Children Diagnosed With Cancer: Financial and Insurance Issues

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Types of private health plans for children

There are many different types of health insurance and health service plans. Most insurers work to contain costs by requiring that hospital admissions, tests, treatment, and specialized care be approved ahead of time (pre-approved, pre-authorized, or pre-certified). Insurers often limit benefits and pass along some of the costs to their enrollees and beneficiaries. Families must be ready to deal with many phone calls, lots of paperwork, ongoing follow-up, and careful record keeping. This is a lot to add to your schedule. And it’s even harder when you are worried about your sick child and all the other problems illness can cause.

Here are very brief descriptions of plans that are used most often:

Managed care plans

These types of plans typically coordinate or “manage” the health care of enrollees. There are different types of managed health care plans. Some plans – like health maintenance organizations or HMOs – have a more limited network of providers and hospitals while other models like Preferred Provider Organizations (PPOs) have a wider provider network.

Most managed care plans have lower premiums and co-payments (co-pays) than traditional fee-for-service insurance. Co-insurance may also be less.

Co-payments or co-pays may also be called co-insurance. This is the amount you must pay at the time of service, usually a flat fee for office visits or other services.

Co-insurance may be a percentage of the bill you must pay even after you’ve paid the yearly deductible amount.

Premiums, co-pays, and co-insurance amounts can differ between managed care companies and even between services within the same company. There’s usually no need to file claim forms.

Some managed care plans require members to use a primary care provider who coordinates all of the patient’s care and serves as a “gatekeeper” for care from specialists. The gatekeeper is usually a primary care doctor who’s responsible for the overall medical care of the patient. This doctor organizes and approves medical treatments, tests, specialty referrals, and hospitalizations. For example, if your child needs to see an expert like a lung specialist, you would need a referral from the primary care doctor before a specialist sees the child. Otherwise your plan may not pay.

Under most managed care plans, members must use only the services of certain providers and institutions that have contracts with the plan. Some plans do not require prior approval (also called pre-authorization), but do require that members choose to get their care from a list or network of providers. When parents choose to go outside the network for their child’s care, they generally have to pay more, or even pay for the full service with no help from their health insurance plan.

Many different types of institutions and agencies sponsor managed care plans, not just insurance companies. These include employers, hospitals, labor unions, consumer groups, the government, and others. It helps to know all the ins and outs of the plan and how it will affect your child’s care.

These are the most common types of managed care plans:

  • Health maintenance organizations (HMOs): An HMO will usually cover most expenses after a modest co-pay. HMOs often limit your choice of providers to those in their approved provider network. This means you have to check their listing to be sure the doctor you want your child to see is one of their doctors. If not, the bill may not be covered in full, and you may have to change to a different type of health plan to get that doctor’s services covered. Or you might have to switch to one of the approved doctors on their list.
  • Point of service plans: A point-of-service plan (POS) is a type of HMO. The primary care doctors in a POS plan usually refer you to other doctors in the plan or network. If your child’s doctor refers you to a doctor who isn’t in the plan (he’s out of network), the plan will still pay all or most of the bill. But if you choose to take your child to a doctor outside the network, you will have to pay co-insurance, even if the service is covered by the plan. Co-insurance is usually a certain percentage of the cost for each service. For example, the insurance company may pay 80% of the bill and you have to pay the other 20%.
  • Preferred provider organizations: The preferred provider organization (PPO) is a hybrid of fee-for-service and an HMO. Like an HMO, there are only a certain number of doctors and hospitals your child can use to get the most coverage. When your child uses those doctors (sometimes called preferred or network providers), most of the medical bills are covered. When you don’t use these providers, the PPO makes you pay more of the bill out of your own pocket. So you pay more to choose providers that are not in the network.

Getting the most from your managed care plan: Sometimes you must go out of network for your child’s care. You may be able to reduce your costs if you discuss and negotiate costs up front with doctors, clinics, and hospitals when surgery, procedures, or other treatments are planned. You can start with the billing department to find out the usual costs of the treatment your child needs. You may want to contact your insurer to find out what the company will pay and how much you’ll have to pay. You can use this information to find out if the medical facility or clinic will be willing to accept the amount paid by insurance as full payment. If not, ask if they’re willing to discount the portion you have to pay.

