Have you ever had a friend or family member struggle with cancer? 

How People on Medicare canto Protect ThemselvesYourself Against the Financial Risk of Cancer (1)

Then you know how challenging this diagnosis can be both physically and financially.

Most of us want to do everything we can to prevent this from happening in our own lives.

The initial care for cancer costs an average of around $43,516, with continuing care costs averaging $5,516, and costs in the last year of life potentially reaching $109,727, according to the National Cancer Institute.

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Understand What Medicare Doesn’t Cover

If you or your spouse is diagnosed with cancer, you can expect a heavy cash need—even if you have Medicare and additional insurance.

As we noted above, out-of-pocket costs around $43,500 are typical and expected. And that’s just to cover the initial costs of care.

Medicare out-of-pocket costs for cancer treatment can vary widely based on the type of cancer, the treatment plan, and the specifics of your coverage.

Common Out-of-Pocket Costs

Here are some common out-of-pocket costs that Medicare recipients might incur for cancer treatment:

  • Part A Deductible and Coinsurance. If hospitalization is required, Medicare Part A applies. For each benefit period, there’s a deductible ($1,624, as of 2024). That’s per benefit period, not per year. Without additional coverage on top of Medicare, you may face multiple Part A deductibles for multiple hospitalizations or medical incidents. Additionally, after meeting the deductible, there may be daily coinsurance fees for extended hospital stays.
  • Part B Deductible and Coinsurance. Medicare Part B covers outpatient care, including doctor visits and outpatient therapies. After the annual deductible is met ($240 as of 2024), you’ll typically pay 20% of the Medicare-approved amount for most doctor services, outpatient therapy, and durable medical equipment—unless you have Medigap, the Medi-Share 65+ health sharing plan, or Medicare Advantage.
  • Part D Prescription Drug Costs. Medicare Part D covers prescription drugs. However you will still have out-of-pocket costs, including your plan’s deductible, copays, or coinsurance for medications, and expenses in the coverage gap (if applicable). Some cancer drugs can be very expensive, significantly affecting out-of-pocket costs. The median annual cost for new oncology medicines in 2023 was $260,000, up from $63,534 a decade ago.

Learn more about Medicare Part D prescription drug plans.

  • Medigap or Medicare Advantage Plan Costs. If you have a Medigap (Medicare supplement Insurance) or a Medicare Advantage (Part C plan, these plans might cover some of the out-of-pocket costs of Original Medicare and Part D. However, these plans also have their own premiums, deductibles, and copays. Additionally, Medicare Advantage plans often have significant Maximum Out-of-Pocket (MOOP)  costs: up to $12,450 as of 2024.
  • Costs for Non-Covered Services. Certain treatments or services that Medicare doesn’t cover, like some experimental treatments or non-medical expenses (e.g., travel for treatment), must be paid out of pocket.
  • Costs Beyond Plan Limits. If there are caps or limits in the coverage (for example, a limited number of therapy sessions), you must pay these costs out of pocket.
  • Costs for Out-of-Network Services. If receiving treatment from providers outside of the Medicare or Medicare Advantage Plan network, higher out-of-pocket costs can be incurred.
  • Excess charges. If your state allows excess charges, you will be responsible for any physicians’ fees they charge over and above the Medicare-approved amount. However, if you have a Medigap Plan G or the Medi-Share 65+ health sharing plan, these plans will pick up excess charges, once you meet your deductible or initial unshareable amount.

While actual out-of-pocket costs can vary, it’s clear that there are often unexpected expenses with cancer treatment that just won’t be covered by Medicare or other traditional insurance plans.

Why You Need Critical Illness Insurance

Critical illness insurance pays a lump sum benefit in the event you are diagnosed with a specific illness or condition.

Some plans also pay a benefit if you suffer loss of eyesight, limb, or become a quadriplegic.

As such, critical illness insurance helps fill the gaps left by traditional health insurance and Medicare in various ways:

  • Covers Non-Medical Costs. Critical illness insurance can help cover costs not covered under Medicare, such as lost income due to time off work, travel expenses to treatment centers, or the cost of home modifications.
  • High Deductibles and Out-of-Pocket Maximums. Many insurance plans have high deductibles and out-of-pocket maximums. The lump-sum payment from a critical illness policy can help cover these high upfront costs.
  • Supplementing Medicare. For those on Medicare with high-risk factors, the additional coverage can provide peace of mind, knowing that they have financial support if diagnosed with a serious illness, such as cancer.
  • Flexibility in Use of Funds. The lump-sum benefit from critical illness insurance can be used at the policyholder’s discretion. This flexibility allows individuals to use the funds where they are most needed, whether for medical expenses, daily living costs, or other financial obligations.
  • Accessibility and Simplicity. Critical illness insurance policies are often easier to understand and purchase compared to traditional health insurance. They provide straightforward benefits, making it easier for policyholders to plan their finances.

Cancer Insurance vs. Critical Illness Insurance

While cancer insurance policies only cover cancer, critical illness insurance typically covers a range of issues like cancer, heart attack, stroke, and more.

