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GoFundMe is a well-known crowdfunding platform. It allows people to create campaigns, share their stories, and ask for donations from anyone who wants to help.

Healthcare cost campaigns are one of the most common categories on platforms like GoFundMe. But before you start a GoFundMe campaign for your medical bills, there are a few things to consider.

How does GoFundMe work?

To start a GoFundMe fundraiser in the U.S., you must be 18 years or older and have the following:

• A social security number or an individual taxpayer identification number (ITIN)

• A U.S. driver's license or valid passport from any country

• A residential address (not a P.O. box) in one of the 50 states

• A telephone number in the U.S.

• A U.S. bank account in your name

If you meet the requirements, here's how to set up your GoFundMe campaign:

1. Get started. Click on the "Start a GoFundMe" button on the website.

2. Select a category. You can choose from a variety of categories, including medical.

3. Share information about your fundraiser. Be prepared to provide information about who or what you're raising money for. You'll also need to upload a photo or video representing your cause.

4. Set your goals. Your fundraising goal can be adjusted later if needed.

5. Receive money. To get the money you've raised from GoFundMe, add your bank account information. Bank transfers take 2 to 5 business days to process.

Once your campaign is set up and approved by GoFundMe, it's time to spread the word. Send your fundraiser link to friends, family, and your community. Some people share their campaign via text messages, emails, social media, and even in-person with printable posters. As more people donate, you can add updates to your campaign page thanking them and keeping them informed of your progress.

How much does GoFundMe cost?

According to the platform, people in the U.S. don't pay a fee to start or manage a fundraiser. But expect to pay a transaction fee of 2.9% + $0.30 per donation.

Let's say someone donates $100 to your cause. GoFundMe will deduct $3.20 ($2.90 + $0.30), and you'll receive $96.80. Donors also have the option to leave a voluntary tip for GoFundMe.

Should I use GoFundMe to pay off medical bills?

GoFundMe can be a good option for raising funds to pay down medical debt. More and more Americans are turning to crowdfunding sites - like GoFundMe - to get financial help with medical costs.

In just 9 years, the number of fundraisers dedicated to medical expenses on the site jumped from about 8,000 to 200,000 per year in the U.S., according to a study. The same study noted that by 2020, millions of Americans had started some type of crowdfunding campaign to cover healthcare costs, and 1 in 5 households had donated to these fundraisers.

While GoFundMe has become increasingly popular and is convenient, keep the following in mind:

• Success is not guaranteed. Like any crowdfunding effort, the amount raised depends on how widely the campaign is shared and how much it resonates with potential donors.

• Transaction fees are involved. As mentioned before, GoFundMe deducts a percentage (2.9%) and a flat fee ($0.30) per donation received.

• Transparency is expected. You'll have to be comfortable sharing information about your medical situation publicly, as well as some details on how the funds will be used.

• There may be tax implications. Money collected through personal fundraisers, such as to pay off health expenses, is generally considered a gift and is not taxable. However, there are some situations where money raised through GoFundMe can count as taxable income.

Pros and cons of using crowdfunding for medical expenses on GoFundMe

Using crowdfunding for medical expenses has its advantages and disadvantages. Let's take a look at what you should keep in mind before starting a campaign.

Pros

Broad reach

GoFundMe allows you to reach a vast network of potential donors, including friends, family, and even strangers. This can significantly increase your chances of raising the funds you need.

Avoid loans

Loans often have an interest rate, which can further strain your finances. Crowdfunding helps you avoid digging yourself into a deeper financial hole through high-interest loans.

Quick access to funds

Once you meet the requirements, you can transfer donated funds to your bank account. The money will typically reach your bank account 2 to 5 business days after you initiate the transfer.

No platform fee

GoFundMe doesn't charge a platform fee, meaning more of the donated funds go directly to your cause. However, transaction fees still apply.

Flexible timeline

Your campaign has no set time limit. You can keep your fundraiser active for as long as you wish.

Opportunity to tell your story

The platform allows you to share your medical story and situation. This helps people understand your financial needs and feel more connected to your cause.

Tax benefits

In most cases, the funds you receive through GoFundMe are considered a personal gift. This can be a significant advantage as personal gifts don't count as part of your total income and are not taxable.

Donor and beneficiary protection

The platform has protections in place for both donors and those receiving funds. For donors, there is a guarantee of a full refund if anything goes wrong with the fundraiser, including misuse of funds. If you have trouble receiving funds raised by someone on your behalf, GoFundMe will step in to help.

Cons

Uncertain outcome

While GoFundMe can be a helpful tool, raising the full amount you need is not guaranteed. Success depends on how well you can spread the word about your campaign and whether your cause resonates with people.

Marketing efforts required

Reaching your fundraising goal requires dedicated time and effort. You'll need to actively market your campaign and share it with as many people as possible.

Public disclosure

For some, the ability to openly share their story on GoFundMe is seen as an advantage. It's a way to rally support and connect with donors. But others may see this public disclosure as a downside. Not everyone is comfortable revealing personal medical and financial matters.

Potential taxable income

Money received through GoFundMe fundraisers is generally considered a nontaxable gift. This is because the donations are usually made out of generosity, and the donors don't expect anything in return. However, there are situations where crowdfunded money is viewed as taxable income by the IRS. Take the time to discuss your campaign goal and details with a tax professional to be sure.

Potential loss of benefits

Are you a Medicaid or Supplemental Security Income (SSI) recipient? The money you raise through a GoFundMe campaign can push your income and assets over the limit allowed for these programs. This means you risk losing access to these benefits. Talk to a Medicaid planner who can help you understand the rules.

Limited availability

GoFundMe is not available in all countries. Currently, funds can only be sent to 19 countries, and the person withdrawing the money must meet specific requirements for that country. Additionally, GoFundMe is not supported in all five inhabited U.S. territories:

• American Samoa

• Guam

• Northern Mariana Islands

• Puerto Rico

• U.S. Virgin Islands

Alternatives to pay off medical expenses

GoFundMe is one option to raise money when facing large medical bills. But it's certainly not the only way. Consider the following alternatives:

• Negotiate your medical bills. You may reduce the amount you pay or receive more time to pay if you negotiate your medical bills.

• Ask about payment plans. Reach out to your medical team about setting up an affordable and interest-free payment plan.

• Apply for financial assistance programs. Hospitals, nonprofit organizations, and prescription medication manufacturers may offer financial assistance programs.

• Tap into your savings. If you have money saved in your bank account, you can consider using the funds to pay your medical bills.

• Look into government assistance programs. Medicaid, for example, may cover medically necessary expenses if you qualify for the program.

• Use your HSA or FSA. Funds from a health savings account (HSA) or flexible spending account (FSA) will allow you to pay for medical expenses with pretax dollars.

• Borrow money. Contact your family or friends to see if they will let you borrow money, preferably with little or no interest.

• Look into loan options. Unsecured personal loans or home equity credit lines can help you pay medical bills. But make sure you can comfortably repay them.

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