For many people, successfully managing and treating illness depends on a person’s access to high-quality health care. In the United States, access to high-quality health care usually requires health insurance. Health insurance can cover or offset the costs of cancer care.
Most people get health insurance through their employer or through government programs. These include Medicare or Medicaid. However, some people do not receive health insurance at work. Others are not eligible for Medicare or Medicaid. If this is your situation, visit www.HealthCare.gov to learn your options for purchasing health insurance. Or call 800-318-2596 (TTY: 855-889-4325).
HealthCare.gov is the official resource for health insurance provided through the 2010 Patient Protection and Affordable Care Act (ACA). This legislation also changed many rules for health care insurance coverage in the United States. Learn more about the Affordable Care Act and Cancer.
Types of private health insurance
Your out-of-pocket medical costs will depend on your insurance type. Find definitions for many of the terms used in this section in the glossary of terms related to cost.
Private health insurance
To pay for and control medical costs, private health insurers use different care models. Common types include:
Health maintenance organizations (HMOs)
Preferred provider organizations (PPOs)
HMO. An HMO covers costs within a network of contracted health care providers. Patients choose a primary care doctor from that network. That provider oversees the patient’s health needs. And he or she refers the patient to specialists, when needed.
HMOs often have the lowest patient costs for private health insurance. At the same time, HMOs generally limit coverage in these ways:
- You have fewer choices of doctors and hospitals. Only doctors and hospitals contracted with the HMO are covered under the plan. However, insurance companies may make exceptions for emergencies and medical necessity. And many HMOs allow visits to doctors outside the plan. You pay a higher fee, though. This is called “out-of-network” care.
- Access to a specialist requires a referral from your primary care doctor.
- You may need precertification for non-emergency hospital visits and some specialist care. This means you get the HMO’s approval before receiving care. HMOs also may require notification within 24 hours of emergency care.
- Some types of services may not be covered.
PPO. PPOs contract health care providers to provide services at a reduced fee. These include doctors, hospitals, and other health care professionals. PPOs typically have a larger pool of in-network doctors than HMOs.
Most medical costs are covered when visiting in-network doctors. You only pay a small set fee called a co-payment or “co-pay.” Additionally, PPOs allow visits to any doctor without a referral. PPOs may provide freedom to visit out-of-network doctors. However, these visits may require you to pay a larger portion of the bill.
PPO restrictions may include the following:
You may be limited to accessing health care services from doctors and hospitals that are within the PPO network.
You may need to get precertification for some types of care, particularly if the facility or doctor is outside of the network.
Some types of service may not be covered.
Flexible Savings Accounts (FSAs) and Health Savings Accounts (HSAs)
Special bank accounts allow you to plan for medical expenses and receive tax benefits. Many employers offer these to their employees through private health insurance plans.
FSAs. Money is taken out of your paycheck throughout the year. It is pre-tax money to use for out-of-pocket medical expenses. You decide the amount of money based on your estimated expenses for the coming year.
Some plans provide an FSA debit card. For others, you pay first and submit your receipts for reimbursement. Any funds unused before the end of the year will be lost.
HSAs. The funds you put in an HSA do not expire. Any unused funds remain in your account for the next year. Additionally, you may keep the account after leaving a job. And you have the option to invest the money. However, only high-deductible health insurance plans offer HSAs.
What is a high-deductible health plan? You are responsible for 100% of costs until meeting a deductible. Usually, this deductible is several thousand dollars. Then, your insurance will pay 100% of covered medical services. You start with a new deductible each year.
Government-sponsored insurance programs
Medicare. Medicare is the federal health insurance program. It covers people 65 and older and some disabled Americans. It has different “parts.”
Medicare Part A covers these costs:
Skilled nursing care
Some home care services
Medicare Part B covers these costs:
Physical and occupational therapy
Many cancer drugs given in outpatient medical offices and clinics
Selected supplies that are deemed “medically necessary”
You are not required to enroll in Part B. However, if you enroll later, you may face a late-enrollment penalty.
