Navigating the Payment Maze


Dealing with your health insurance plan is complicated and will most likely be overwhelming. But figuring out upfront whether your insurance will pay for your treatment—or, if you are uninsured, learning about resources that may be available to you—can ease some of the pressure and help prevent huge debt at the end of your treatment. This is what you or whoever takes care of your medical expenses needs to do right now.

In this section of the website, we describe insurance types and financial programs you may qualify for and make you aware of dangerous loopholes. Once you learn what the important questions are, you can get more specific information in the sections of this site that are dedicated to various insurance types. Where pertinent, we point out specific pages for you to go. Learning about payment and reimbursement is not, by any means, the most entertaining subject in the world (but it is a great cure for insomnia). Be assured that there are many sources of help out there for you.

So, let’s get started. The most urgent things you need to know when you are diagnosed with cancer are:

  • What type of insurance you have or may qualify for
  • What your policy’s limitations are
  • When your insurance company will approve treatments, and when they won’t
  • What you need to pay out of your own pocket.

These issues are key to your success at calculating what you can expect financially during your cancer treatment.

What kind of medical insurance do you have?

Your medical insurance may come from a private source, such as an employer, a union, a group (such as AARP), or an individual policy that you buy yourself. Or it can be government-funded, such as Medicare, Medicaid, veterans’ benefits, and some disability plans. But patient beware! All plans have caveats, so read the Common Landmines and Pitfalls section below. If you don’t have medical insurance, read the Government Programs section; you may qualify for some types of government programs. And all cancer patients can benefit from reading the Supplementary Financial Programs section.

Types of Private Insurance Plans

Types of insurance plans include:

  • Health Maintenance Organization (HMO) 
    Health maintenance organizations are prepaid health plans that cover all aspects of your treatment. In an HMO, you must choose a primary care physician, who coordinates all your care and makes referrals to any specialists that may be required. You can use only the doctors, hospitals, and clinics that participate in your plan’s network. No benefits are paid for nonemergency services provided outside the HMO network. If you want a second opinion, you most likely will have to finance it yourself. If you have an HMO plan, make sure you know who your primary physician is, what your in-network pharmacies and laboratories are, and what kinds of referrals and/are approvals you will need.

  • Preferred Provider Organization (PPO) 
    Preferred provider organizations are basically groups of providers that discount their fees to form a network of preferred doctors and/or hospitals. If you do not use a preferred provider, you generally have to pay a significantly larger co-pay, or you might have to get your treatment preapproved. If your PPO offers a point-of-service (POS) plan, you can either choose your in-network provider or pay more coinsurance for a provider outside the network. The important thing for you to keep handy in a PPO is the list of your plan’s approved providers, labs, and pharmacies.

  • Indemnity Insurance 
    If you have indemnity insurance, you can generally choose any doctor or hospital you want. In addition, in some cases this type of insurance pays providers better, so providers will welcome indemnity patients with open doors. But remain aware. Even these insurers may have employee waiting periods, require authorization, and/or limit the types of treatments you can have. So understand your policy constraints, and don’t take anything for granted. All health insurance is expensive for employers and organizations right now, so plans without limits are rare.

Common Landmines and Pitfalls

This might seem extreme, but it is a good worst-case, rule of thumb to help you protect yourself:

Insurers make more money if they do not pay for expensive disease treatments. And, if they are large public corporations, making money is what they need to do to satisfy their investors. 

Cancer care is expensive, and you might encounter some hurdles. So you need to understand how insurers can legitimately limit your access to payment for care. Read on, even if you are in a government program. Government programs are social services; therefore they do not generally have the same policy limitations as private plans. But many of the noncoverage methods and out-of-pocket expenses do apply to all programs that pay your bills.

