What You Need to Know About Cancer Insurance

Is Critical Illness or Cancer Insurance Worth It?

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Should you purchase cancer insurance?. Frederic Cirou/PhotoAlto Agency RF Collections/Getty Images

Cancer insurance is a relatively new fad in the world of health insurance programs. It was created in response to the increasing rate of cancer diagnoses worldwide and the ever-increasing costs of cancer care and treatment. It's currently thought that one in three women and one in two men will develop cancer during their lifetime. The supplemental insurance was initially designed to help reduce the out-of-pocket cost of cancer care and bridge the gap between what your primary health insurance covers and what it doesn't, but is cancer insurance worth it?

Introduction to Cancer Insurance

Cancer insurance is a type of supplemental insurance policy that may help to reduce the out-of-pocket cost of cancer treatment. It is not designed to replace a traditional health insurance policy, but instead to compliment it by covering additional cancer-related expenses that may not be covered by your current policy. There are two ways in which this insurance works:

  • With many plans, you will receive a lump sum of money if you re diagnosed with cancer which can be used for both cancer-related costs and for normal living expenses. You can essentially use the money any way you wish to make up for deductibles, co-pays, and lost wages.
  • Less commonly, a cancer insurance policy may provide coverage for cancer-related expenses above and beyond those covered by your primary health insurance coverage. What these cover, however, varies tremendously, and it is important to understand what the plan actually covers. It may exclude the same expenses that your comprehensive coverage excludes.

    These policies would go into effect when you are diagnosed with cancer, and they receive the proper documentation from health care providers. There is usually a waiting period after you purchase the insurance before it will go into effect.

    Eligibility for Cancer Insurance

    To be eligible for cancer insurance, you cannot usually have a pre-existing cancerous condition.

    For example, you cannot have been diagnosed with uterine cancer and then apply for a policy. In most cases, people who have previously been diagnosed and treated for cancer are also ineligible for the supplemental cancer coverage. In other words, the new laws which say that you cannot be excluded due to a pre-existing medical condition do not apply to supplemental cancer insurance.

    What Cancer Insurance Covers

    Cancer insurance coverage varies based on the provider and policy details, but most plans cover both medical and non-medical expenses. Medical expenses can include co-pays, extended hospital stays, medical tests, procedures like stem cell transplants, and other disease-specific treatments. The non-medical expenses that are covered with a supplemental cancer policy can include home health care, loss of income benefits, child care expenses, and dietary restriction aids.

    Cancer insurance does not usually apply for those who have non-melanoma skin cancer. In addition, those who have early cancers, such as carcinoma in situ, may get a reduced pay out, say half of what would be received if you had instead received a diagnosis of invasive cancer.

    Is Cancer Insurance Worth It?

    There is a lot of debate about disease-specific health insurance plans like cancer insurance. Some people firmly support them, while others believe that they are "junk plans" sold on fear. Here are some points to consider when thinking about buying a cancer insurance plan:

    • What is your cancer risk? Do you have a strong, familial history of cancer? If so, cancer insurance may make sense for you. Those with a strong family history of cancer may want to take a look at their current policy and see how cancer insurance may compliment their current policy. Remember, cancer insurance only kicks in if you are diagnosed with cancer. It will not provide any coverage for other common, chronic diseases.
    • Would upgrading my current health insurance plan be a better idea? Choosing to upgrade your current policy may be a better alternative to buying a cancer protection plan, especially for those who are at average risk of developing cancer. It may cost less to upgrade your current plan than adding an additional cancer policy. Perhaps most importantly, upgrading your existing policy would provide a wider range of coverage benefits than a cancer-specific policy.
    • Remember that two policies may not equal to double the coverage. Having a basic comprehensive health insurance plan along with a cancer insurance plan does not necessarily mean that you will get double the benefits. A treatment excluded by your comprehensive insurance coverage may just as well be excluded by your cancer insurance.
    • Coordination of benefit clauses can mean headaches for you. Most major insurance policies have a coordination of benefits clause that states that it won't cover expenses that the other plan does. By purchasing cancer insurance, you may be degrading the coverage of your primary health insurance policy! In some cases having two insurance companies can become a significant headache. It's not uncommon for people to have two insurance plans which would both independently cover a procedure each assume that the other should cover the procedure, leaving the patient without either of the companies assuming coverage. While the powers to be argue who should be responsible, valuable time can be lost.

    Before You Buy

    At first glance, the wide range of expenses covered by cancer insurance can look like a great deal. But before purchasing a cancer insurance plan, it is important that you understand exactly what is covered in the policy. You should also compare the benefits to your current health insurance plan to see if and where there is any overlap in coverage or redundancies. There is no sense in buying a cancer insurance policy if your current policy covers most or all of the same expenses. In fact, this can delay your treatment as they decide who should be responsible.

    If you are concerned that your medical costs of cancer treatment will not be covered, it may be a better idea to invest in a more comprehensive health insurance policy. This is probably the wisest choice for the majority of people considering cancer insurance (perhaps combined with a disability insurance policy.)

    If after careful consideration you decide that a cancer insurance policy may be the right move for your and your family, be sure to shop around before you sign your name on the dotted line. Many plans are available and comparing them is highly recommended. This includes shopping around for other types of insurance plans like long-term disability insurance, which may be a better option for you than cancer-specific protection. Always, always, read the small print.

    Other Options

    If you are concerned about what a diagnosis of cancer could do to you and your family financially, there are other ways in which you may wish to plan for the financial hit of cancer.

    • Health savings accounts (HSA) or a flexible spending accounts (FSA) through your employer allow you to put aside money tax free to be used for medical expenses. This money can then be used tax free to cover medical costs above and beyond those covered by your comprehensive health insurance.
    • If you are considering cancer insurance you may instead want to look into a critical illness insurance plan instead. A plan such as this usually covers expenses related to other medical conditions, such as heart attacks as well. As with cancer insurance plans, it's critically important to read the fine print.
    • If you don't have it, consider investing in short-term disability insurance. This may be a less expensive way to anticipate any lost wages you would experience if you were diagnosed with cancer.
    • There are many tax deductions for people with cancer. Even your mileage traveling to your clinic can be deducted. If you are diagnosed with cancer, make sure to keep careful records to take advantage of these deductions.

    Sources:

    Kirchhoff, A., Kuhlthau, K., Pajolek, H., Leisenring, W., Armstrong, G., Robison, L., and E. Park. Employer-Sponsored Health Insurance Coverage Limitations: Results from the Childhood Cancer Survivor Study. Supportive Care in Cancer. 2013. 21(2):377-83.

    Nekhlyudov, L, Walker, R., Ziebell, R., Rabin, B., Nutt, S., and J. Chubak. Cancer Survivors’ Experiences with Insurance, Finances, and Employment: Results From a Multisite Study. Journal of Cancer Survivors. 2016. 10(6):1104-1111.

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