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CancerGuide: Financial and Practical Aspects

Be Smart About Group Insurance
Be Smart About Group Insurance

And I'll dance in time and the times are rough
And I'll pay the price and I'll pray that it's enough
--Melissa Etheridge, Chrome Plated Heart

This article assumes you either have active cancer now or have had cancer and still have a significant risk of recurrence, and that the cancer is life threatening or would be if you relapsed. This also assumes you're eligible for group health, life, or disability insurance through your work or your spouse's. This is also written specifically for American patients. Similar considerations may apply in some other countries but the details will differ.

I was motivated to write this article when, to my astonishment, several members of my Kidney Cancer E-Mail List with renal cell carcinoma said they were considering choosing an HMO over a PPO to save on premiums and out-of-pocket expenses. If it's not obvious to you why in almost every case you should choose the PPO plan if you have cancer and have a choice - even if it's more expensive and even if that's hard to afford - you need to read the rest of this article, which covers group disability and life insurance as well as group health insurance.


My Bottom Line Advice

  • Spend the extra bucks to get the most flexible and comprehensive health insurance you can get - even if spending that extra money is hard.
    Usually this means avoiding HMO plans in favor of less restrictive plans such as a PPO - even if the HMO plan's cheaper.
  • Take all the disability insurance you can get
    You'll be glad you did if your cancer recurs or progresses.
  • Most people should get all the life insurance they can without having to answer medical questions.
    You may be surprised to know that you may be able to get money for your life insurance while you're still alive. You may even be able to use that money to save your life.

Group Health Insurance

Most employers offer a choice of plans usually including at least an HMO ("Health Maintenance Organization") plan and a PPO ("Preferred Provider Organization") plan. Usually the HMO is cheaper and some people, feeling the financial stresses of cancer, think they should choose a less expensive health plan (Typically an HMO) to save on the monthly premiums and deductibles. For someone with cancer this is usually just exactly what not to do.

Although HMOs normally have lower out of pocket costs due to lower premiums, deductibles, you pay a big price in flexibility. With an HMO you limit yourself to the HMO's network of doctors and hospitals. This means that world class experts and clinical trials at major centers are not likely to be covered. Furthermore, most HMO members have to get a referral from their Primary Care Physician anytime they want to see a specialist. You give up have the right to decide on your own that you want another opinion, and you give up the right to decide who to get it from. If you are determined to get the best treatment no matter where it may be found and no matter who is giving it, you don't want to be in an HMO.

In addition to higher premiums, PPOs normally have deductibles and also require you to pay a percentage of expenses (typically 10-30%). Fortunately, they almost all have a maximum out-of-pocket expense limit after which they cover most expenses at 100%. Anyone receiving care for a serious medical problem is likely to incur that maximum cost, which is likely to be in the low thousands, but once over that threshold most everthing else should be covered (but see below!). PPOs also have a network of doctors, but you can decide to go outside it - for a price. Out of network care will have a higher maximum out-of-pocket expense along with a higher co-insurance percentage and deductible. While there is no automatic guarantee of coverage for clinical trial treatment, having coverage for out of network care is a start since it's a given that many trials will be out of network. Another big advantage of PPO plans is that you can see a specialist of your choice without a referral.

One financial danger with any insurance plan, including PPO plans, is recurrent expenses which aren't covered and which may not be included in the "maximum" out of pocket limit. For instance, if there is a charge every time you go to the hospital which is not subject to the cap and your treatment requires many hospitalizations, this can add up. If outpatient drugs are paid at a percentage not subject to a cap, that can also add up - especially for expensive drugs used in cancer treatments. You should look at all the provisions in the plan and ask questions to understand what your real liabilities will be.

You should be aware that almost every PPO plan limits reimbursement on out of network expenses to "Usual, Customary and Reasonable" (UCR) charges. This means that they will pay only up to a limit they have determined. You will be responsible for any charges above that limit. UCR limits only apply to out of network treatment. If your treatment is in network, the PPO pays according to their contract with the provider and UCR limits don't apply. Charges above the UCR limits for out of network treatment should be modest at worst, but there is no way to guarantee this in advance. If you're going out of network you should ask the provider to accept the insurer's payment in full or ask the insurer to negotiate fees with the provider. This is best done before starting treatment. My experience with UCRs back in 1989 was reassuring - the only major uncovered expense due to UCR limits was surgeon's fees - and they were willing to forgive the excess. I can only hope the same holds true in today's cost controlled, "Managed Care" environment.

