Handling Costs of a Terminal Cancer Diagnosis
Being diagnosed with terminal cancer is undoubtedly a numbing experience, and it's possible that you may choose to continue treatment options such as clinical trials and experimental treatments. However, many doctors suggest hospice as the best route, as attempting to extend life expectancy can be extremely costly and/or won't change the diagnosis of being terminally-ill. With that in mind, here's what you need to know about handling the costs of end-of-life care.
While it's hard to say there's a silver lining when diagnosed with a terminal illness, one less thing to worry about is paying for hospice. Costs are typically covered by the Medicare Hospice Benefit, Medicaid, and The Veterans Health Administration. Many private health insurance policies also provide some coverage, but check with your provider before making such an assumption. If you don't have insurance and/or don't qualify for the above options, you may have to find a hospice that provides financial assistance (free services) through gifts, donations, grants, or other community resources.
It's important that you create a plan to minimize the financial burden that your family members may face if you have any outstanding financial obligations. Make a list of your debts, including loans, credit cards, leased cars, mortgages, monthly bills, estimated tax payments, and outstanding medical bills. Next, figure out how you're going to pay them off. This is also a good time to plan for funeral costs, so purchase burial insurance so your loved ones aren't left with the financial burden. Develop a contact list of all beneficiaries, account holders/signers, and other important info so it's easy for a family member to step in. If your medical costs outweigh your liquid assets, consider these options for obtaining additional funds.
Withdraw from Retirement Account
You can withdraw from your retirement account early — a terminal illness may be grounds to waive the early withdrawal penalty — but you should understand the rules associated with the specific account you have. For example, your employer may have decided whether to allow hardship distributions through a 401k or 403b plan. IRA accounts can be used penalty-free if you are older than 59.5. If you're younger, there are other ways to avoid fees, such as having your physician determine that your illness is total and permanent, or paying for medical expenses out of your IRA if the total cost is above 10 percent of your adjusted gross income.
A viatical settlement is the sale of your life insurance policy in the event that you're terminally ill. It's a good option if you or your loved one needs money to cover medical expenses or long-term care associated with your diagnosis as your policy can be sold for a cash payout. The Accelerated Death Benefit (ADB) lets you use the money set aside for your death benefit before you pass. However, there are certain requirements, which include having limited life expectancy, what type of policy you have (universal, whole, and term allow a viatical settlement), and having a policy size that's valued at least $50,000.
If your illness prevents you from being able to work, you may qualify for disability benefits.Anyone in hospice immediately qualifies and therefore the approval process will be expedited. If you pass, any dependent family members will receive up to 75 percent of your benefits.
When diagnosed with terminal cancer, it's likely that your doctor will tell you to put your affairs in order.Along with tackling financial obligations as stated above, organize all of your important documents and shred those you don't want left behind. Make a contact list of all of your trusted professionals in case your loved one needs to reach out to them on your behalf. If you have a life insurance policy, make sure everything is in order so your family knows how to tackle any debts or income tax liabilities from your estate.
—Lucille Rosetti, The Bereaved.org
Mountain Valley Hospice & Palliative Care offers free grief support to the community at large. For more information, contact us today at 336-789-2922 (toll-free 1-888-789-2922).
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