Fee-for-service plans

Fee-for-service plans are the least restrictive plans that offer the most choice in medical providers. They are also called indemnity or traditional health plans. If you have this type of health insurance, you can choose any doctor who accepts your particular health insurance plan, change doctors any time, and go to any hospital anywhere in the United States.

You pay a monthly fee, called a premium. Each year, you also have to pay a certain dollar amount of the medical costs (known as the deductible) for each family member before your insurance will start to pay. After you have met your child’s deductible, your insurance will pay a set percentage of the medical bills for the rest of the year.

You might have to pay your medical bills yourself and then fill out forms and send them to your insurer to get reimbursed (paid back) for what you’ve already paid. If your doctor “accepts” your insurance, their office will often bill the insurance company for you, and then send you a bill for the amount your insurance didn’t cover. Keep receipts of your child’s drugs and other medical costs, and any payments made by you and your insurance company. This paperwork can help you greatly if there’s a dispute about payments or other problems in the future.

After your stated deductible is met, the insurance company pays a percentage (70% to 80% is common) of the covered costs submitted to them. The percentage they pay is based on what they consider to be “usual, customary, and reasonable” charges (called UCR charges). The insurance company decides what the UCR charge is. If your child’s doctor charges more than the UCR, you may get a bill for the balance in addition to your usual co-pay percentage. This is called “balance billing.”

Things to consider when shopping for health insurance

For children living with cancer it’s especially important to choose the health insurance plan that best meets their needs. When comparing plans, consider a number of factors, including:

  • What are the total benefits covered by the plan?
  • What are all of the costs associated with the plan, including premiums, deductibles and co-pays?
  • Are your child’s providers included in the network of doctors and hospitals covered by the plan?
  • Does the plan cover the prescription drugs your child takes?.

For more on selecting an insurance plan, see the section called “Options for uninsured children.”

Other things to know about finding health insurance for children

Fake health insurance and other deceptions

There have always been people looking to profit from the needs and hardships of others. Now they’re exploiting health care reform in many different ways. They may advertise on hand-lettered signs, post ads online, or go door to door. They may be completely fly-by-night or they may have a legitimate-sounding 800 number. But here are some basic approaches to watch for:

A common tactic is to offer a stripped-down insurance policy that doesn’t meet the law’s requirements for covering major illness.. These policies are cheap because they make you pay for most of your child’s care. By the time you find out your child has a serious illness it may be too late to get real coverage.

Another way is to offer a medical discount card that gives you minor discounts but leaves the big payments up to you. Sellers might call this “coverage” or “protection,” but it’s neither. Discount cards can be helpful, but they don’t take the place of health insurance.

Some offer completely fake health insurance. The seller takes your money and gives you a worthless piece of paper. They may promise lower rates if you buy now. The seller might say that they’re “required” to offer this great, low-cost coverage by the Affordable Care Act. Sometimes scammers say that it’s government-sponsored insurance or that they work for the government. Or they’ll use a well-known insurance company’s name, even though they don’t work for the company.

Some fraudsters have gone to great lengths to create websites that mimic official marketplace websites. These sites are designed to fool people into thinking they are on an official marketplace site. They may offer anything from fake health insurance to a policy that doesn’t cover serious illnesses. Be sure you are on www.healthcare.gov, your state’s official website, or a site they refer you to before entering any personal information.

Identity theft scams

A final way that scammers exploit the ACA is a ruse to try to get your personal and financial information for identity theft. Some might even call and pose as government workers looking to “update” your information, asking for your date of birth, Social Security number, or bank account numbers. If you get such a call, notify the FTC online at www.ftccomplaintassistant.gov or call 1-877-FTC-HELP (1-877-382-4357).

How to spot scammers

Watch out for aggressive sales people, very low premiums, and a push for you to sign up right away. They may try to evade your questions, and often don’t have the full policy details in writing. Some offer you coverage only if you join an association, union, or other group. You may not get an insurance card or policy for some time after you sign up, if ever. And when you file a claim, there’s no response or a very slow response; when you call they explain it’s a glitch or processing error – if they answer at all. Here are some tips to help you protect yourself.

