Financial assistance cancer patients


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At Fifth Season, you will find caring and professional counselors to assist you and answer questions about our Loans for Living program. Fifth Season works to make the application process easy and stress-free.

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Financial assistance cancer patients

  1. 1. Financial Alternatives for People Living with Late-Stage Cancer By: Scott B. RoseCancer changes the lives of millions of people. While those affected by cancer understandits impact, most people do not understand how significantly a cancer diagnosis candisrupt and, ultimately, take a persons life. Cancer is "a group of diseases characterizedby uncontrolled growth and spread of abnormal cells." Cancer strikes across thepopulation; it afflicts people of all ages, gender, race, ethnicity, religion, residence andsocioeconomic status. It is estimated over 1.6 million new cancer cases were diagnosedin the United States 2012. Regardless of the specific type of cancer one has, a cancerdiagnosis can be devastating to the patient, as well as their family and friends.In addition to the obvious physical and emotional hardships, a cancer diagnosis cancause many to suffer financial hardship. Typically, those with more deadly forms of andlate-stage cancer suffer more substantially from the financial challenges that a companycancer diagnosis. In one study, researchers found 7.7% of those diagnosed with lungcancer (the deadliest form of cancer) filed for bankruptcy within five years of beingdiagnosed. These financial challenges arise from a number of different sources. First, thecost of treating the cancer can be overwhelming, notwithstanding the patients access tohealth insurance. A recent study from Duke University Medical Center and Dana-FarberCancer Institute found out-of-pocket cancer-related costs averaged $712 per month,despite all but one survey participant having health insurance and 83% of surveyparticipants having prescription-drug coverage. Such costs can include insurance co-paysand non-covered treatments and medications. Second, and perhaps more financiallyimpactful, is the loss of income associated with the patients and potentially thecaregivers inability to continue working full time. The physical strains on late-stagecancer patients often prevent a patient from remaining employed and can even requirethe caregiver (often a spouse, sibling or adult child) to forgo or limit employment,compounding the higher cost of living with cancer with a significant reduction inhousehold income. Finally, late-stage cancer patients often seek palliative care, whetherin-home or in a hospice, which can be costly if not covered by Medicare or otherinsurance carriers.While there is an incredible amount of data, information and resources devoted toinforming and financial assistance for cancer patients, very little of it is designed to helplate-stage cancer patients meet their overwhelming financial needs. Instead, a great dealof what is available attempts to reduce the incidence of cancer by focusing on research,awareness, prevention and early detection of cancer.In addition, resources for helpingthose diagnosed with cancer offer assistance with topics such as navigating the healthcare system, transportation, education and support groups. There are very fewAmerican Cancer Society, Cancer Facts & Figures 2012. Atlanta: American CancerSociety; 2012.Id Staging describes the extent or spread of the cancer, ranging from StateI (least) to Stage IV (most). For purposes of this article, we use the term "late-stage" torefer to Stage III and Stage IV.The Wall Street Journal, Health Blog, Study Illuminates Link Between Cancer, Bankruptcy,available at (last visited December 4, 2012).
  2. 2. The National Institutes of Health estimates direct medical costs of cancer in 2007 were$103.8 billion and will reach $158 billion in 2020. The Wall Street Journal, Health Blog,Out-of-Pocket Costs for Some Cancer Patients Top $700 Monthly, available at (last visited December 4, 2012).resources available to assist late-stagecancer patients in meeting their growing financial needs and their options are notgenerally well known or understood.The most likely place for late-stage cancer patients to turn to meet financial needs iscurrent assets. Obviously, patients have the most control and easiest access to their ownassets. Unfortunately, given the American economy over the past four years, fewerpeople have meaningful "rainy day" funds to allow them to use current savings to fundcancer treatment and other daily living expenses. To the extent patients have savingsavailable, often their savings is quickly depleted and is often difficult to replenish.Another asset that may be helpful can be a cancer patients home. For manyhomeowners, it can be a source of significant cash, but accessing this value can be timeconsuming and more difficult when a familys income is reduced by the inability tocontinue earning at the same level as prior to the cancer diagnosis. Equity levels havedropped so precipitously with falling real estate prices and lending criteria have tightenedso much, a home equity line or even a reverse mortgage is less viable as a source offunds for late-stage cancer patients.Government assistance for cancer patients is limited. While there do not appear to begovernment assistance programs specifically for cancer patients, there are a number offederal and state programs that provide financial benefits that cancer patients mayaccess, including Social Security, Medicare and Medicaid, the Department of Health &Human Services and the U.S. Administration on Aging. These benefits are typicallyentitlements and, therefore, do not require patients to use up current assets or take onfuture obligations. These programs, however,are typically set up for low-incomehouseholds, the elderly and the disabled and many cancer patients may not qualify.Other government and nonprofit