Crowdfunding can ease the hardship of medical debt, but it’s unlikely to alleviate those bills altogether. Only 11% of such campaigns are fully funded, NerdWallet found in a new analysis of 2015 data provided by crowdfunding sites.
Medical crowdfunding campaigns enlist the help of social networks — and sometimes strangers — to contribute money to help pay for health care bills. Despite more Americans getting health insurance after Affordable Care Act coverage started in 2014, financial problems related to health care costs are a reality for 26% of adults, according to a 2015 survey by NPR, the Robert Wood Johnson Foundation and the Harvard T.H. Chan School of Public Health.
Data from five sites
Just over 1 in 10 of all medical crowdfunding campaigns in 2015 were fully funded at the sites NerdWallet examined. Averages were calculated with data from five crowdfunding sites: FundRazr, GiveForward, GoFundMe, Plumfund and Red Basket.
Among the sites that contributed data, an average of 41% of all crowdfunding campaigns in 2015 were for medical debt. The average goal per medical campaign in 2015 was $15,721 at the sites that provided data. Fully funded medical campaigns saw nearly 55 contributors, on average, according to the analysis.
Most crowdfunding sites keep a percentage of donations. Of the five sites analyzed by NerdWallet, two don’t charge platform fees on donations — Plumfund and Red Basket. The other sites charge 5% on all donations. And other than Red Basket, the sites also charge a processing fee on donations.
Tackling medical debt
There are other ways to ease the burden of medical debt, such as negotiating a bill payment schedule with health care providers.
“You want to communicate with the medical biller directly while the account is still in their hands,” says Bruce McClary, vice president of communications for the National Foundation for Credit Counseling.
It typically takes about 120 days for a health care provider to send unpaid bills to a collections agency, he says. Then, the agency can send the debt information to one of the credit reporting bureaus, which hurts your credit score.
Credit experts say it can be more detrimental to your credit score in the long run to let unpaid bills sit than to declare bankruptcy. When you’ve exhausted other options, declaring bankruptcy may be the best way to deal with high debt. Bankruptcy will hurt your credit score, but only temporarily. Responsible spending and payment habits can repair the damage.
To help you determine the best course of action, seek advice from a professional, such as a medical billing advocate, nonprofit credit counseling agency or bankruptcy lawyer.
Read NerdWallet’s full study on medical debt crowdfunding.