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Quick Guide to Crowdfunding

In Triage Cancer's free Quick Guide to Crowdfunding you'll learn about the different crowdfunding platforms, important things to consider before launching a campaign, and potential solutions if you are concerned your crowdfunding campaign may impact your benefits.

Crowdfunding (asking for donations from others) may be an effective way to help pay for medical and other expenses. While crowdfunding can be done in person, it is most often done online. Individuals can create their own crowdfunding campaign, or create one to help someone else. Generally, crowdfunding campaigns include information about the person who will benefit from the fundraiser and why they need financial help. That personal story can help motivate people to give. Once a fundraiser has been created, it can be shared electronically (e.g., via email or on social media), to help increase the number of potential donors.

With the increased cost of cancer care, crowdfunding for medical expenses has become more popular. Funds raised through crowdfunding are classified as gifts by the IRS, so they typically are not considered taxable income and are considered “unrestricted” funds. This means that the funds raised can be used for any expenses an individual might have.

Crowdfunding Platforms:

Each platform has its own set of rules and fees. The following sites specifically cater to medical crowdfunding:

  • Gofundme: When you create your fundraiser you set a fundraising goal, and you must meet the goal in order to collect your funds. No cost to set up a fundraiser, however, the platform will deduct 2.9% + $0.30 per donation.
  • GoGetFunding: No fee to create fundraiser, and the beneficiary receives any money raised, even if the goal is not met. GoGetFunding charges 6.9% + $0.30 per donation.
  • Fundrazr: No fee to create fundraiser, but there is a fee of 2.9% + $0.30 per transaction. Fundrazr has two options for campaigns: “Keep it All” or “All or Nothing.” If a “Keep it All” campaign is chosen the beneficiary receives any money raised, even if the goal is not met.
  • Fundly: Mobile app only for iOs devices and Facebook integration. There is no fee to establish a fundraiser, and the beneficiary receives any money raised, even if the goal is not met. You do not have to meet your goal or deadline to collect funds, but you do have to pay a 4.9% fee to the platform and a 2.9% + $0.30 fee per transaction.
  • Plumfund: No platform fee, but there is a fee of 2.8% + $0.30 per transaction.
  • Mend Together: Free gift registry and crowdfunding platform. Patients (or a helper) can register for healing products or cash. People can choose a gift to send or donate funds. 5% service fee charged to cash fund donor at time of purchase. Patient receives full amount gifted.

Crowdfunding Considerations:

While crowdfunding may be a useful tool to cope with the financial burden of a cancer diagnosis, there are some possible ramifications everyone should consider before starting a campaign.

  • Disclosure: Sharing your diagnosis publicly can have implications for your personal and professional lives. Creating a campaign to raise funds for medical expenses makes this information public. If you have concerns about disclosing this information, crowdfunding may not be right for you. For more information about making disclosure decisions, see our Quick Guide to Disclosure.
  • Taxes: Although the IRS typically considers funds raised through crowdfunding non-taxable, there have been cases of individuals being taxed. It can be useful to carefully document these funds for tax purposes and to discuss your situation with a tax professional. For more information about finding a tax professional, visit IRS.gov.
  • Income-Based Programs: Many individuals diagnosed with cancer rely on government benefits or programs based on their income level. For some of these programs, the funds raised through crowdfunding may impact eligibility. For example, if an individual is receiving benefits such as Medicaid, Supplemental Security Income, Supplemental Assistance Nutrition Program (SNAP; Food Stamps), or income-based tuition assistance, receiving a payout from a fundraiser may impact eligibility for those programs.
    • Some may consider establishing a fundraiser and having friends or family members accept funds on their behalf, and then pay for their needs from those funds. However, this arrangement may be considered “in-kind maintenance” and could still impact benefits. In-kind support and maintenance is food or shelter that somebody else provides for you. The Social Security Administration will consider in-kind support and maintenance as income when it calculates the amount of SSI benefits. For example, if someone helps pay for your rent, mortgage, food, or utilities, SSI benefits will be reduced depending on the value of the help you receive. For more information about in-kind maintenance, visit SSA.gov.