Resource

Other Types of Plans

Though HMO and PPO plans are by far the most common type of plan these days, there are several other types of plan such as Point Of Service (POS) and Fee for Service. Regardless of what the plan is called, you should ask the same fundamental questions:

  • Can you see any doctor and go to any hospital you want?
  • Do you need a referral to see a specialist?
  • How exposed does the plan leave you to major uncovered costs? Concentrate here on costs which aren't subject to a cap or limit.

Resource

Judging Quality of PPO Plans

You may not have a choice of more than one PPO, but large employers sometimes offer a huge array of plans. If you're fortunate enough to have so many choices you are faced with the decision of which PPO to take.

If you're offered several PPO plans from the same insurance company, the chances are the more expensive one (in terms of the monthly premium) will probably include more through coverage and/or lower out-of-pocket expenses, any of which would be good for someone with a high risk of incurring major expenses.

If you have a choice of PPO plans from different companies, it's very difficult to know which one is more likely to be willing to cover you for unusual expenses, innovative treatments, or clinical trials. Some companies question every scan, test, and procedure which can make your life a living hell. Others are much more willing to leave the practice of medicine to the doctors.

You can't really tell by reading the contract because the contract doesn't say much about how difficult they are to deal with, and because many are flexible (especially when pressured) beyond the strict terms of the contract. The best advice I've gotten is to ask your oncologist and/or their billing office which company offers the most flexible hassle-free coverage (If you have any better ideas, please let me know ). (I am aware that there are rating services which publish statistics on member satisfaction with their health plans and on other standard quality measures. Most members of health plans do not have a serious illness and even if they do they probably aren't truly active patients who search deeply for the best options. The standard quality measures have little to do with throughly they cover for non-standard treatments.)

In general, you should scrutinize all plans very carefully for gaps in coverage. Avoid anything which looks like a bare bones or stripped down plan.

Bad Idea Number 862: Go With the Cheap Plan Until You Need Better

Usually you can switch plans only once a year and only on a specific date. One member of my kidney cancer list thought it would be clever to go with the HMO and then switch to the PPO in the event of a relapse so as to save the expense of the PPO until it was needed. This is a profoundly bad idea. Although there is a chance of beating the odds, the median survival for recurrent renal cell carcinoma, like that for many recurrent solid tumors, is well less than a year. The first treatment you get (or didn't get because your insurance didn't cover) is often the most important. Sure if you got "lucky" your relapse could come a week before your chance to switch plans. Then again it might come the week after. This is not the time to play Russian Roulette to save a few bucks.

Group Disability Insurance

Many employers offer long term disability insurance which will replace your income (or part of it) if you become unable to work due to an extended illness. It will cover even if the disability may be temporary. I was unable to work for a full year and collected tens of thousands.

In my experience, premiums are usually pretty modest. (For more background on disability insurance, see the CancerGuide article. Disability and Cancer). Given your high personal risk of disability due to your cancer history, this is cheap insurance. It's cheap because you pay the same as everyone else but are more likely to collect on it. More importantly, if you are unable to work you will not face the stress and difficulty of losing your income.

Disability insurance may also improve your odds of survival by giving you the time you need to get well. Many people go to great lengths to struggle into work even when the disease or its treatment makes it very difficult. When I was diagnosed, I instantly dropped work because I knew I had a more important job to do - to get well. I knew immediately that would take everything I had and more. I believe that in most cases where work would be a major struggle, disability would cover. Ask yourself honestly if you could benefit from time to heal and recover from the illness and its treatment and if so, don't hesitate to take disability if at all possible. This isn't welfare, it's why you've been paying for disability insurance.

You do have to take into account that although you will be paid disability benefits for as long as you're disabled (up to the age of retirement), you may lose your job. Most employees are entitled to 12 weeks of unpaid leave under the Family and Medical Leave act, but I believe after that it's up to the employer whether you will get your job back. For more on The Family and Medical Leave Act, see the FMLA Compliance Assistance page from the US Department of Labor

In my case, my company was more than happy to have me back after a year, and when I was diagnosed they assured me if I recovered I would be able to come back. I believe it is to the advantage of enlightened employers not to force their workers to struggle into work while fighting a serious illness when they probably won't be able to do as good a job as usual, but rather to let them take the time off they need without pay and then allow them to return to work when they are back to full performance.

Note that long term disability insurance usually doesn't kick in till you've been disabled for 60 to 90 days. This interim period may be covered by a combination of your accrued vacation and sick leave, short term disability coverage provided by the employer, and sometimes just covered by understanding employers because it's the right thing to do.

Group Life Insurance

Many employers offer group term life insurance at relatively reasonable rates. If you have cancer or a history of cancer with a significant risk of recurrence, this probably the only way you will be able to get life insurance if you don't already have it. Employers typically offer insurance up to two or three times your annual salary without requiring that you pass an exam or answer questions about your health. Most people facing serious life risks from cancer would be wise to take as much employer life insurance as they can get without having to answer medical questions.

