Cancer kills 600,000 people a year in the United States, second only to heart disease. We all know someone who’s been affected. But did you know your health plan probably doesn’t cover all the costs associated with cancer treatment? And yes, I’m talking about Medicare too.
By the time you’re done with this article, you’ll know why cancer insurance is an absolute must have, the two main types of cancer insurance policies available on the market and how they work, how much coverage you need, and of course the answer to the big question, how much does it cost?
Is cancer insurance worth it?
So I hear this all the time when I’m talking to clients. Is cancer insurance really worth it? My answer is almost always a emphatic YES!
First of all, the biggest reason why you need cancer insurance? Statistically you’re extremely likely to get it at some point in your life.
According to the American Cancer Society, about 40% of men and 39% of women are at risk of developing some form of cancer in their lifetime.
Right now you’re saying, “I already have health insurance, why do I need cancer insurance?” That’s a great question, so let me give you a few reasons why a cancer plan is a great investment on your part.
Medicare Advantage Plans and Cancer Insurance
If you’re one of the millions of people currently enrolled in a Medicare Advantage plan, you need to hear this. Let’s look at the maximum out of pocket for your plan. As of 2020, the maximum amount you can be made to pay out of pocket is $6,700 for an in-network provider, and up to $10,000 for an out-of-network provider. Now, your plan may have a lower amount, but this is *maximum* you’re allowed to be charged.
Do you know the fastest way to reach your maximum out of pocket with a Medicare Advantage plan? Radiation and Chemotherapy. Now let’s say you’ve got $10,000 in savings set aside for a rainy day. You’ve been responsible and you’ve tried to prepare for this exact situation. That’s great, but you need to keep two things in mind:
First, that out of pocket maximum is a “calendar year maximum”. That means if you start treatment in August, and you reach your out of pocket maximum in December, once January begins a couple of weeks later, you’re back at square one again. Now you’ve gotta pay *another* $6,700 out of pocket.
The second thing to remember is that your out of pocket maximum does not cover prescription drug costs! Now you’re adding several thousands more depending on what prescriptions you’re using.
The American Cancer Society put out a study called “The Costs of Cancer” and it’s full of great information. One of the biggest things they found was that the highest costs associated with cancer get dropped on you in the first three months.
Take a look at what it says here on page 16 of the report:
Cancer costs are front-loaded. In each cancer scenario, the patients with employer-sponsored insurance and individual market insurance experienced the highest out-of-pocket costs in the first 2-3 months after being screened and diagnosed with cancer. In each case, the cancer patients paid large amounts in applicable deductibles, co-pays and co-insurance in these months until they reached their co-insurance or out-of-pocket maximum.”
Notice the last sentence in that paragraph:
“It is important to note that these protective out-of-pocket maximums only last for one plan year, and in January the patients would once again be subject to cost-sharing.”
Cancer never hits at a good time, but if you’re diagnosed later on in the year, you’re at risk of paying a lot more than if you had caught it early in the year.
Medicare Supplements and Cancer Insurance
Now what about people with a Medicare Supplement?
It’s true, your out of pocket costs are a lot lower for a lot of things. Maybe you’re on a Plan F and the only thing you have to worry about paying is that monthly premium.
By the way, if you’re on a Plan F, that premium is going to skyrocket in the next few years, so if you’re able to, I highly suggest switching over to a Plan G or Plan N if you’re still in good shape healthwise, but that’s another topic for another time.
So you may not have a ton of costs for the treatments, and specialists, and the hospital visits, but don’t forget, that Plan F does not cover your prescription drugs.
If you’re like most people with a Medicare Supplement, your Part D plan wasn’t selected with a future cancer diagnosis in mind, so once you spend past that initial coverage period, you hit what’s called “the coverage gap” and now you’re responsible for 25% of all drug costs until you hit $6,350 in total out of pocket drug costs and reach what’s called the “catastrophic” phase.
Now you’re only responsible for 5% of the cost of your prescriptions, but 5% of a big bill is still a lot of money, and you’ve already paid over $6,300 in drug costs alone!
We’ve already talked about the direct costs of a cancer diagnosis, let’s go over the indirect costs.
The indirect costs of cancer
The indirect costs of cancer include things like transportation to treatments, lodging, family care which covers things like babysitting and other help with daily activities, and the biggest cost of them all, the cost of any lost income as a result of being unable to work.