Typical policy limitations include:

  • Pre-existing conditions: Let’s say you just got a really, really good job. Then, you get some really, really good health benefits. Then, you get cancer for the second time. Your insurance may point out that you had this disease before you ever got the fabulous job. Thus, the insurance company may delay coverage or restrict your access to treatment for a while, depending on your state patients’ rights laws. It also depends on whether and for how long you had other insurance coverage. If you have had “creditable coverage” before getting your new insurance, a law called HIPAA (pronounced HIP-ah) may apply. You can also fight pre-existing condition limitations because, in some cases and places, restricting your access to cancer treatments or to your insurance is illegal.

  • Lifetime or annual benefit cap: This is the most your insurance will pay—either throughout your life as their policyholder or in one year—for your care. This number excludes what you pay out of your pocket. Most likely, this is not something you need to worry about, since a lifetime maximum is usually up there in the millions, unless you have a really bad policy. If your policy has a low maximum, less than $500,000 for life or $100,000 per year, it is worth carefully tracking your insurance company’s expenditures.

  • Pharmacy caps: Cancer patients often need expensive prescription drugs either for their cancer, their side effects, or for pain control. Some policies have a limit on prescription drugs called a pharmacy “cap”—that is, a ceiling on prescription expenditures. Typical caps are $2,500 to $5,000 per year. For some cancer patients, this is not enough.

Some insurers have good limitations too, called “stop losses” or catastrophic coverage. These clauses mean that when you reach a certain annual dollar figure paid out of your pocket—$50,000 or more usually, but not always—you no longer have to pay a co-payment, coinsurance, or other out-of-pocket costs, excluding premiums. In some plans, you may still have to pay, but it will be a much smaller amount. Your cancer treatment will probably be very expensive, and there is a possibility that you might qualify for this patient payment break, so check to see if you have a stop loss. If you cannot figure out the legal jargon, call your employer benefits manager, union benefit office, or insurance agent. You need to be aware of these limits because insurance companies have to be reminded to adhere to them; they rarely start paying for this coverage voluntarily.

Noncoverage Methods

Remember our worst-case principle—insurance companies want to avoid paying for nonstandard services, even if it means you do not get what you think you may need. Here are some of the ways they can prevent you from getting what your doctor prescribes:

  • Gatekeepers : The gatekeeper is just that—someone who wants to know why you need expensive treatment before your insurance company will pay for it. The big gatekeeper in HMOs and PPOs is generally a primary care physician. Other gatekeepers can be utilization review nurses, pharmacists, and medical directors. They will require things like referrals (referring you to specialists or for expensive procedures), authorizations (permission based on clinical information provided by your doctor) for minor procedures and/or radiation therapy, and review on each day of your hospital stay to make sure it is medically necessary for you to be there. You or your caregiver may want to understand when these steps are necessary, or you may end up with an unexpected bill.

  • Formularies : Formularies are lists of “acceptable” drugs. Originally, they were invented for drug safety. But when insurance companies (or organizations that manage drug benefits for insurance companies) use formularies, they limit choices to whatever drug or version of a drug they think costs the least. If you do not abide by the formulary, you may have to pay full price at the drugstore. Luckily, chemotherapy administered in your doctor’s office or in the hospital is rarely limited by formularies. However, drugs from the pharmacy are limited. Make sure these limitations do not affect your treatment. Your cancer doctor can often persuade the insurance company to change its list.

  • Denials/rejections: This happens when your doctor or hospital bills your insurance for a treatment or service, and it comes back unpaid. A rejection happens when the doctor or hospital makes a billing error. A denial happens when an insurer refuses to pay for something because your plan does not cover the service or because the insurance company does not feel the treatment is “medically necessary,” which can mean anything the insurance company wants it to mean (in other words, you are guilty until you prove your innocence). However, for cancer, it is usually because the FDA may not have approved a drug you are being given for your exact diagnosis. So ask your doctor about the likelihood of a rejection before accepting a certain treatment. And if your claim is rejected, you may be eligible for a supplementary program (see the Supplementary Financial Programs section of this article).