  • Don’t give them money, but especially don’t give them credit card information, birth dates, Social Security numbers, or bank account numbers unless you’re sure of who they are and what you’re getting.
  • Read the policy line by line or have someone read it for you.
  • Check out any association you have to join – go online, be sure they have a street address, and find out if they have legitimate activity besides selling insurance.
  • Call your state insurance department to be sure the plan is licensed in your state; also ask if the plan has had complaints made against it. (See the “To learn more” section to find your state insurance department.)
  • Finally, check with your child’s doctor and pharmacist to be sure they accept the plan.

Catastrophic coverage

Treating and managing most cancers costs a lot of money. Some insurance plans offer supplemental coverage called catastrophic coverage with high deductibles and fairly low premiums.

Catastrophic illness insurance is sometimes called a hospital-only or short-term plan. These plans often won’t cover doctor visits, medicines, or routine care, but kick in when your child is hospitalized and has very high expenses. Depending on the policy, expect to pay a few thousand dollars for the deductible alone, some percentage of co-insurance on the rest of the bill, plus the total cost for any items and services not covered by the plan.

Even though they are called “hospital-only” the plans won’t necessarily cover all or even most of your child’s hospital bill. It’s important to understand exactly what the plan will cover and not rely on a catastrophic plan for your child’s primary coverage. These plans will not provide the coverage needed to treat a disease like cancer and do not meet the requirements of the health care law. If this is your child’s only form of coverage, you will likely face a penalty at tax time unless the child is exempt from the requirement to have health insurance. (You can find out about exemptions at www.healthcare.gov/exemptions/.)

Catastrophic coverage plans may be offered in the health care marketplace for people with very low incomes or other hardships that exempt them from having to get standard health coverage. The marketplace plans have some advantages over the usual catastrophic coverage plans, in that they cover some preventive care. But a person who gets an exemption from buying a regular health plan can’t get help paying the premiums for catastrophic coverage. And when there’s a serious illness, the out-of-pocket costs with catastrophic plans can run very high. This is not a good option for a child with cancer.

Health Savings Accounts

If you have enrolled or plan to enroll in an insurance plan with a high deductible, you may be able to set up a Health Savings Account (HSA). You don’t have to pay federal income taxes on the contributions you make to the HSA as long as the money is used to pay for qualified medical expenses. If you use it for anything else, you will be required to pay the tax and a penalty.

Note that an HSA is different from a Flexible Spending Account (FSA); for instance, you can have an FSA even if you don’t have a high-deductible health plan. FSA funds are set up to be used for both medical and child care expenses. But the FSA money you don’t use goes away at the end of each year, while the HSA money is yours until you take it out. For more information about setting up an HSA you can contact your employer, bank, or credit union.

Pre-existing condition exclusions

A pre-existing condition is a health problem that a person had before joining the health plan. Before the new health care law went into effect, health plans could impose a pre-existing condition exclusion period on patients, meaning that the patient would have to wait a certain amount of time before the plan would pay any health care costs related to the pre-existing medical problem. The wait could be as long as a year for employer plans, and some individual plans refused to cover certain pre-existing conditions such as cancer at all.

The current health law prohibits most health plans from imposing pre-existing condition exclusion periods, or from refusing to cover people with a pre-existing condition. But some health plans, including grandfathered plans that were in existence when the law was signed in March 2010, can still have exclusion periods for pre-existing conditions.

Grandfathered employer plans: Federal law has long prevented employers from applying exclusion periods for a pre-existing condition in certain situations, and this law still applies to grandfathered employer plans. You may be able to avoid the exclusion period in a grandfathered plan if you have had health insurance with a previous employer and have not been without health insurance coverage for more than 63 days. Some states require employer plans to cover pre-existing conditions even for people who were without insurance for more than 63 days. You can call the US Department of Labor at 1-866-444-3272 to find out more about your specific situation. (See the section called “The Health Insurance Portability and Accountability Act of 1996” for more information.) Note that employers can sign up new employees for grandfathered plans if the employer has had the plan since 2010, so you may need to ask if your plan is grandfathered.