By the way, when we talk about lost income, we’re not just talking about your income, we’re also talking about the income of whoever has to help look after you. Whether it’s your spouse or a friend or family member, helping someone going through a cancer treatment can be a full-time job.
Do you really want the people you care about to have to worry about paying the bills and keeping the lights on while you’re dealing with cancer treatment?
A good cancer plan can give you peace of mind and enough money so that you don’t have to worry about where your next meal is coming from.
Imagine dealing with something like this without the extra safety net of a cancer plan. There are always stories like these out there.
Take a look at one woman’s story of dealing with the financial costs of a cancer diagnosis.
Thank God she got through it, but did you hear that last statistic? Up to 16% of people WITH INSURANCE quit the treatment plan because it’s taking too big of a toll on their finances. That’s 1 out of 6 people!
What is cancer insurance?
So what is cancer insurance? Cancer insurance is exactly what it sounds like. Your policy covers you in the case of a cancer diagnosis, and once either you or your doctor submits the paperwork to the insurance company, you’ll qualify for benefits.
Now, it’s important to remember that a lot of policies only cover internal cancer. So for example, most forms of skin cancer would not qualify for a benefit, because removing skin cancer is much simpler to remove and doesn’t require the long and complicated procedures that treating internal cancer does.
What are the types of cancer policies?
Cancer policies are usually divided up into two different kinds - scheduled benefits policies and lump sum benefit policies.
Scheduled benefits cancer policy
Scheduled benefits policies are designed to cover cancer treatments and other expenses when needed. These expenses can include transportation to and from a healthcare provider, lodging, surgery, medications, and even a certain amount paid to you as soon as you’re diagnosed. The policy has a “scheduled” amount that is allotted for a certain kind of expense, and once that amount is used, the policy cannot be used to pay that particular expense anymore.
For example, a scheduled benefits policy may have $5,000 set aside for a certain kind of procedure. Once that portion of the benefit has been exhausted, the rest of that money has to come from somewhere else, usually out of your own pocket.
Not only that, but a lot of the costs that this policy covers will have to be paid in full by you first, and then you’ll be reimbursed by the insurance company later.
Allstate Scheduled Benefits Cancer Policy
Let’s take a look at an example of a scheduled benefit cancer policy, this one is from Allstate.
Now, I’m not picking on Allstate, they do a lot of good things, but I just wanted to show you an example of a scheduled benefit policy and the kinds of limits that are placed on you. A lot of companies have scheduled benefit policies designed like this, which is why I don’t like to offer them to people.
The one thing I want you to notice here is that they keep using the phrase “cash benefit” over and over throughout this whole thing. What they’re doing is making it seem as though you’re gonna get all this money paid directly to you, but that’s not really the case.
See the first paragraph here, “Our coverage pays you a cash benefit to help with the costs associated with treatments, to pay for daily living expenses – and more importantly – to empower you to seek the care you need.”
Wow, that’s awesome! I get cash paid directly to me if I ever get cancer to help with the bills?
What about the next paragraph down below: “With the cash benefits you can receive from this coverage, you may not need to use the funds from your retirement plans or 401(k) for cancer or specified disease treatments and expenses.”
It just keeps getting better and better! But wait, what’s that sentence right before it? “Benefits are paid directly to you unless otherwise assigned.”
What’s that mean? It means that you’re not going to actually get any cash paid to you except in very specific situations, and usually only after you’ve used your own money first.
Let’s go to the next page here, and WOW! So much more on these cash benefits and what you can do with them! Protect your finances, use them for travel, pay the mortgage, use them for living expenses!
But how much do I actually get? Let’s take a look at the numbers over here on the right. So you notice they have three different levels of plans, and let’s take a look at how much the plan is actually going to pay you.
Continuous hospital confinement, up to $300 per day for up to 70 days. Up to $300 a day for at-home nursing. Between $5,000 and $10,000 for radiation and chemotherapy.
Here’s outpatient lodging, which is $50 per day. I don’t know anywhere worth staying that only costs $50 per day. What about transportation? It says “coach fare” which means whatever the minimum price is, that’s what you’ll be paying. But look down in the fine print, you have to go at least 70 miles, and you’re only covered up to 700 miles.
