The cost of cancer treatment has garnered more headline attention since the Food and Drug Administration approved Bristol-Myer Squibb Co.’s drugs Yervoy and Opdivo for the treatment of advanced melanoma in October 2015. The drugs work in combination to boost a patient’s immune system…and cost more than $250,000 per year.

Other oral cancer drugs can be nearly as costly. A University of North Carolina study published in JAMA Oncology found that new oral cancer drugs approved in 2014 cost an average of $11,325 per month versus $1,869 per month for those approved in 2011.

Drugs represent only a portion of cancer’s cost. The American Institute of Cancer Research (AICR) estimates cancer costs $895 billion annually. Most of these costs result from loss of life and productivity, which account for 1.5 percent of global gross domestic product (GDP) losses. Direct healthcare costs account for some 10 percent of that, or $88.7 billion in 2011, estimated the Agency for Healthcare Research and Quality (AHRQ).

Cancer is the second leading killer in the U.S., accounting for 25 percent of all deaths. Half of all men and a third of all women will receive a cancer diagnosis at some point in their lives. Employers can take several positive steps to reduce the impact and cost of cancer.

Cancer patients can also have expenses that aren’t limited to medical bills. They might miss work, require additional help around the house and have extra transportation expense. Disability insurance can replace a portion of an employee’s income when he or she cannot work due to a covered illness. And cancer or critical illness insurance can help employees with some of their other expenses. These policies pay benefits directly to insureds when they receive a diagnosis of a covered illness. This means insureds can use their benefits for whatever they need—whether covering deductibles and copayments, paying for transportation expenses or covering the income of a spouse who loses work to provide care.

Employers can provide both disability and critical illness insurance on an employer-paid or entirely employee-paid (voluntary) basis. For more information, please contact us.

What to Look for in a Critical Illness Policy

Benefit Paid Per Covered Illness: As indemnity policies, critical illness policies pay a flat amount when a policyholder is diagnosed with a covered illness. Policies may pay a lump sum or over a specified time period. Benefits typically range from $10,000 to $100,000 per incident.
Conditions for Payment: Claims must meet certain criteria before the policy will pay. For example, some policies require a heart attack patient to survive a certain number of days before they will pay benefits.
Exclusion or Limitation Periods: The number of days after policy issue before the policy will pay benefits. In some states policies will pay benefits only after 30 days; in others after 90 days.
Renewability: Look for a guaranteed renewable policy. You can keep a guaranteed renewable policy for life as long as you continue to pay premiums on time.
Level Premiums: Many critical illness policies offer level premiums throughout the insured’s life. This means the policyholder pays the same amount, regardless of changes in health status. (But state regulators might permit an insurer to increase rates if it increases rates for all insureds in that rating group.)
Optional Benefits: Some policies offer optional benefits, such as a return of premium provision. Under this provision, the insurer will return all premiums paid to the insured’s estate or beneficiary if he/she never suffers a covered illness. The refund will not include interest and the cost of any claims paid.