Out-of-Pocket Expenses

This is self-explanatory. Cancer is expensive, and some of your costs are going to come out of your own pocket. To figure out just what your out-of-pocket expenses will amount to, you need to read your policy thoroughly. Here is what every policy (except many Medicaid plans) requires in terms of out-of-pocket costs:

  • Premiums: This is the monthly payment you make for the privilege of having insurance. Make sure that you always pay your premium, if your employer does not pay the full amount. You might want to opt for direct debit (removal) from your bank account. That way, if you aren’t able to stay on top of your bills when you’re not feeling well, your premiums are up-to-date and you will not be canceled.

  • Deductibles: Many cancer patients feel the weight of their deductibles in the beginning of the year. This is because a deductible must be met before insurance starts to pay for care. Sometimes deductibles are quite small ($250), and sometimes they are quite large ($2,000). Always read the fine print because in some plans, there are services (doctor visits, for example) that are exempt from the deductible, and insurance will pay for them before the deductible is met. Your doctor or clinic may not be aware of this and may collect fees in error.

  • Co-payments: A co-payment is a set amount you must pay for certain services. For example, some HMOs have a $25 co-pay for each doctor visit.

  • Coinsurance: Coinsurance is a percentage you pay along with the insurance company. Sometimes this is also known as a “share of cost.” The most infamous coinsurance is the 20 percent Medicare coinsurance for some outpatient services, including doctor visits and chemotherapy.

  • Doughnut hole: The doughnut hole is just a way of saying there is a dollar figure at which your insurance will not pay, although it will pay at some higher point. For example, if you have a $2,500 cap on benefits for prescription drugs and your catastrophic coverage kicks in when you exceed $5,000 out of pocket, that $2,500 gap in benefits is a doughnut hole. Doughnut holes are rare, but with Medicare leading the way, expect to see them more often.

So now what? If you are in a government program or uninsured, check out the next sections for some other general information or look at individual sections of the website for details. If you have private insurance, we advise you to do the following, preferably before your treatment begins:

  • Read your insurance plan like the crucial document it is. If you cannot understand it, contact the source of the policy—your employer benefits manager or union benefit office or your insurance agent.
  • If you think your policy stinks, try to get supplementary insurance. But be sure to check for pre-existing condition clauses.
  • Pay your premiums! You do not want your insurance canceled in the middle of your treatment.
  • Ask your providers what your treatment plan is and how much cash you will need. If they do not know, try to guesstimate from what you know about your policy.
  • Make sure claims are submitted by your providers or by you for all services, even if you think insurance may not pay.
  • Keep track of all copies of everything your insurance has paid/not paid.
  • Keep track of all costs paid out of your pocket. There are three reasons to do this:
    1. You can request assistance from some foundations and drug companies if medical expenses profoundly reduce your income.
    2. You might have a stop loss or catastrophic clause that will kick in when and if you go over the threshold.
    3. You might get a tax deduction if these things mount up. This is something to ask an accountant or the Internal Revenue Service.
  • Save all correspondence regarding denial of coverage. Submit it to your physician to see what you are responsible for.
  • Get help if you feel as if your finances are being depleted. Check our Uninsured or Underinsured pages for resources that can help you now. If you feel the least bit intimidated by this process, check with a social worker or patient financial counselor at the clinic where you get your cancer care.

Government Programs

If you don’t have insurance, or are unsure whether you qualify for a government program, read this section carefully. You may find that there is financial help available.


Medicare is a federal program for people who are over 65 years of age or have been permanently disabled for more than 24 months (a fact many cancer patients do not know). Medicare covers more than 1 million cancer patients per year. If Medicare covers you, you should know that there are many additional Medigap and underinsured benefits for cancer patients. Many seniors and disabled patients are eligible for this assistance and do not even know it. You can learn more about Medicare and these supplementary programs on the Medicare pages of the site. Make sure you read the Medicare Prescription Drug Benefit pages to find the latest on drug coverage.