Possible Solutions:

If you are concerned about funds raised through crowdfunding negatively impacting current benefits, there are possible solutions to consider:

  • ABLE Accounts: These are savings accounts for individuals with disabilities and their families. The beneficiary of the ABLE account is the account owner, and contributions can be made by anyone (including family and friends) using post-taxed dollars. The most significant impact of ABLE accounts is that the funds will not be counted against individuals for the purpose of determining eligibility for governmental programs. In order to be eligible to open an ABLE account, the disability must have begun prior to the individual turning 26, and the medical condition must meet the Social Security Administration’s (SSA) definition of disability.
    • Annual contributions are limited to $16,000; however, accounts can generally hold a balance of up to $100,000. Under the ABLE to Work Act, individuals who are working may be eligible to contribute more than $16,000. The additional ABLE contribution is up to the lesser of:
      • the federal poverty level for a one-person household ($12,280 in 2022) or
      • the account owner’s compensation for the taxable year.
    • Funds included in ABLE accounts must be used for “qualified disability expenses,” which are any expenses, transportation, assistive technology, personal support services, education, and other expenses to enhance the beneficiary's quality of life.
    • An ABLE account can be opened by a beneficiary, parent, guardian/conservator or agent designated through a power of attorney for financial affairs. ABLE accounts are established through the state, and each state has slightly different procedures.
  • Special Needs Trusts: (aka supplemental needs trusts) allow individuals with a disability to hold an unlimited amount of assets in a trust for their benefit. Similar to ABLE accounts, the advantage of these trusts is that assets included in the trust are not considered “countable assets” for government benefits that are based on certain income and resource levels (e.g., Supplemental Security Income or Medicaid).
    • Funds will not count towards taxable income, but must be used for specific goods and services for improving the beneficiary’s life. A special needs trust may supplement care the government provides. For example, the trust may pay for hours of home health care in addition to those paid for by Medicaid.
    • There are very specific requirements that must be met in order to establish a valid special needs trust, including:
      • The beneficiary must be younger than 65 at the time the trust is established
      • The trust is irrevocable
      • The trustee has sole and absolute discretion over the use of the trust funds for the sole benefit of the recipient of government benefits (i.e., the trustee cannot be required to pay the beneficiary directly from the trust)
    • There are three main types of SNTs:
      • First Party SNTs: (“stand-alone” SNT) can be contributed to by multiple individuals, and are immediately accessible to the beneficiary. First-Party SNTs can be established at any point before the beneficiary turns 65 years old as long as they meet SSA’s definition of disability.
      • Pooled SNTs: often run by nonprofit organizations, are created to administer master special needs trusts on behalf of individual beneficiaries. Assets are pooled and funds are given to beneficiaries in proportion to their share of the total amount. Pooled SNTs can be established at any point before the beneficiary turns 65 years old as long as they have a disability or moderate impairment.
      • Third-Party SNTs: created by a third-party, commonly a family member, to benefit an individual with special needs. The beneficiary is not permitted to contribute to these SNTs. Third-Party SNTs can be established at any point during the life of the beneficiary even if they do not yet have a disability.

For more information about other estate planning options, see Triage Cancer's Estate Planning Materials & Resources.

Medicaid Pay-Back

  • When an individual who received Medicaid passes away, any funds remaining in an ABLE account, first party SNTs, or certain pooled SNTs, must be reimbursed to the state for Medicaid services the beneficiary received after those accounts were established. This is commonly referred to as “Medicaid pay-back.”

Overview of Trust Account Options

First Party SNTPooled SNTThird Party SNT
How to EstablishOnline though state website. No Attorney neededAttorney RecommendedAttorney RecommendedAttorney Recommended
Allowed # of Accounts1May have multipleMay have multipleMay have multiple
Disability Onset RequiredPrior to age 26. Meets SSA disability definitionPrior to age 65. Meets SSA disability definitionPrior to age 65. Disability or moderate impairmentAny age. No disability required
Maximum Contributions$16,000 per year (unless beneficiary is working)No maximumNo MaximumNo maximum
Who Can ContributeAnyoneBeneficiary onlyAnyoneAny third party (but not the beneficiary)
Allowed Use of FundsQualified disability expenses (e.g., housing, education, health care, etc.)As determined by TrusteeAs determined by TrusteeAs determined by Trustee
Who Controls DistributionsDesignated Beneficiary (unless has guardian)TrusteeTrusteeTrustee
Distributions to pay housing costs considered income for SSI?NoYes. Payments will reduce SSI by 1/3 + $20Yes. Payments will reduce SSI by 1/3 + $20Yes. Payments will reduce SSI by 1/3 + $20
Medicaid PayBackYes (Except in PA)YesYesNo
Remainder of the TrustTo heirs named in account holder’s estateTo heirs named in the TrustDepends on the state. Typically, money stays with organization to cover administrative costsTo heirs named in the Trust

For more information about managing finances after a cancer diagnosis, see our free Financial Materials & Resources, and visit CancerFinances.org.

Disclaimer: This handout is intended to provide general information on the topics presented. It is provided with the understanding that Triage Cancer is not engaged in rendering any legal, medical, or professional services by its publication or distribution. Although this content was reviewed by a professional, it should not be used as a substitute for professional services. © Triage Cancer 2021

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