Reasons To Bulk Up on Life Insurance

  • You can benefit while you're still alive
    • Although it's little known, if you find yourself facing a limited life expectancy, you may be actually able to collect part of your life insurance benefits while you're still alive. You could use this money to improve your quality of life or even to fund treatment your insurance won't cover that might save your life.
  • You can provide additional money to your family (or others) after your death at low cost and it's a good statistical bet
    • If you have a high risk of dying in the next few years, your beneficiaries have a greater than average chance of collecting, but you don't pay any more for the insurance than anyone else - that makes it a good deal. Even if you don't have dependents, you could use your insurance to give something to friends, relatives, or even a charity of your choice. I admit it's more than a little odd to literally bet against your own survival when you're fighting to live. But what matters is whether it makes sense to place that bet and hope to lose.

Reasons Not To Bulk Up on Life Insurance

  • If you already have enough life insurance from another source, you may not need more, although given your risks, employer life insurance is still a good deal statistically and means you can benefit your friends, family, or a charity of your choice at a very low cost. However if you simply cannot afford it, it's not an absolute necessity in this circumstance. Just make sure you keep paying the premiums on your other life insurance!

Using Your Life Insurance to Save Your Life

Not only could life insurance serve the usual purpose of protecting your family if you die, but if you have a poor prognosis, you may be able to collect all or most of the money before you die. There is nothing to prevent you from using this money to help with medical expenses including, if necessary, the cost of experimental therapies your health insurance refuses to pay for. If you beat the odds, you get your money and your life.

Most life insurance policies these days have an Accelerated Benefits Provision (ABP) which allows you to collect a percentage of the face value if your life expectancy is limited due to something like poor prognosis cancer. A typical ABP provides a portion of the death benefit immediately if you are certified to have a prognosis of less than six months or a year (depending on the policy). The amount paid under the ABP will again depend on your policy. Any remaining amount will still be paid on your death as long as you keep up with the premiums (as you should).

Even if your life insurance doesn't have an ABP, if you have a poor prognosis with a limited life expectancy, you can probably sell your policy to a third party for a percentage of face value - a process called viatication. Viatication is tricky and different viaticators might offer different amounts for your policy. I believe that if you have a poor prognosis, the viaticator should offer you a high percentage of the face value of your policy and I would be wary of anything less. I do not presume to be an expert on viatication and can't offer more detailed advice on finding a reputable company in this somewhat macabre business.

Viatication and Accelerated Benefits Provision (ABP) Compared

  • Amount Of Money You Can Get Now

    Usually an ABP limits the amount you can get to a fraction of the policy's face value - often as low as 25%. Assuming you can get a high percentage of face value from a viaticator, it's likely that viatication will get you more money now.

  • Ultimate Cost to You and Your Beneficiaries

    Exercising the ABP often has little or no effect on the total amount which will ultimately be paid to you and your beneficiaries. Since there can be fees and other provisions which reduce the total benefit, this is somewhat variable and you should check the rules for your policy. In contrast, when you viaticate your policy, the percentage discount is lost to you and your beneficiaries.

  • Time To Get Your Money

    The ADB process is usually faster and simpler, and the amount you will get is known in advance. Also with ABP you know who you're dealing with from the outset - the insurance company - whereas with viatication it's up to you to do the research to find a reputable viatical service which will make a fair offer and complete the settlement process in a reasonable time.

  • Life Expectancy Limits

    Both ABP and viatication are based on your having a limited life expectancy but viaticators may be willing to buy your policy even if your life expectancy is longer than the 6 month to a year limit of most ADB clauses, although the longer your life expectancy the lower the percentage of face value you will get from a viaticator.

  • Availability

    If your policy doesn't have an ABP, viatication is still an option. If your policy hasn't been in force long enough to be non-contestable (usually a year or two) then viatication might not be available but any ADB may be. As mentioned above, Viatication may be an option even when your life expectancy exceeds the limit in your policy's ABP.

You will need to investigate subtle financial consequences of either viaticating your life insurance or using the Accelerated Benefit Provision. I'm not a financial planner and can't advise. Areas I think are of concern include that the money you get now reduces the death benefit for your family, the question of whether any creditors you have now would have the rights to the money before you could use it for your own purposes, whether having this money would affect eligibility for any government benefits you're getting now or expect to be eligible for later, and any tax consequences from receiving the money. I understand in most cases early payout on life insurance due to limited life expectancy isn't taxable.



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This CancerGuide Page By Steve Dunn. © Steve Dunn
Page Created: January 11, 2003, Last Updated: January 31, 2003