And by the way, you do know that the insurance company isn’t going to pay for that sort of thing ahead of time, right? You’re still paying for this, now you’re just waiting on reimbursement once you’ve sent them the bill.
And what if you live in a city or close to one with a health provider you need to see regularly? If you need to take a cab or an uber to the doctor who’s 20-30 minutes away, you’re paying for that out of your own pocket!
So we keep going down further, and we see a few more benefits here covering some different things. I still haven’t seen anything about those cash benefits they were so excited about at the beginning of this. OK, here we go, all the way down at the bottom, under the “Optional/Additional Benefits” we see you can get between $2,000 to $5,000 paid directly to you when you opt in for this extra benefit. I don’t know about you, but for most people that’s maybe 1-2 months of living expenses, and then what?
So what’s the point of all this? Once again, I’m not picking on Allstate. This kind of plan is typical throughout the insurance business. It’s usually a little cheaper than most lump-sum cancer plans, and it’s also a big money maker for insurance companies. Why?
Because the simple fact is that most people will never use the majority of the benefits of their scheduled benefit cancer policy. Unfortunately, either they won’t qualify because of the restrictions on things like transportation and lodging, or they’ll max out their benefits on one or two items, and because they don’t understand the policy, and the agent who sold it to them is long gone, they have no one to turn to. Sadly, the other reason is because they don’t live long enough to use all the benefits they paid for.
Lump sum cancer policy
For all of these reasons and more, we HIGHLY recommend a lump sum cancer policy instead.
Typically these are very simple and straightforward policies that pay you a cash benefit directly if you’re diagnosed with cancer. Once you’ve been diagnosed by your doctor, either you or the doctor will submit a few forms to the insurance company, and usually within about 5-10 business days at the most you’ll have a check in your hand for the benefit amount.
This is a check you can spend on literally anything, and because it’s an insurance check, it’s tax free. Do you want to pay off the mortgage? Go ahead. Do you need the extra money to pay for medications and treatment that’s not fully covered by your insurance? You can do that.
We’ve even had clients who have got the terrible news that they’re terminal, and that they only have about 6-12 months left to live. You know what they did? They used the money and took their family on that trip around the world they always wanted.
Why in the world would you want to spend your time filling out reimbursement forms from the insurance company when you could just get one big check and use it how you wanted?
How much cancer insurance do I need?
So this all sounds great, but right now you’re saying to yourself, how big of a cancer policy do I actually need? Most companies allow you to purchase up to $75,000 in coverage, but most of my clients never go that high.
If you already have basic health insurance or some kind of private plan that takes care of most of these things, $10,000-$20,000 in coverage will give you enough to handle the initial shock and expenses that come with this sort of diagnosis.
But if you don’t have health insurance, or maybe you just have a family history of cancer, or you’re a smoker and have been for years, or it’s just something you’ve been worried about for awhile and you want to get it off your mind, a higher amount would probably make sense for you.
Cancer insurance is not a substitute for regular health insurance, but if your plan isn’t set up for a lot of cancer treatments, or maybe you’ve just got a big deductible that you’ll have to meet before it kicks in, this kind of policy will help you bridge that gap and give you peace of mind.
The best part is, there aren’t a lot of health questions to answer. As long as you’re not currently hospitalized or in a nursing home, have never been diagnosed with HIV or AIDs, and haven’t had cancer in the past 5-10 years, you can qualify. The specific health questions are a little bit different with each company, but if you can answer no to those three questions, you’re usually able to qualify for coverage.
One last thing, most companies also offer what’s called critical illness coverage. We’ll talk about those plans in another video, but the idea is generally the same. Most plans offer a lump sum payment for either a heart attack, cancer, or stroke diagnosis, and just like the cancer plan, you’re free to do what you want with that money.
How much does cancer insurance cost?
So you’re thinking it sounds like a good idea, but how much does a policy like this cost?
Like everything else in insurance, it starts with your age and health. Each time you have a birthday party, that policy is gonna get a little bit more expensive each year.
Each company’s rates are a little different, but they’re similar enough that we put together a list of prices below. These are just some ballpark figures for a $10,000 policy at different ages.
30 years old - $6.00/month
40 years old - $9.00/month
50 years old - $16.00/month
65 years old - $30.00/month
70 years old - $35.00/month
Call us at 1-800-701-3951 today and get a more accurate quote for your area. Or click here and send us a message.