Cancer and Financial Planning
- The financial toxicity of cancer can wreak havoc on our budgets.
- There are important documents to get in place or update after a diagnosis.
- Asking tough questions now can save your loved ones time, money, and heartbreak in the future.
Unfortunately, it’s one of the harsh realities that must be faced along with the disease.Read More
Cancer treatments are expensive, even with insurance. Some people lose income as they’re unable to work and/or they must pay for childcare while undergoing treatment. Even the cost of parking at the hospital can add an extra burden to any available funds. Often referred to as the financial toxicity of cancer, it can take a toll on anyone’s budget. A diagnosis also can serve as an impetus to get important financial matters in order, and to think about our long-term finances.
Paul Karger, co-founder and managing partner of TwinFocus, a premier financial advisement firm with offices in Boston and London, spoke with SurvivorNet about financial steps people may want to consider when they’re diagnosed with cancer.
“Interestingly enough the whole world has faced this similar topic with this pandemic,” he told SurvivorNet. “People wake up and realize that whether you have significant means or not, there are still some basic planning items it makes sense to have in place, especially if you have children.”
No one likes to think about what will happen when they’re gone, but a will, which is a legal document that outlines how you want your assets distributed and affairs managed after you die, can save your loved ones time and money and make sure that your wishes are honored. When facing a diagnosis, Karger says there are three important designations to make:
This involves choosing someone who is capable of closing up your estate should you pass away. It could be a spouse or a child that’s mature and responsible. Karger says in many cases people will name the attorney as the representative.
If a person has minor children, the other thing to think about is a guardian. Karger encourages people to inform/ask the people they’re designating as a guardian so there are no surprises.
Health Care Proxy
This is a person the hospital can call on to make decisions about your health care and treatment. Karger said this is often a spouse, adult child or good friend, but that it should ideally be someone that’s in close proximity to where you live.
Durable Power of Attorney
You want to choose someone who can make financial decisions on your behalf should you become incapacitated. It should be someone who is financially savvy and may not be the same as your personal representative or healthcare proxy.
Beyond a Will, Consider a Trust
Beyond a will, if you have more than average assets, such as retirement accounts, property and other investments, you may want to establish a revocable trust. Karger says this is a more involved document than a will. You can change the terms of it while you’re alive, but upon a person’s passing it becomes irrevocable, meaning it can’t be changed. It, unlike a will, is a way to avoid probate court, and assets are immediately transferred to those whom you name. Note, however, that some of the rules regarding trusts vary by state.
“The big thing is thinking about who you want to represent you in these various capacities,” Karger told SurvivorNet. “And the beauty of all these estate planning documents is that they’re all revocable, so you can change them anytime. The important thing is to get something down on paper. You can always change it.”
Karger says that changes in the administration could change estate laws as well. Under President Trump, the tax exempt gifting limit nearly doubled, and there’s concern that with Joe Biden in the White House it may it be overturned and again reduce the limit on the lifetime irrevocable gift tax exemption.
He notes, however, that parents can pay directly into their adult children’s healthcare expenses without tax implications as those payments don’t contribute to their lifetime gift limit.
Related: Susan G. Komen CEO Says Breast Cancer Doesn’t Discriminate, but the Current Healthcare System Does: “Everyone Deserves to Live.”
What to Do About Investments
If you have investments, you may wonder if you should be more or less conservative in your approach after a diagnosis. Karger says there are differing schools of thought. He says by and large, people tend to get more conservative. They want to keep as many funds as possible on hand and aren’t as willing to take risks that may not pay off. There are others, however, who decide to take as much risk as possible in an attempt to maximize the amount they leave for the next generation.
In other words, there’s no right or wrong answer. It’s largely a matter of personal preference and individual circumstances each individual should weigh. A professional financial advisor can help.
Budgeting for Treatment
When it comes to paying for treatment, the bills can feel overwhelming. While there are resources that may help in some cases, Niv Persaud, managing director at Transition Planning & Guidance LLC, in Atlanta, Ga., said there are some other steps those diagnosed with cancer may want to take.
- Calculate deductibles and estimated out-of-pocket costs for medical treatment.
- Total the amount you have available in your emergency reserve, health savings account, and flex spending account.
- Tighten your budget by reducing or eliminating non-essential expenses. Look at money spent on shopping, food delivery, entertainment, subscription services, etc.
- Review your payroll deductions and reduce or eliminate those that are optional where it makes sense. Some pre-tax deductions will have minimal impact on your take-home pay. Before making any changes, ask your HR contact to calculate the impact.
Should you ever borrow from a retirement plan to pay for treatment? Karger said there are no hard and fast rules.
“Personally, I think when you’re faced with a life threatening illness, your health is number one,” he told SurvivorNet. “You do whatever you have to do.”
There are also many financial resources available to cancer to patients that can help pay for costs associated with treatment, transportation, drugs, and other related expenses. Knowing how to find them, however, can be overwhelming after a diagnosis.
Sara Goldberger, president of the Association of Oncology Social Work (AOSW), said oncology social workers can help. Many people, however, don’t know to ask if a social worker is available to them and aren’t aware of the resources they can help them find.
“There are a wealth of organizations and opportunities to help people with the costs of cancer,” Goldberger said. “Obviously, it’s a very deep well of need, and there’s not help for everyone in every situation, but knowing to ask is so important for patients and families.”
She said there are state and federal programs like Medicare, Medicaid and unemployment that many people don’t know they’re entitled to. There are also hospital foundations that raise money for patient assistance, support from advocacy groups and patient assistance plans sponsored by pharmaceutical companies to help provide free drugs or funds to assist with copays. A social worker can help patients find ones for which they qualify.
She said if a social worker isn’t available through your care center, she would encourage people to call on the advocacy community. There are national, regional, and local organizations that can help patients find the resources they need.
“Being your own best advocate is so important,” she said. “Figure out what you need and ask people for resources. There is a lot of need, and people are stressed out and struggling. COVID clearly didn’t make it any better, but there is money out there to help.”