Go Fund Me and Other Informal Fund-raising Accounts Raise Issues for SSI and Medicaid

Over the past several years, crowd funding and personal fundraising have become popular ways to raise money for people in need.  Crowd funding cuts out the charitable middleman, allowing a person or organization in need to appeal directly to the general public via the internet in the hope of raising money for a cause or calamity.  In many cases, crowd funding campaigns take place when a family member has a medical emergency and needs help paying the bills or when a natural disaster wipes out a family\’s home. Unfortunately, when crowd funding sites are established for people with special needs who are receiving disability or medical benefits, even with the best of intentions, things can go wrong.

The Social Security Administration does not have a fixed policy regarding crowd funding sites and Supplemental Security Income (SSI) benefits, but its treatment of other resources illustrates the problem with crowd funding accounts.  In the first place, if an SSI or Medicaid beneficiary establishes a crowd funding account on his or her own and the beneficiary has access to the funds in the account directly, then it is likely that those funds are going to be considered a countable resource for SSI and Medicaid purposes, even if the language of the crowd funding page limits what the beneficiary can use the money for.  That\’s because there really aren\’t any rules when it comes to crowd funding – once someone makes a donation, it doesn\’t matter what the pitch to donors said, the beneficiary of that donation has carte blanc to use the funds in any way he or she chooses.  As a result, the SSA will most certainly count funds in a crowd funding account established by an SSI beneficiary as the beneficiary\’s money, as will most state Medicaid agencies.

Things get a little more complicated when dealing with accounts set up to help somebody else, as is often the case when a family member suddenly dies and an account is set up to take care of her children or when someone is critically injured and people want to help with the costs of care.  In these situations, provided the SSI or Medicaid beneficiary doesn\’t have direct access to the funds, the argument can be made that the crowd funding account is not the beneficiary\’s resource.  But because the SSA hasn\’t promulgated specific rules governing these accounts, it\’s impossible to know for sure that funds in a crowd funding account won\’t be counted against a beneficiary even if he can\’t access the funds himself.

Instead of creating a crowd funding account in these situations, it\’s much better to create a special needs trust to hold funds to care for a beneficiary.  Although creating a trust requires more work initially, properly drafted trusts are clearly exempt from SSI and Medicaid resource restrictions and could offer much more flexibility in the long run.  In fact, some donors who want the convenience of crowd funding with the benefits of a trust will set up the special needs trust first and then make it the beneficiary of the crowd funding account.  In any case, before opening an account for a person with disabilities, make sure that you discuss the matter in detail with your special needs planner.