Medicaid is a public welfare program for medical care that varies from state to state. Even though some of the funding is from the federal government, your state funds dictate how easy it is to qualify for Medicaid and exactly what is covered. Some examples of who might qualify for Medicaid include low-income families with children (or expected children), Supplemental Security Income (SSI) recipients, and infants born to Medicaid-eligible pregnant women and those women’s children under 6 years of age. You can find out whether you are eligible for Medicaid benefits on our Medicaid pages. Please understand that because Medicaid pays providers badly at times, many providers (particularly office-based cancer clinics) do not take Medicaid patients and/or will not take Medicaid as a secondary insurance for chemotherapy or radiation treatments. However, most hospitals will treat you for outpatient services. So don’t delay getting care while you are trying to find a physician who will accept your coverage.


Hill-Burton is a program through which hospitals receive construction funds from the federal government. Hospitals that receive Hill-Burton funds are required by law to provide some services to people who cannot afford to pay for their hospitalization. My hospital experience tells me that these funds are exceedingly rare and are available only if you are admitted as an inpatient. It’s a shot in the dark, but it is worth a try.

Medical Assistance 

Medical assistance programs vary from state to state and, in some cases, may even be county specific. They require qualification by income and assets. They may supplement other benefits or may supply money for clinic visits, prescription drugs, insurance premiums, or transportation to the clinic. Ask the patient financial counselor or social worker at your local hospital if there is any help for you under one of these programs. Money is scarcer now in local areas, so don’t get too optimistic about getting help.

Veterans Affairs (VA)

If you are a veteran, you might be able to be treated at a VA hospital or at least be able to get some of your prescription drugs there. These benefits, due to federal deficits, are in the process of being cut. So, if you fought for our country and need medical care, call your local Veterans Affairs facility (1-877-222-VETS/1-877-222-8387), or look them up on the VA site.

Supplementary Financial Programs

Because of the limits that are built into insurance plans, you may need to supplement your coverage. The following are some programs you can piece together, if you qualify for them.

Drug Assistance Programs for Uninsured Patients 

Depending on your cancer, your largest percentage of costs may come from drugs. Many newly diagnosed cancer patients do not know that drug companies offer free drugs to patients who are uninsured and cannot afford to pay for them. Most programs’ qualifying levels are not publicly available, but our experience tells us that they are set at 250 percent to 400 percent of federal poverty levels. Use the Assistance Eligibility Calculator on our site to find out where your income falls in relation to federal poverty guidelines. Another thing that many cancer patients do not know is that they may qualify for one of these programs any time their insurance denies their drug claims. In all cases, patients will need to prove that their qualification is valid using tax forms, pay stubs, and/or bank statements. See our Getting Help for Cancer Drugs page for more information on uninsured patient programs.


While many of the drug assistance programs are also foundations, there are special foundations for patients who are underinsured or cannot pay their premiums, deductibles, coinsurance, or doughnut holes. This means that you can get help covering the monthly costs of your cancer treatment. These funds are restricted by diagnosis, not by drug. You also must qualify for assistance in terms of income, assets, medical expenses, and how much your insurance requires you to pay. See our Getting Help for Cancer Drugs page for more information on foundations.

Local Charities 

Even though these organizations sometimes do not offer the big-dollar assistance that drug assistance programs or foundations do, they can help with things like transportation, baby-sitting, hot meals, and small stipends. Religious organizations can offer hospital and hospice services for patients who have exhausted their benefits. Check your Yellow Pages for “Social Services” or call your local chapter of the American Cancer Society. See our Getting Help for Cancer Drugs page for more information on local sources of charitable help.


In the most extreme cases, a viatical may be an option for you. A viatical is cashing out all or part of your life insurance if your condition becomes terminal. In many states, you can accelerate your life insurance benefits or cash in the policy completely. Viaticals can be used if you need cash right away, either for medical care or to take that trip to Europe you’ve always dreamed of. If you are thinking you might want to do this, go to our Viatical Settlements page for more information.

In closing, we cannot stress enough how important it is to understand upfront what financial benefits you have access to, what will and won’t be covered, and how much cash you must be prepared to spend on your own. Get someone to help you, keep a cool head, and stay on top of your paperwork. This will go a long way in preventing huge unexpected debt.

This content was last reviewed August 15, 2010 by Dr. Reshma L. Mahtani.
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