What Is Crowdfunding and How Does It Work For Medical Expenses?
It’s becoming increasingly common for Americans to go into debt over medical expenses. This could be due to the rising cost of healthcare. The U.S. Centers for Medicare and Medicaid Services (CMS) reports that on average, the amount that Americans spend on healthcare will rise by 5.5% each year from 2017 to 2026.
These rising costs are leading patients to seek alternative methods to pay for their costly medical expenses. Crowdfunding has expanded from a way to get funds for a business into a way to cover personal medical expenses. The CEO for GoFundMe, a popular crowdfunding site, states that one-third of all crowdfunding campaigns on the site are for medical expenses. Many cancer patients use crowdfunding to help pay for drug costs, medical bills, and treatments, even if they have health insurance.
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What Is Crowdfunding for Healthcare?
Crowdfunding is asking for small amounts of money from a large number of individuals. You gather donations to use for a specific purpose. Traditionally, crowdfunding is used to raise money for business ventures, such as inventions or startups, or for artistic endeavors.
However, medical crowdfunding is on the rise as more people struggle with the high cost of medical treatments. Using a crowdfunding strategy, you can ask friends and family or other individuals for small donations, which you can then use to pay for your medical bills.
How Does Crowdfunding Work?
In the traditional world of crowdfunding, entrepreneurs raise capital to start a business or manufacture a product. Or, artists raise money for a project and offer donors something in return.
Crowdfunding provides a platform where anyone can pitch an idea and receive monetary contributions from a large pool of people to turn their concept into a tangible product or business. Traditional crowdfunding techniques require entrepreneurs to pitch their ideas to potential investors, while artists detail their projects and offerings to visitors on the crowdfunding platform.
With the popularity of social media, these traditional crowdfunding strategies have morphed into highly effective online campaigns that can reach an even larger pool of potential donors. Not only do entrepreneurs, inventors, and artists use this technique to raise funds, it can also be used to raise money for other causes, such as medical debt.
Tips for Crowdfunding for Medical Bills
If you want to start your own medical crowdfunding campaign, you’ll have several crowdfunding sites to choose from. Some of the most popular crowdfunding campaign hosting companies include Transparent Hands, Fundly, and GoFundMe. Choose the platform that works for you based on ease of use, fees, and how you’re planning to share your campaign.
When you’re creating your medical crowdfunding campaign, you’ll need to figure out how you can appeal to your potential donors. You should consider:
- Getting personal: Telling your story in a heartfelt and compelling way is more likely to attract donors and encourage them to share your campaign with their friends and family. Consider adding photos and videos that truly show who you are and what you’re going through on your health journey.
- Spreading the word: The more exposure your campaign gets, the more likely you are to get donations. Share your medical crowdfunding campaign on all your social media platforms and ask your friends and family to do the same.
Does Crowdfunding Work for Medical Costs?
Crowdfunding is a great way to ask a large number of people for financial assistance with paying for your medical expenses. However, it’s important that you don’t rely on this as your main source to cover your medical debt. Patients who use medical crowdfunding find it hard to reach their financial goals with these campaigns. In an analysis of 1,000 medical crowdfunding campaigns on GoFundMe, patients only raised about one-quarter of their goal.
Potential donors may be leery of donating online to medical crowdfunding campaigns because recent situations have caused doubt in the legitimacy of some campaigns. Abusers of the crowdfunding technique can fabricate or exaggerate medical or personal interest stories to gain attention and encourage donations.
The popularity of crowdfunding and the saturation of these campaigns online can also make it harder for campaign managers to get donations. The current “I want” culture and the ease of creating these campaigns have led to crowdfunding for frivolous or luxurious items. Some campaign managers create these crowdfunding campaigns for unnecessary reasons, such as to raise money for a new smartphone or to fund a cat’s birthday party. This can also tarnish the legitimacy of crowdfunding and make potential investors more cautious about donating.
Alternatives to Medical Crowdfunding
While medical crowdfunding may be a simple way to potentially raise funds for your medical bills, it may not always be your best potion. Keep in mind that crowdfunding sites may charge fees on the money you raise. For example, GoFundMe charges a 2.9% transaction fee and takes 30 cents from each donation.
If you’re facing medical debt, you may be able to speak with your healthcare provider about setting up a payment plan. This allows you to make payments that fit into your budget until your balance is paid off. Review all medical bills and verify that your insurance coverage paid their portion correctly. Disputing any incorrect medical bills you have can lower the balance you owe. You could also take out a medical loan with a financial institution to pay your expenses. This allows you to pay the bills you owe, then make a monthly payment to the lender until your balance is paid off.
Medical crowdfunding can help you share your story and potentially raise some funds to pay your medical debt. However, don’t expect all your medical expenses to be covered by crowdfunding. It’s important to have alternative options for covering your medical bills.
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This post was updated December 12, 2019. It was originally published December 12, 2019.