A review of the pros and cons of supplemental cancer insurance can help you decide whether purchasing a policy will prove worthwhile.

The primary drawback is that you must enroll before any diagnosis, and could pay premiums for decades and never use the coverage – except for annual screening tests.

Patients diagnosed later in life see the advantages in living color. Experts estimate that 62% of the costs of fighting this dread disease are non-medical. A supplemental plan fills much of this rather large hole.

Decide for yourself which mistake to make: paying for something you might never use, or fighting for your life with diminished resources.

Is Cancer Insurance Worth It?

It is hard to guess whether buying a supplemental cancer insurance policy before diagnosis will be worth it. The plans exclude pre-existing conditions. None of us have a crystal ball when making an enrollment decision about what might happen to our future health.

The biggest negative is that you must commit to paying premiums (before a diagnosis) over decades for coverage you might never use. Of course, we all hope for this outcome!

Your personal information can alter your odds. Meanwhile, sample cost quotes combined with possible tax savings, and wellness benefits can give you a clearer picture of what your net spending might be for this roll of the dice.

Personal Information

Your personal information can help you decide whether buying supplemental cancer insurance makes sense. These policies pay fixed cash benefits that do not coordinate with your primary coverage if you or a family member contracts cancer later in life.

The odds of this happening differ for every person.

  • People with a family history of cancer face higher chances
  • Smokers pay the same premium despite the higher risks
  • Gender plays a significant role in who might need to file a claim
    • Men have a 50% lifetime risk
    • Women have a 33% lifetime risk
  • Odds of a diagnosis increase as we age

Sample Cost Quotes

Sample supplemental cancer insurance cost quotes are the first step in determining whether the coverage will prove worthwhile for your family. Always remember that you are buying peace of mind – hopefully, you never have to use the policy.

As you will see shortly, enrolling at work has the advantage of pretax payroll deductions, which lock in your tax savings – and add FICA reductions into the mix. Therefore, it is better to get an exact quote from your workplace agent.

Below are sample rates to give you a starting point for the monthly premiums of a base policy – before optional riders. Each level in the progression pays a higher amount per claim trigger (see the second section).

LevelFamilyIndividual
1$21$12
2$37$21
3$48$27
4$63$36

You can also choose to add optional riders that will increase your cost estimate.

  • Initial diagnosis lump sum (see below)
  • Progressive payment of lump sum
  • Specified disease hospital confinement (other than cancer)

Tax Deductible Premiums

Supplemental cancer insurance premiums are tax-deductible – sometimes. Reducing the net cost helps make the policy more affordable, which makes it easier to take the most crucial step – actually buying the coverage before diagnosis.

  • IRS cafeteria plan (section 125) rules explicitly allow pretax payroll deductions for supplemental health insurance.[I] However, any benefit payments that exceed actual unreimbursed medical expenses will count as income. Lump-sum payments often fit this description (see below).
  • Itemizing medical deductions on Schedule A does not always work out.
    • New rules under the Tax Cuts and Jobs Act (TCJA) increase the size of the standard deduction, meaning fewer people benefit from itemizing
    • Only the amount of unreimbursed medical expenses exceeding 10% of Adjusted Gross Income (AGI) yield any tax savings beginning in 2019
    • Policies that pay you a guaranteed amount each week for a stated number of weeks if you are hospitalized for sickness are ineligible[II]
  • The IRS regulations allow self-employed workers to deduct premiums paid for medical and dental insurance. The list of exclusions does not include critical illness coverage.

Screenings

Supplemental cancer insurance benefits for wellness screenings factor into the net-cost equation making it easier to afford.  Large families with many females old enough for an annual pap smear (which detects malignant growths in their cervix) gain the most significant yearly savings.

Many policies make immediate cash payments before diagnosis for other annual screening tests to detect early signs of malignancy.

