Balancing their checkbook is not the first thing people think of when they receive a cancer diagnosis. Biopsies and treatment plans are more the order of the day. Yet, in time, inevitably, the topic of money will come up.
Will I have to work to keep my health insurance? How do I keep paying my bills? Will I beat cancer, only to become financially broke doing so?
The sooner a patient addresses the financial concerns, the better the chance that a financial issue will not get in the way of cancer care.
The following steps can provide dividends to the patient’s financial health at any point during cancer treatment. In my book Crushing Cancer, I take a grounded, no-nonsense approach to managing your finances. Here is some initial advice for patients with cancer starting out.
Step 1. Take Stock
Figuring out your path forward requires you to figure out where you are starting from.
Look at your outflows. Do you really need Hulu, and Amazon Prime, and Netflix, and Apple TV+? Look at the subscriptions you have, or didn’t even know you still had, and remove what you don’t need right now. Look for the easy economies.
Understand true costs. As an example, consider an online retailer who offers the same book through different sellers. One offers the book at $20 and another at $25. Buy the $20 book, right? Well, maybe—until you see that the $20 seller is going to charge local sales tax and $10.99 in shipping. The $25 book comes from a place with no sales tax and with free shipping. The added cost for the $20 book drives the total to more than $35 for the same book. Understand the true cost.
Realistic expectations. No one has lived very long in this world without the disappointment of getting less, sometimes a lot less, than promised or expected. We’re discussing money here, so when dealing with your expectations about money, round down the cost when estimating inflows, and round up the cost for expected costs. So too with timing. Someone may say that the check will get to you in 1 to 2 weeks. So figure on 3, certainly not 1. This builds in a cushion that can be very useful, or at least protective.
2. Start on Day 1
Talk to the people who you need to pay money to as early as you can after your diagnosis, including things such as utility bills and mortgage or rent payments. If you feel comfortable doing so, let them know that you have cancer, and that your finances may present a short-term challenge.
You can also just present it as a “health issue,” if you don’t want to tell them about your diagnosis. Ask if they have any programs for people who may be financially stressed. If there is no penalty, start these programs as soon as possible.
Having a little breathing space already in place can yield dividends down the road. Bear in mind, however, that forbearance does not go on forever. Know how much time they can give you, and understand any penalties or charges you may incur, if any, when planning when to start.
It is critical that you don’t wait until the bills are overdue. Many businesses love nothing more than to apply penalties to your bills for late payment. This is free money to them. But they are also human, so if you tell them you have this issue later, they may, and I stress “may,” waive the fees. Then again, they may not.
Credit card companies are all too happy to reset your rate from the teens to the twenties for a missed payment. Your 14% card rate can double to 29.99% with late fees after 60 days, plus interest on the late fees.
As part of my Crushing Cancer book, I’ve included a budget worksheet, which I’ve also made available for a free download at www.warriorstance.com/resources (the cancer journaling site we host). This is a downloadable Excel spreadsheet posted in the “Personal Expenses Spreadsheet Tracker” section. Other budget worksheets are also available on our website.
3. Taming the Beast with Too Many Mouths to Feed
Having multiple monthly payments can be financially draining when you are suddenly hit with the expenses associated with a cancer diagnosis. Medication co-pays, travel, medical supplies—these all add up, even if you have health insurance.
If you are carrying high-interest credit card debt and have some equity in your home, you can use the equity to combine several bills into one. Either refinancing (which can lower your mortgage payment as well) or taking a home equity loan can reduce the number of bills to 1 bill.
Understand, however, that as a general strategy, clearing credit card debt with your home equity is not a good financial move if you are not under financial stress. Also, note that one of the advantages of paying credit card debt with home equity loans went away in 2017. The interest you paid on such loans is no longer tax-deductible, because of the Tax Cuts and Jobs Act of 2017.
A debt-consolidation loan is another way of pulling credit card bills into 1 lower bill. Instead of 1 bill as explained above, you’ll have 2. Still, if you don’t have enough home equity, or if you rent your home, this can be a reasonable alternative. According to NerdWallet (www.nerdwallet.com), the interest rates on debt-consolidation loans as of December 16, 2021, are between 11.2% with excellent credit (FICO 720+) and 25.3% with “lower credit” (FICO under 629).
Back to the idea of starting early: if you wait until your credit score is plummeting from unpaid bills, you will end up paying more for the same loan. In addition, applying for a loan while you are still working improves your chances of favorable loan terms.
Finally, you can borrow from your 401K plan early, if you have one. Remember that you are not going to withdraw the money. If you take money before retirement, you will be penalized 10% of any gains. Instead, you can loan money to yourself from your 401K. Understand clearly the repayment requirements. If you default on the payments, you will have the 10% penalty, but it will not be reported against your credit score.
In all of this, keep in mind that no lender has the right to require you to disclose any health issues. Indirectly, however, some things could tip your hand. Part of the loan process is disclosures of your income, for example.
If you recently stopped working, you may be asked why. Although we’d like to think that people would try to help in the face of a cancer diagnosis, banks are businesses. If they get the idea that you have a potentially serious illness, they don’t have to loan you the money. They can always find a reason not to do so.
4. Review Your Health Insurance Plan
Early on in all this, you’re going to want to know what is covered and what is not. The “average cost” of cancer care is variable based on the type of cancer, but according to the National Cancer Institute (https://progressreport.cancer.gov/after/economic_burden), the range is from a “low” of $5,047 for melanoma (presumably for early stage) to a high of $115,250 for brain cancer for the first year of treatment. Knowing how much you will be responsible for is very helpful in planning your finances.
Get to know a few people at your health insurance company whom you could call in case an issue comes up. This won’t always be possible. In addition, make sure you know your insurance benefits officer at your place of work, if you get your health insurance through your job. You need many allies.
5. Check Those Bills
Hospital bills are notorious for being inaccurate. In her upcoming (March 2022) book, Crush Medical Debt, Virgie Bright Ellington, MD, says that 80% or more of all bills contain inaccuracies that are not in the patient’s favor.
Medical bills are bewildering even to the people who generate them. I have a medical doctorate and an MBA; I’m still perplexed at times by medical bills. Find a good guide to help you sort it all.
6. Accept Help
If you have an “Uncle Murray” who has a few bucks he wants to chip in, let him. The point is—the people who love you want to help. Sometimes with resources such as money, rides, childcare, or even food. Accept the help. None of us walks this world alone.
As the songwriter legend Bill Withers said in “Lean on Me,” one of the best songs of all time:
Lean on me
When you’re not strong
And I’ll be your friend
I’ll help you carry on...
For it won’t be long
Till I’m gonna need somebody to lean on.
I’ve tried to distill the 50 pages of Chapter 10—“Managing the Financial Impact of Cancer”—of Crushing Cancer into this article. This is a good start, but continue to educate yourself.
Start as early as possible in managing your finances, be realistic about what you need versus what you want. And, be realistic about what money is coming your way, and when.
Don’t pay a medical bill you don’t understand. Ask for and accept help, and most important—go out and win that fight.
- It is critical that you don’t wait until bills are overdue; many businesses have late fees
- Manage your expectations so that you’re realistic about what to expect in terms of estimating costs and time frames of your treatment
- If you feel comfortable doing so, let people know that you have cancer or a medical condition, and that your finances may present a short-term challenge
- If you are carrying high-interest credit card debt and have some equity in your home, you can use the equity to combine several bills into one
- Download for free my budget worksheet at www.warriorstance.com/resources; you will find it under “Personal Expenses Spreadsheet Tracker”