Humans are hardwired with a survival instinct, which explains the advances in medicine and the creative ways people have found to pay for their medical care.
In the aftermath of the Boston Marathon bombing on April 15, which claimed three lives and injured 264, according to the Boston Public Health Commission, many patients and their loved ones quickly realized that their challenges were just beginning. Some people were discovering that the price of a prosthetic arm or leg can range from $5,000 to $50,000, according to Disabled-World.com. In 2012, the International Federation of Health Plans reported that the average cost of a single day in a hospital in the U.S. was $4,287.
High hospital bills are a crisis for people throughout the country, many who have serious injuries or health problems away from the media limelight. One is Erin Taylor, an Orlando, Fla., resident who was born with cystic fibrosis and last year needed to raise $30,000 for a double lung transplant.
"The costs associated with transplants are astronomical," says Taylor, who was already $10,000 in debt to hospital clinics and pharmacies before her friends and family started to raise money for her operation. "In terms of raising money, I, personally, did very little," Taylor admits. "I always felt very uncomfortable asking people for money. Like my problems were any worse than someone else's? It didn't sit well with me."
But it had to be done, and that's often how it goes, with friends and family taking the lead in fundraising, in part because someone seriously ill can't do it themselves. So if you ever find yourself in the unenviable position of having to ask friends and family for money to pay for your own out-of-control hospital bills or a loved one's, here are some things you need to know.
The tax issue. As you can imagine, if you're going to embark on a serious effort to raise money for a loved one's medical bills, consult a tax professional.
What's the complication? For starters, "a person can receive a gift each year from another person up to a point of $14,000 in 2013," says Chip Manning, director of the Babson Center for Global Commerce at the University of the South in Sewanee, Tenn. "Anything above that can have a tax effect on the grantor and possibly recipient," Manning says.
Debbie Atuk is wrestling with that right now. The Brooklyn resident has been raising money for her cousin's husband, Greg Dixon, a 39-year-old former gold miner in Fairbanks, Ala., who was diagnosed with Stage IV colorectal cancer late last year. He didn't have health insurance, however, and is now undergoing extensive chemotherapy and radiation in Katy, Texas. The couple has three kids under age 10.
Atuk had the money raised—approximately $30,000 from a variety of resources—go directly into her bank account before she gave it to the Dixons, and she's now concerned she might be saddled with the taxes. If she had set it up so the money went directly to the Dixons' bank, they at least could have taken the taxes out of the money they were receiving.
"It's a delicate issue," says Atuk, who initially thought about discussing it with the couple but didn't. "When your relative has been given a 50 percent chance of surviving, it feels awful to say, 'Can I bother you for your bank account number?'"
Meanwhile, unless you've set up a nonprofit to accept contributions, people who give you money to give to someone else can't make a tax-deductible donation.
Consider crowdfunding. Sites like GoFundMe.com and GiveForward.com, which have both been utilized by victims of the Boston Marathon bombing, allow people to mobilize by collecting money and sharing the person's story in a meaningful way. And while so-called "crowdfunding" sites have a ton of success stories in raising money for worthy causes, it's important to recognize that these nonprofit sites have costs of their own and take a percentage of what is collected (GiveForward.com takes 7 percent and GoFundMe.com takes 5 percent).
There are also crowdfunding sites that raise money for a specific medical purpose. For instance, HelpHopeLive.org helps individuals and families raise money for uninsured medical expenses related to transplantation, like organ and bone marrow, and catastrophes involving, say, an amputation or a spinal cord injury.