Why Crowdfunding May Cost You Medicaid Eligibility

Crowdfunding or fundraising websites, such as Kickstarter, YouCaring, and GoFundMe are quickly becoming a popular source for donations where ordinary people may raise money from others for anything from new inventions to helping a neighbor or family member in need. Over time, crowdfunding has morphed into a platform to request finances for anything from the essential to the frivolous.

The most significant increase may be the rise of campaigns to crowdfund for medical hardships, medical bills, and associated bills and living expenses. In fact, according to GoFundMe CEO Rob Soloman, one-third of all donations made through GoFundMe help individuals cover medical expenses. “When [GoFundMe] started in 2010, it wasn’t purposefully set up and built to be a substitute for medical insurance,” Soloman told CBS MoneyWatch. “We weren’t even set up to be a health care company and we still are not. But over time, people have used GoFundMe for the most important issues they are faced with.”

Unfortunately, the good deed of asking for donations to cover your medical or living expenses may end up costing you your Medicaid eligibility in the end.

Let’s say you are currently receiving Medicaid to help pay for your skilled nursing expenses. To be eligible for Medicaid, your assets in most states must remain under $2,000 of non-exempt assets at any given time (exempt assets might include the equity in your home, for example). Your daughter, Susan, is well-meaning and starts an online fundraiser asking for donations with a goal of $20,000 to help pay for your medical expenses for an upcoming surgery and to help with your living expenses during this difficult time. The good deeds by Susan and your friends and family who give towards the fundraiser might cause you to lose your Medicaid benefits.

Even though Susan, not you, set up the fundraiser, you, as the recipient of the fundraiser, have direct access to all the funds and may request the funds directly from the website. This means if you set up a crowdfunding website or are the beneficiary of a crowdfunding website, you may lose your Medicaid eligibility based on the donations received from the fundraising website.

In the above example, while Susan thought she was helping you out, in the end, she ended up costing you Medicaid eligibility. Qualifying for Medicaid can be complicated and is often best accomplished with years of planning in advance through the assistance of a skillful elder law and estate planning attorney.

The information in this article was provided by Stephen C. Hartnett, J.D., LL.M. Director of Education of the American Academy of Estate Planning Attorneys, Inc.