  • Blood Tests
    • CA125 Ovarian
    • CA 15-3 Breast
    • PSA Prostate
    • CEA Colon
    • Serum Protein Electrophoresis (Myeloma)
  • Imaging Tests
    • Mammography
    • Breast Ultrasound
    • Chest X-ray
    • Thermography
    • Virtual Colonoscopy
  • Invasive Tests
    • Biopsy of skin lesion
    • Colonoscopy
    • Flexible Sigmoidoscopy
    • Bone Marrow Aspiration

The wellness screening benefit does not usually cover genetic testing for the BRCA1 or BRCA2 gene. However, your primary health insurance may cover the exam for women with a family history of breast cancer.

Cancer Insurance after Diagnosis

A decision to buy a supplemental cancer insurance policy earlier in life will prove worthwhile should you contract this dread disease. The positive elements (benefit payments) associated with your earlier roll of the dice can begin after diagnosis by a doctor or lab result.

  • The presence of malignant cells or a malignant tumor characterized by the uncontrolled and abnormal growth and spread of invasive cancerous cells
  • A melanoma of Clark’s level I or II (Breslow less than .75mm); basal cell carcinoma; or squamous cell carcinoma of the skin

Lump-Sum

The lump-sum supplement cancer insurance benefit pays out right away after diagnosis and before any treatment. The lump-sum could be a fixed amount stated in the policy, or a variable figure that grows over time if you selected the progressive payment rider when you initially enrolled.

The issuing company pays the lump sum benefit to create a cushion of cash that helps with expenses frequently not covered by primary health insurance plans.

  • Lost wages due to disability
  • Deductibles, copayments, and coinsurance
  • Out-of-network balance billing from specialists
  • Childcare costs
  • Help with cleaning and food preparation

Travel Expenses

Supplemental cancer insurance will also reimburse a fixed amount for many of your travel expenses, something that Medicare and your primary healthcare plan will never do. Patients frequently need to commute long distances and sleep away from home for long periods while seeking treatment.

A policy may make benefit payments for some of these travel-related charges.

  • Lodging you each day the patient and or one adult must stay at a hotel while receiving treatment more than 50 miles from your residence
  • Family care each day your covered child receives treatment from an in-patient or out-patient facility
  • Transportation (per mile) for trips of 50 miles or further to another location to receive treatment: per patient and one adult companion
  • Ambulance (air and ground) from a professional service to transport you to or from a hospital where you are receiving relevant care

Treatments

Supplemental cancer insurance can also payout fixed benefits for many of the treatments you might need. The amounts paid do not coordinate with your primary coverage.

While your primary healthcare plan or Medicare should cover most of these regimens, many patients will still quickly run short of cash because of lost income, non-medical expenses, deductibles, and balance billing from out-of-network providers.

A policy may support claim payments for each time you receive many of these treatments. Some could have unlimited lifetime benefits.

  • Anti-nausea medications
  • Bone marrow stem-cell transplant
  • Colony-stimulating factors
  • Experimental treatments prescribed by a doctor
  • Peripheral stem-cell transplant
  • Radiation and chemotherapy
  • Surgical procedures to remove malignant tumors
  • Reconstructive surgery
  • Transfusions of blood, platelets, plasma, and immunoglobulins

Patient Care

Supplemental cancer insurance could also support claim payments for each day a patient requires care. While Medicare or your private healthcare plan may cover many care-related services, there is a red line where they stop.

Unskilled help with the activities of daily living could cause huge problems.

Unskilled

Primary plans do not support claims for cancer patients that need help with the activities of daily living: eating, bathing, dressing, transferring, and toileting.

On the other hand, a supplemental policy may pay a daily benefit with no lifetime limit for an unskilled home health care professional to provide these services. However, this might not include housekeeping, childcare, or food preparation.

Skilled

Medicare and your primary healthcare plan should cover most charges for skilled care at a facility or in the home. However, families sometimes lose two incomes (patient and caregiver) when someone needs any of these advanced services, or they lose coverage after job termination because of extended work absences.

A supplemental policy may support claims for each day a patient needs skilled care (with no lifetime limit).

  • Hospital confinement
  • Private full-time nursing
  • A skilled nursing care facility
  • Hospice

[I] Cafeteria Plans

[II]Topic 502