. When someone dies, friends and extended family often send gifts of consolation. Crowdfunding these medical costs gives people who are mourning a chance to pay toward the funeral as opposed to sending flowers or cards. Due to the reach of these campaigns, distance friends can show their respects by donating without having to send something in the mail or search for current addresses.

Potential Disadvantage to Crowdsourcing for Medical Expenses

While there are many benefits to using crowdsourcing to cover medical costs, there are some negatives to using this tool as well. It is important to understand these disadvantages to make sure that this technique is the best option for you and your family.

 

  • Fees – Crowdfunding websites have fees for using their services. On general, they take 5 percent of the raised funds. This does not include any processing fees that are applied for donations made with credit cards. Make sure you are aware of all applicable fees before committing to a crowdfunding campaign.
  • Income Tax – Money that is raised to pay for something directly cannot be deducted from your taxes and is often classed as income. Most crowdfunding websites that raise over $200,000 or have over 200 contributions will require a 1099-k form to be completed. However, this does not mean you have to pay income tax on the money raised. Similar restrictions apply to any money raised for personal use and not for a qualified charity. It is important to make sure you are aware of all applicable taxes before you crowdsource your medical costs, so you are not short of funds at a later date.
  • Fraudulent accounts – For those who are looking to donate to another crowdfunding website, make sure they are for legitimate accounts. The flexibility that these campaigns offer is what also that allows fraudulent accounts to exist. Research the profile carefully before giving money.
  • Exposed personal details – One of the sacrifices in crowdsourcing any information, especially medical information, is the loss of privacy. While this may sound obvious, it is important to weigh the benefits of posting your situation online for the entire population to view. With this in mind, do not reveal any private information that is not necessary to the campaign itself.
  • Loss of Medicare – Due to the fact that crowdfunded money is typically classified as income under the IRS, it may affect your eligibility for Medicare. The rules and regulation for Medicare often include income levels. This spike in income could disqualify you from receiving benefits that might have helped cover future medical bills.

 

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