benefit programs have eligibility requirements that canlimit a cancer patients access to potential benefits. Navigating the application andeligibility process for such assistance programs can be difficult, time consuming andfrustrating, especially for those suffering physically from cancer. In addition, someindividuals are unable to access these programs.In addition, sources of financial aid such as non-profit grants and charitable grantsgenerally provide assistance for specific expenditures (e.g., patient care, co-pay off-setsand prescription costs). Other programs limit the aid to defray the costs of transportationor the costs of treatment outside the home. These resources and the governmentassistance programs generally do not provide discretionary funds to help with day-to-dayliving expenses, such as mortgage payments, child care and other necessary expensesnot tied directly to the cost of treating cancer. Therefore, other financial solutions arenecessary.For those late-stage cancer patients with a life insurance loans policy, there are a numberof other potential options to help meet financial needs. Policy owners with built up cashvalue1 may take a loan or a withdrawal against that cash value from the insurer thatissued the policy. Unfortunately, the vast majority of life insurance policy owners do nothave significant, if any, cash value accumulated in their policies. Some insurance policies
  3. 3. offer an Accelerated Death Benefit Rider (ADBR). The ADBR provides a benefit to thepolicy owner if the insured is diagnosed with a terminal illness resulting in a lifeexpectancy of less than 24 months and sometimes as short as only 6 months. Ifavailable, the benefit is typically up to 50 percent of the policy’s death benefit and mayonly be available in monthly installments, as opposed to a lump-sum payment. Ofcourse, there is a cost to purchase this rider and few policy owners have policies withsuch a rider. Even those who do, however, cannot take advantage of the rider until theirmedical condition has become terminal. Therefore, the ADBR is rarely an option for late-stage cancer patients.Two other options exist for policy owners who cannot take advantage of the moretraditional options discussed above. The first is to sell the life insurance policy for cashproceeds. Generally, this transaction is known as a life settlement,2 and involves thepolicy owner receiving a lump sum cash payment and forever giving up any rights to thepolicy, including receiving the payment of the death benefit upon the insured’s death.Policy owners submit their policy and medical information to a licensed provider,3 whosolicits offers from multiple bidders to buy the life insurance policy. The life settlementbuyer will keep the policy in force by making all the future premiums and receive 100percent of the death benefit from the insurance company. Life settlements can be fairlycomplicated transactions and many insureds are uncomfortable with the notion that athird-party investor will potentially profit from their death. Also, the life settlementmarket is relatively immature and no sizable market currently exists, making it uncertaina policy owner will actually qualify for a life settlement and receive fair value for sellingtheir policy.A second less traditional option for a policy owner to access value in their life insurancepolicy is a non-recourse loan secured solely by the policy’s death benefit. Under thisrelatively new option4 for late-stage cancer patients, qualifying insureds can obtain aloan for up to as much as 70 percent of the policy’s death benefit. As a non-recourseloan, the borrower has no obligation to make any loan payments or premium paymentsduring the insured’s lifetime and the loan is repaid by the insurance company out of thepolicy’s death benefit at the time of the insured’s death. Unlike other options discussedabove, this product has been specifically designed to address the financial needs of late-stage cancer patients. There are certain advantages to this product over other optionsdiscussed above, including: (1)there is no need to exhaust current assets, (2)there is no restriction of the use of loan proceeds, (3)there are no credit-based, needs-based or age qualifications, (4)the loans are available for most insurance policies, (5)the policy beneficiary still receives the residual death benefit after the loan is repaid and (6)the transaction process is generally simpler and quicker. Yet, qualifying for such a loan and the amount of proceeds available will depend greatly on the insured’s medical condition and the size of the insurance policy. In addition, not every type of cancer will qualify.To many, the financial challenges that accompany a late-stage cancer diagnosis can be ascrippling as the disease itself. Unfortunately, there is little focus in the cancer community
  4. 4. on addressing these needs and there are few adequate solutions. The cancer communitycan be instrumental in helping cancer patients become better acquainted with and helpidentify solutions for the very real and debilitating financial challenges that oftenaccompany a cancer diagnosis. This article discusses a number of options that do existtoday, but they are generally limited and often inaccessible to the patients. For thosewho own a home or a life insurance policy, more options become available. The bestsolution may be different for each individual and will be a function of a number of factors,including an individual’s access to liquid assets, home ownership, ownership of a lifeinsurance policy and medical condition. Cancer patients need access to and a betterunderstanding of the financial option sat their disposal to fund the fight of their life.Author BioFifth Season Financial is a leading provider of financial resources for terminal andlate-stage cancer patients. Fifth Season offers loans secured by an existing lifeinsurance policy to assist individuals in meeting their financial obligations. Contactus today at Fifth Season Financial.