Will Your Major Medical Insurance Provide Enough Coverage If You’re Diagnosed with Cancer?

Deb Shields
March 24th, 2020 March 24th, 2020 |
Read time: 10 minutes
doctor reviewing chest xray

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Chances are, you know or have heard about someone being diagnosed with cancer. According to the American Cancer Society, more than 1.7 million new cancer cases were expected to be diagnosed in the U.S. during 2019.[1] And by 2026, experts predict that over 20 million cancer survivors will be living in the U.S.[2]

If you have major medical insurance and are diagnosed with cancer, your policy can help cover the high costs of comprehensive cancer care. Thanks to the Affordable Care Act (ACA), there is no annual or lifetime maximum benefit on how much your plan will pay towards your covered healthcare expenses.[3]

But even with ACA-compliant coverage, you’ll still be responsible for paying your annual deductible before your plan will begin to pay for covered cancer care expenses, in addition to your coinsurance responsibility, according to your plan’s provisions.

A critical illness such as cancer may affect your ability to continue working and earning an income. Critical illness insurance can help assist you with costs when you are diagnosed with a serious medical condition such as cancer.

Upon diagnosis of a covered condition, a critical illness plan will pay you a lump-sum benefit. You may use that benefit to pay your major medical deductible or any bills you choose while you’re undergoing treatment and recovery.

Compare critical illness plans and costs available to you by requesting a quote – it just takes a couple of minutes.

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No one wants to contemplate what would happen if they were told they have cancer. But if you want to learn more about how you can be more financially prepared in case of a critical illness diagnosis, keep reading.

Are You at Risk of Developing Cancer?

A study by the Mayo Clinic[4] found that Americans reported cancer to be the most significant healthcare challenge that concerned them. So what are your odds of getting cancer?

Men have a 39.66% probability of developing cancer in their lifetime, while women have a 37.65% chance, according to the American Cancer Society.[5] The good news is that researchers now say that the onset of a significant proportion of cancers at least 42% can potentially be prevented by lifestyle changes.[6]

Cancer risk factors specifically linked to certain types of cancer include:[7]

  • Smoking
  • Physical inactivity
  • Excess alcohol consumption
  • Poor nutrition
  • Inadequate skin protection from excessive sun exposure and use of indoor tanning devices.

In addition, vaccinations, and behavioral and healthcare choices can help lower your chances of developing certain types of cancer caused by infectious agents such as human papillomavirus (HPV), hepatitis B and hepatitis C viruses and H. pylori.[8]

The importance of regular health screenings and early detection cannot be overstated. Screening may help your doctor identify and treat cancer early, even before physical symptoms appear, and that can result in better health outcomes, including a reduced risk of death in some cases.[9]

ACA Plans Include Preventive Care
Remember, ACA-qualifying major medical plans include no-cost preventive care such as cancer screenings and vaccinations.[10] Learn more about the preventive care services included in ACA plans.

The Financial Impact of Cancer

Beyond the health implications and emotional impact that a cancer diagnosis may have on you and your family, several studies have indicated that cancer patients and survivors are more likely to experience financial challenges than are people without cancer.[11] In one study of 9.5 million cancer survivors age 50 or older, approximately 42% had drained their life savings and other financial assets just two years after being diagnosed.[12]

Having cancer and undergoing treatment may make it more challenging for you to perform your job duties, cause you to miss time at work for medical appointments or because you’re feeling unwell, and perhaps even result in you not being able to work at all. In fact, a recent report noted that individuals receiving cancer treatments missed about 22 more workdays per year than employees not getting cancer treatment.[13]

Informal caregivers, such as family members, may also experience financial distress by purchasing different foods, medicines and other supplies the cancer patient needs, as well as taking time off work to care for their loved one. A government study notes that this impact can lead to feeling overburdened, a reduced quality of life, and a negative effect on the caregiver’s mental health.[14]

The stress related to paying medical bills, worries about missing work, feeling physically unwell and concerns about trying to understand, track and pay complex medical bills all can take a toll on you and your loved ones.

What Does It Cost to Treat Cancer?

There’s currently no cure for cancer, but advances in technology have led to cancer treatment options that are more effective today than ever before. However, treatment can be very costly.

According to an article published by AARP, the average costs for cancer treatment run around $150,000 over an extended period of time for options such as radiation, surgeries, chemotherapy and other medications.[15] And treatment costs are projected to increase,[16] with most expenses related to hospital outpatient or office-based doctor visits.[17]

How Much Will Your Major Medical Policy Cover + What Will You Have to Pay?

If you have a major medical plan (insurance which complies with the ACA regulations), you are entitled to benefits for covered medical expenses, and can’t have your policy canceled after receiving a cancer diagnosis. You also can’t be denied coverage under an ACA-compliant plan nor be charged a higher rate based on having cancer.[18]

Before your plan will begin paying benefits for covered cancer treatment, however, you may be responsible for satisfying a deductible and copays. If applicable, you may still be responsible for coinsurance and copays until you reach your out-of-pocket maximum.