Medicare Part C is also called Medicare Advantage. It allows Medicare-approved companies to provide Part A and B benefits. In some cases, Medicare Advantage plans include Part D benefits.
Medicare Part D is a voluntary prescription drug benefit. It covers prescription drugs that are not otherwise covered under Medicare Parts A or B.
Medicare does not cover all health care expenses. As a result, some people who have Medicare purchase supplemental insurance policies. These may be private insurance products called “Medigap” policies.
Medicaid. The federal and state governments both fund Medicaid. Each state operates its own program. This means eligibility and services vary by state.
Traditionally, Medicaid has covered low-income people who are older or have a disability. Also, Medicaid may include certain people in families with dependent children. States that elected to expand Medicaid under the ACA may provide coverage for other low-income adults.
Other types of insurance
Health insurance covers some of the costs of cancer care. However, typically, one plan does not cover all the costs. Other types of insurance are available to cover additional expenses.
Supplemental insurance. This helps cover expenses not covered by your primary insurance. Or it may cover the costs you pay within your existing plan:
Other out-of-pocket expenses
It may offer additional benefits. For example, some plans cover compensation for lost earnings due to missed work.
Disability insurance. This replaces income lost if your health keeps you from working. For example, this insurance helps if you have a long-term illness or injury. It’s typically provided through your employer or government-sponsored programs. However, individual policies are also available.
Hospital indemnity insurance. This provides limited coverage for hospital stays. It’s usually a fixed amount each day up to a maximum length of stay. Hospital indemnity insurance is most helpful for people with a basic insurance plan that limits coverage of hospital care.
Long-term care insurance. This provides coverage to offset the costs of long-term care. For example, nursing home care may be included. Most basic private insurance plans and Medicare provide limited long-term care coverage.
Insurance in practice
It is important to understand your health insurance plan’s benefits and limitations. The following examples help illustrate how co-pays, co-insurance, and deductibles work. However, talk with a representative of your insurance provider. A representative can explain the details of your specific plan.
Example #1: Co-pays
Anna needs to see two specialists this week. Dr. Martinez charges $100 per visit. Meanwhile, Dr. Jones charges $500 per visit. Anna’s insurance requires her to pay $20 co-pays for specialist visits. How much will the doctors charge her for the appointments?
Anna will pay $20 out-of-pocket for each appointment. That means $40 total. Co-payments are a set amount. This means Anna’s payment doesn’t depend on the amount of the bill.
Example #2: Co-insurance
Martin needs to see two specialists this week. Dr. Andrews charges $100 per visit. Meanwhile, Dr. Lee charges $500 per visit. Martin’s insurance requires a 20% co-insurance for specialist visits. How much will the doctor’s charge him for the appointments?
Martin will pay Dr. Andrews $20. He will pay Dr. Lee $100.
A co-insurance payment is calculated by multiplying each bill by the co-insurance percentage.
Dr. Andrews will charge Martin $20 because $100 x 20% = $20.
Dr. Adams will charge Martin $100 because $500 x 20% = $100
Example #3: Co-insurance and deductibles
Jasmine has a deductible of $2,000 a year. And she has not incurred any medical costs yet this year. Her co-insurance for a hospital visit is 20%. She recently had a surgery that cost $10,000. How much does she need to pay?
Jasmine will pay $3,600 out of pocket for her procedure.
STEP ONE. Subtract the deductible from the total bill: $10,000 – $2,000 = $8,000.
STEP TWO. Multiply the difference by the co-insurance percentage: $8,000 x 20% = $1,600. This gives Jasmine’s co-insurance amount.
STEP THREE. Add the deductible and the co-insurance amounts. $2,000 + $1,600 = $3,600.
What happens if Jasmine has another identical surgery within the same year? She already paid her deductible. So she would have only the co-insurance payment, which is $2,000 because $10,000 x 20% = $2,000.
Some medical expenses not covered by insurance can be deducted from federal income taxes.
Examples of potentially tax-deductible expenses:
Mileage for trips to and from appointments
Meals during lengthy medical visits
A tax advisor can explain rules about whether your medical expenses are deductible.
CancerCare: Sources of Financial Assistance