Insurance is a way to help protect you and your family from life’s unexpected happenings. But it can be hard to know what type of coverage you may need and when, especially as a Senior. Because age 65 is the age which most people qualify for Medicare, we’ll consider anyone of the age 65 and older as a Senior.
Primary health insurance is often what people use as a basis for their coverage. For almost 96% of America’s Seniors, their primary health insurance is provided through Medicare.
Medicare does not cover all medical expenses. Medicare supplement insurance, also known as “Medigap”, helps fill in the gaps of coverages that Medicare Part B does not cover.
Let’s explore what supplemental health insurance is, and two types of supplemental health insurance, cancer insurance and critical illness insurance.
What is supplemental health insurance?
Supplemental health insurance is an additional insurance plan that helps pay for healthcare costs which are not covered by primary insurance. Such costs may include coinsurance and deductibles.1 Some types of supplemental health insurance policies offer a cash benefit, paid as a lump sum over a period of time.
Common types of supplemental health insurance are accident, hospital indemnity, dental, Medicare supplement, cancer, and critical illness insurance. This is not a comprehensive list of types of supplemental health insurance. Policy specifics vary between different companies.
What is cancer insurance?
Cancer insurance provides benefits only if you are diagnosed with cancer, as defined by the terms of the insurance policy. These policies offer limited benefits for the diagnosis and treatment of cancer. Most cancer insurance policies provide benefits based upon specified health care costs and expenses incurred in conjunction with the treatment of cancer, though some policies may pay a lump-sum benefit upon diagnosis. Cancer policies that provide more comprehensive benefits and coverages will have higher premiums than policies with limited coverage. In addition, premiums may increase as you get older, or may increase if total claims paid for consumers covered under a company’s specific cancer policy increase beyond the company’s expectations.
Cancer insurance is sometimes referred to as a “specified disease” policy. Typically, insurance policy provisions found in this type of coverage are very specific and limit benefits to a narrowly defined covered illness and treatment. Specified disease policies generally exclude benefits for any disease or sickness that is diagnosed prior to the policy effective date.2
What is critical illness insurance?
Critical illness insurance is an insurance product in which the insurer agrees to pay benefits in the event the policyholder is diagnosed with a covered illness.
A critical illness insurance policy provides benefits in addition to any existing major medical coverage you already have. In the event of a heart attack, stroke, cancer, or other serious illness the insured can receive a lump-sum cash or specified payment amount to help manage expenses. The choice on how you’d like to use this assistance is yours. This benefit can assist with covering costs such as:
- Out-of-pocket medical expenses such as co-pays and deductibles that medical insurance may not cover
- Experimental procedures
- Daily living expenses including mortgage or rent payments while you’re recovering
- Transportation expenses, such as traveling to and from treatment facilities, installing in-home ramps, or retrofitting vehicles to carry wheelchairs or scooters
- Other non-medical costs related to the illness
What does Medicare cover in regards to cancer treatment services?
Medicare Part A covers inpatient hospital stays, including cancer treatments. Skilled nursing facility care is covered provided it follows a related 3-day hospital stay. Home health care is also included. Surgically-implanted breast prostheses, after a mastectomy, are part of the services as an inpatient. Medicare Part A does not cover copayments, coinsurance, and deductibles.3
Most of the coverage provided to Medicare Part B is related to medically-necessary cancer related outpatient services and treatment, including doctor’s visits in an outpatient clinic, chemotherapy drugs oral and infusion treatments, radiation treatment, diagnostic tests, and outpatient surgeries. Medicare Part B does not cover copayments, coinsurance, and deductibles.4
When reviewing whether you should purchase cancer insurance, there are many factors to consider.
- There are different cancer insurance benefits. Consider what type of insurance plan you need:
- Lump sum insurance pays out a lump sum of money once the insured has been diagnosed and confirmed. This is at the discretion of the insured and how they want to spend the money. It can be used for co-pays and deductibles, or to supplement lost wages from being unable to work, or money for travel and transportation.
- Most expense incurred cancer insurance requires you to pay out-of-pocket for the cancer care, and then the insurer will reimburse you; there is usually a maximum dollar amount.
- Indemnity cancer insurance is similar to expense-incurred but each treatment has a payout limit, such as a daily limit on hospital stay. If your room costs $325.00 a day and the indemnity has a max of $300.00, you will have to pay the difference out-of-pocket.
- Consider the cost with relation to your age:
- Costs for cancer insurance increases with age. For people over 65, the cost of cancer insurance premiums may outweigh the savings of the insurance benefit. The median age of a cancer diagnosis is 66 years old.4
- A cancer insurance plan may be less costly than a critical illness insurance policy which covers more illnesses. Other factors to consider is what your current health condition is and how much coverage you desire.
- Your Family History: If cancer illness is prevalent in your family history, you may want to investigate purchasing cancer insurance.
What does Medicare cover in regards to critical illness services?
Medicare Part A covers hospital stays. If you need to transfer to a skilled nursing facility care, Medicare Part A covers the stay, provided it is related to a 3-day hospital stay. Home health care is also included, and surgery is also covered. Medicare Part A does not cover copayments, coinsurance, and deductibles.5
Medicare Part B covers doctor’s visits, chemotherapy drugs including oral and infusion treatments, radiation treatment, diagnostic tests, and outpatient surgeries. Medicare Part B does not cover copayments, coinsurance, and deductibles.5
Supplemental health insurance may make sense for persons aged 65 or older. There are many different types of supplemental health policies including cancer and critical illness insurance.
The coverage these insurance policies offer varies depending on the type of policy. There are many different insurance companies that offer supplemental health coverage. If you are insured for a covered accident or illness, the coverage may make a huge financial difference when it comes to the medical expenses you would incur. Research the options available to you and be sure to fully understand any policy, including the insurance policy’s limitations and restrictions, before you buy.
If you have any questions about supplemental health insurance, including cancer or critical illness insurance, or Medicare, contact an independent broker or a licensed insurance agent.
Sources:
- https://www.cancer.gov/publications/dictionaries/cancer-terms/def/supplemental-health-insurance
- https://www.cancer.gov/about-cancer/causes-prevention/risk/age
- https://files.nc.gov/doi/consumer-guide-to-cancer-insurance.pdf
- https://www.ssa.gov/benefits/medicare/
- https://www.medicare.gov/what-medicare-covers/your-medicare-coverage-choices/whats-medicare