Grandfathered individual policies: If you have a grandfathered individual plan, the pre-existing condition exclusion period could still be many years or even unlimited. Such plans can also continue to impose an elimination rider that keep that disease, body part, or body system from ever being covered by that policy. Grandfathered individual policies can’t sign up new people, so this only applies if you had an older policy that you were able to keep. (See “High-risk pools and Pre-Existing Condition Insurance Plans” in the section “Health insurance options for the uninsured.”)

Grandfathered plans will be going away: The health care law defines grandfathered plans as those that were being sold when the law began to go into effect in March 2010. A plan can keep its grandfathered status only if it does not make a significant change to the coverage it offers or the prices it charges. Because health plans often change their coverage and/or price from year to year, many lose their grandfathered status over time. The total number of grandfathered plans is shrinking, and, with time, there will be few, if any, grandfathered plans left. If you’ve had your insurance plan since at least 2010, it’s important to find out if it’s a grandfathered plan.

National law prohibits discrimination based on genetic testing or test results

The Genetic Information Nondiscrimination Act (GINA) does not allow health insurers to turn down people or charge higher premiums for health insurance based on genetic information or the use of genetic services, such as genetic counseling. GINA defines genetic information as any of these:

  • A person’s own genetic tests
  • The genetic tests of family members
  • One or more family members with a genetic disease or disorder

GINA bars group health plans, individual plans, and Medicare supplemental plans from using genetic information to limit enrollment or change premiums. It also forbids these insurers to request or require genetic tests. GINA applies to all health insurance plans (including federally regulated plans, state-regulated plans, and private individual plans).

The law also forbids discrimination by employers based on genetic test results or genetic information. GINA states that employers must not discriminate on the basis of genetic information (no matter how they got the information) in hiring, firing, layoffs, pay, or other personnel actions such as promotions, classifications, or assignments.

You can learn more about GINA in our document called Genetic Testing: Patient Privacy and Discrimination Considerations.

Hospital indemnity policies and other supplemental insurance

Hospital indemnity policies, sometimes called supplemental medical policies, pay a fixed amount for each day a person is in the hospital. Not all indemnity policies cover children, and some that do pay a lower rate for days that children are in the hospital than they do for adults. There may also be a limit on the total number of hospital inpatient days a policy will pay in a calendar year or a cap on the total number of days it will ever pay. The money received from such policies can be used as the insured needs or wishes. It’s often used for medical costs not paid by the insurance company, or the other expenses that families face when one member is ill.

These supplemental plans don’t provide comprehensive coverage to treat a disease like cancer and they don’t meet the health care law’s requirement to have insurance. So, if this is your child’s only form of coverage, you will likely face a penalty at tax time. You could also have to pay huge out-of-pocket costs if your child has a serious illness. This is not a good option as the only coverage for a child with cancer.

How to manage your child’s health insurance

  • DON’T let your child’s health insurance expire.
  • Pay premiums in full and on time. New insurance can be hard to get and can cost a lot.
  • If you are changing insurance plans, don’t let one policy lapse until the new one goes into effect.
  • Know the details of your child’s health insurance plan and its coverage. Ask for a Summary of Benefits and Coverage (SBC), an easy-to-understand description of a plan’s benefits and the costs you will have to pay. If you think your child might need more coverage than a plan offers, ask your insurance carrier if better coverage is available.
  • When possible, call the insurer to make sure that any planned medical service (such as surgery, procedures, or treatments) does not require prior authorization.
  • If a bill looks odd or wrong, make sure to call or email your insurer to avoid being mistakenly charged more than you should.
  • Submit claims for all medical expenses even when you aren’t sure they’re covered.
  • Keep accurate and complete records of claims submitted, pending (waiting), and paid.
  • Keep copies of all paperwork related to your claims, such as letters of medical necessity, explanations of benefits (EOBs), bills, receipts, requests for sick leave or family medical (FMLA) leave, and any communication with insurance companies.
  • Get a caseworker, a hospital financial counselor, or a social worker to help you if your finances are limited. Often, companies or hospitals can work with you to make special payment arrangements if you let them know about your situation.
  • Send in your child’s bills for reimbursement as you get them. If you become overwhelmed with bills or tracking your medical expenses, get help. Contact local support organizations, such as your American Cancer Society (ACS) or your state’s government agencies, for extra help in finding resources.

Last Medical Review: 01/14/2014
Last Revised: 01/14/2014