This broad coverage can give you peace of mind that no matter what happens as you age, you will be protected.

As you approach the age of 65, it’s crucial to understand that Medicare and other traditional insurance policies may not fully cover all the costs associated with cancer treatment:

If you’ve never considered adding a critical illness coverage plan to help fill the gap before, now might be the time.

A policy specifically designed to help cover cancer treatment can be a vital part of keeping yourself protected.

Be Proactive!

Some risk factors for cancer, like genetics and family history, are beyond our control.

However, adopting healthy lifestyle choices can contribute significantly to reducing overall risk, and provide a better quality of life as we age.

Here are eight ways you can significantly lower your risk:

  1. Avoid Tobacco Use. Avoiding smoking and tobacco use is one of the most significant ways to reduce cancer risk. This includes not only cigarettes but also other forms of tobacco like cigars, pipes, and smokeless tobacco.
  2. Healthy Diet. Eating a diet rich in fruits, vegetables, whole grains, and lean proteins can help lower the risk of cancer. Limit processed foods and red meats, as well as foods high in fats and sugars.
  3. Stay Active. Regular physical activity can help you maintain a healthy weight and lower the risk of various types of cancer, including breast, prostate, lung, colon, and kidney cancers.
  4. Maintain a Healthy Weight. Obesity significantly increases the risk of several types of cancer. It also increases risks associated with diabetes, high blood pressure, hip and knee replacement surgery, COVID, and heart disease.
  5. Limit Alcohol Consumption. Reducing alcohol intake can decrease the risk of many types of cancer, including liver, breast, colon, and lung cancer.
  6. Use Sunscreen. Protect your skin from the sun by using sunscreen (SPF 30 or higher), wearing protective clothing, and avoiding tanning beds can significantly reduce the risk of skin cancer.
  7. Get Regular Checkups. Be sure to get screened on schedule for common cancers. Take advantage of your health plan’s free screenings, such as mammograms, cervical screenings, prostate exams, and colonoscopies, and get them on schedule. Early detection is critical to have the best chance at successfully beating these cancers.
  8. Get Vaccinated. Certain vaccines can help prevent cancer. For example, the human papillomavirus (HPV) vaccine helps prevent most cervical cancers and several other kinds of cancer, and the hepatitis B vaccine can reduce the risk of liver cancer.

Plan For the Future

When selecting a plan, ensure that it provides continuous coverage as you age.

The availability and specifics of critical illness insurance plans can vary, so there are some details you will want to clarify before enrolling:

  • Maximum Age for Enrollment. Some policies have a maximum age limit for new enrollees, which commonly ranges between 60 and 70 years. This means that individuals must purchase the policy before reaching this age.
  • Coverage Duration. Check for age limits on policies. Some might offer coverage only until the policyholder reaches a certain age like 75 or 85. Others may provide coverage for life.
  • Age-Related Premiums. The premiums for critical illness insurance often increase with the age of the policyholder at the time of purchase. Older individuals can expect to pay higher premiums compared to younger individuals for similar coverage.
  • Pre-existing Conditions and Age. Older applicants might face stricter scrutiny regarding pre-existing conditions, and some insurers might not provide coverage for certain conditions that are more common in older age groups.
  • Policy Renewal. Some policies might be renewable up to a certain age, after which the policyholder might not be able to renew the coverage.

Carefully review the terms and conditions of each option to make the best choice for your specific age and health status.

Worth the Cost

The average cost of a critical illness insurance policy can vary widely based on several factors:

  1. Age. Younger individuals typically pay lower premiums than older individuals, so the sooner you enroll the better!
  2. Health Status. The presence of pre-existing health conditions can increase the cost of premiums, so don’t wait until you have health issues.
  3. Coverage Amount. The more comprehensive the coverage, the higher the premium. Policies with higher payout limits will cost more, but you will be happy for the forethought if you ever need it.
  4. Policy Terms. The cost can also depend on the specific terms of the policy, such as the range of illnesses covered, the length of the coverage period, and whether the policy includes return of premium benefits.
  5. Gender and Lifestyle Factors. In some cases, premiums may vary based on gender, as certain critical illnesses may be more prevalent in one gender. Lifestyle factors can also affect the cost, so living a healthy lifestyle can help keep your costs reasonable.

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Find the Best Plan

While Medicare and traditional insurance provide essential health coverage, they may not fully cover the costs associated with cancer treatment should you ever need it.

Critical illness insurance is a valuable addition to provide extra protection, but it’s important to do your research and find the best plan for your situation. A Personal Benefits Manager can help!

For Further Reading: Don’t Forget Your Annual Wellness Visit | Back to Basics: Twelve Keys to a Healthy Lifestyle | Can You Spend Your Medicare MSA Money on Nutritional Supplements?

Leslie Jablonski is a Personal Benefits Manager at MediGap Advisors. Leslie has a passion for bringing clarity to those confused about Medicare. She is an authority on Medicare, Medicare supplement plans, Medicare Advantage plans, and Part D prescription drug plans. Read more about Leslie on her Bio page.