Covering these expenses can be costly, particularly if you have a high deductible plan. And for 2020, you may have an out-of-pocket limit up to $8,150 for an individual plan, and $16,300 for a family plan.[19]

Tips to Help Protect Yourself Financially in Case of a Cancer Diagnosis

Taking steps today to financially prepare yourself for a critical illness can provide you and your family a great sense of relief.

Financial advisors suggest that the following strategies can help you provide an income stream, cover out-of-pocket costs and lower your income taxes – all of which can provide peace of mind in case you experience a critical illness:

Purchase a critical illness insurance policy[20] – in case you are diagnosed with a covered, serious medical condition, this type of plan provides a lump sum benefit that can help you pay for healthcare expenses or any other bills that you choose.

Establish an emergency savings fund[21] – advisors suggest building a fund that can cover a minimum of six months of expenses. A good first step to doing this is to create a budget, and then have withdrawals automatically deducted from your checking account on a regular basis (weekly or monthly) and deposited into your emergency savings fund.

Set up a Health Saving Account (HSA) – If you have a high deductible health plan (HDHP), are not enrolled in Medicare, and are not claimed as a dependent on someone else’s tax returns, you may be eligible to establish an HSA.[22] Funds you deposit in an HSA can help pay your medical bills not covered by your health insurance plan such as your deductible and coinsurance amounts.

An HSA also provides a triple tax advantage:[23]

  • You make contributions on a pre-tax basis (lowering your taxable income)
  • Your contributions in your account grow tax-free
  • Withdrawals for qualified medical expenses are distributed with no tax liability

You may have the ability to choose how to invest your HSA funds, and may roll over unused HSA funds from year to year, allowing tax-free interest to accumulate in the account.[24]

Please note, the materials available at this website are for informational purposes only and not for the purpose of providing legal or tax advice. You should contact your attorney or tax professional to obtain advice with respect to any particular issue or problem.

Financial Strategies If You’ve Already Received a Cancer Diagnosis

If you’ve recently been diagnosed with cancer, are there steps you can take to protect your financial security? The answer is yes, according to organizations that provide support and advocacy for cancer patients, such as the American Cancer Society. Recommendations include:

Learn about your cancer and treatment before it begins[25] – talk with your healthcare team and ask questions about different treatment options, cost and effectiveness to help guide your choices as to which treatment protocol you choose to follow.

Contact your insurance company to ensure that you maximize your policy benefits – ask questions such as whether any treatments in your care plan need to be pre-approved; verify that the providers you want to visit participate in your provider network; learn what to do if you have questions about claims processing.

Obtain financial counseling – the National Cancer Institute recommends that treatment centers offer financial counseling to help both patients and their families, and provide estimates of out-of-pocket costs.[26]

Keep a list of care advocates which can provide support if you are struggling with medical expenses, including:

The Value of Critical Illness Insurance

Having a critical illness plan can help add to your financial protection strategy by paying you a lump sum benefit if you are diagnosed with a covered medical condition. You have the flexibility of using that lump sum payment however you wish – to pay medical expenses, your mortgage, groceries, and more.

Critical illness insurance is not a qualified ACA plan, has limited coverage with exclusions, and you may be required to complete a waiting period before receiving benefits for a diagnosed health condition. You should also know that your premiums are based on your age and coverage may terminate when you reach a certain age.

However, you can apply for coverage at any time, and you can visit any provider you want – there are no network limitations.

So when should you plan to purchase critical illness insurance? And how much coverage do you really need?

When to Buy Critical Illness Insurance

Because premiums are based on your age and the plan may terminate once you reach a certain age designated in your policy, it may make sense to consider purchasing a critical illness plan when you are younger.

A recent New York Times article reported that young adults with cancer go bankrupt two to five times more frequently than seniors, many of whom receive Social Security and Medicare benefits.[27]

On the other hand, if you are retired but not yet eligible for Medicare, you also may want to consider purchasing a critical illness plan as part of your comprehensive financial protection strategy, rather than relying on your retirement savings to pay for unplanned medical costs.

How Much Critical Illness Insurance Do You Need?

Critical illness policies, generally, range in benefit amounts from $5,000 to $500,000.[28] When deciding how much coverage you need, consider what the financial impact would be if you were unable to work and pay bills for a period of time. How much savings do you have accumulated? Do you have a family that depends solely on your income?

Consult with a financial advisor to determine an amount that would work best for your situation. To speak with a licensed insurance agent who can provide you details about coverage options, call 888-855-6837.

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Summary + Next Steps

While health experts say that you can reduce your chances of developing several types of cancer through preventive health and lifestyle behaviors, the odds are still that approximately one in every three people will receive a cancer diagnosis in their lifetime.

Having a comprehensive financial plan that includes health insurance, supplemental coverage such as critical illness insurance, emergency funds and, if you are eligible, a tax-advantaged Health Savings Account (HSA), can help you be more prepared for the financial impact associated with a cancer diagnosis and treatment plan.

Consider the financial resources you have available to support you and your family when deciding how what benefit amount you would need to help cover your expenses if you’re out of work due to a critical illness. A licensed agent can give you quotes for different benefit amounts.

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Originally Published On March 24th, 2020
Independence American Insurance Company and/or Madison National Life Insurance Company, Inc. may underwrite the products referenced on this website. Legal Disclaimers.

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