How Financial Planning Can Help Treat the ‘Financial Toxicity’ of Cancer

A cancer diagnosis is never something anyone is ready for, but when it happens, the effects can go well beyond the physical and emotional traumas that turn lives upside down. 

There are financial aspects that, if not addressed, can affect quality of life and even survival rates. Having a financial planner in their corner can help patients organize, ensure they’re getting the most from their benefits and prepare as much as possible for whatever comes next. “With cancer, you get diagnosed, and then there is this few-week window before they start treatment,” said Dr. Carolyn McClanahan, a physician and financial planner. That’s a critical time for putting a plan in place, as “once you start treatment, it can be a drain on your physical and mental health.”

The National Cancer Institute has a term for devastating financial consequences resulting from the high costs of medical care patients and their families face: financial toxicity. While it’s inherently financial in nature, the stress it causes has real medical implications. That makes financial planning incredibly important, especially for those struggling with the high costs of care:

• A pilot study of 107 patients being treated for blood cancers found that comprehensive planning resulted in higher mental and physical quality of life, among those experiencing financial toxicity.
• Among patients facing a variety of high-risk diseases, along with financial toxicity, those who received financial planning intervention were 56% less likely to die during the course of their treatment.

One Journey

No one may be more familiar with the need for that than Matthew Wolniewicz, the president of Income America and someone well-known as a friendly face in the retirement-planning business. He was successfully treated for non-Hodgkin’s lymphoma in 2018. But last year, after what initially seemed to be a stroke, Wolniewicz found out that the cancer had returned. Now, it’s in remission, and he’s nearing his six-month appointment following a stem-cell transplant in March. “Once you hit the five year mark — it’s considered the gold standard — you’re really considered to be cured … It was pretty shocking that it came back,” he said. “From a financial planning standpoint, it was kind of crazy.” 

Even though both he and his wife, Athena, meet with their advisor every six months, they couldn’t access his accounts following his first trip to the hospital last year. “She didn’t have any of the passwords to any of the accounts, and I couldn’t log into my computer when [the cancer] came back, because I didn’t remember my password,” Wolniewicz said. “You have to have a plan in case you become incapacitated … That was one of the things I learned.”

What makes the topic more salient than ever is that cancer rates have mysteriously been trending up worldwide among people younger than 50. More than ever, young people are being diagnosed with colorectal, breast, prostate, uterine, stomach and pancreatic cancers, among other types, according to the Memorial Sloan Kettering Cancer Center. Going through cancer — or other debilitating diseases — can mean taking time out of the workforce during one’s prime years for earning and saving. And the costs can be overwhelming, even for those with insurance.

“I had serious cancer this year myself, and within the first week, even though I have good insurance, I had well over $1,000 out of pocket,” said Jon Dauphiné, CEO of the Foundation for Financial Planning, which supports pro bono work for at-risk groups. “Most Americans don’t have $1,000 in a savings account for emergency expenses.” Since the nonprofit began working with several partner organizations in 2018, it’s helped provide financial planning to 3,500 cancer patients through about $700,000 in grants, Dauphiné said. 

A Calming Presence

The framework the group promotes is three meetings with patients. Taylor Jessee, a financial planner at Impact Financial, has two or three pro bono clients a year who are going through cancer treatment. “Every case is different,” said Jessee, who works with Virginia-based Cancerlinc, one of the organizations that has a partnership with the Foundation for Financial Planning. People often have high-level budgeting questions or want to know which accounts they should prioritize for paying expenses, he said. “These are heartbreaking situations. The majority of Cancerlinc patients are low-income families. They’re working with lower resources.” 

For those already working with an advisor, and who often have more resources, it’s helpful to tell them to breathe and that they can’t necessarily solve the financial problems of a cancer diagnosis all at once, Jessee said. “You definitely have to approach it from a more sensitive, empathetic angle, understanding that these folks have gotten a really scary diagnosis,” he said. “What I try to do is be a calming presence.”

Life Interrupted

One of the first things patients need to consider is using the Family and Medical Leave Act after exhausting their vacation or sick time to ensure they don’t become unemployed, McClanahan said. After 12 weeks, FMLA coverage is exhausted, and people may need to pay for health insurance through COBRA, which lasts for 18 months, she noted. “Hopefully a person has disability insurance. As soon as they are diagnosed … they need to go ahead and start filing claims,” she said. 

And there are other resources they may be able to tap, she said:

• Out-of-pocket costs associated with care, including things like travel to treatment centers, can be itemized on tax returns.
• IRA owners may be able to take early withdrawals without penalties for medical expenses that are above 7.5% of their adjusted gross income.
• Patients can also claim Social Security disability, and the program’s compassionate allowance program, which applies to hundreds of illnesses, can help fast-track their applications.

In some cases, employers may be able to help as well. One client, who is a dentist, had an employee get diagnosed with a terminal cancer, and her office did not provide any life insurance benefits at the time, McClanahan said. “She ended up buying group life insurance for all the employees, which there is no underwriting for,” she said. “This employee was able to get $50,000 of life insurance benefits.”

Beyond a thorough review of a client’s finances, including insurance, advisors should visit estate plans, make sure there are powers of attorney in place and ensure patients have good advance directives, she said. As diseases progress, family members often make poor choices that needlessly increase costs, she noted. “Be clear about what your quality-of-life and end-of-life choices are.”

Reach Out. Income America’s Wolniewicz, who has been open on social media about his bouts of cancer, recently returned to the conference speaking circuit. It’s been humbling to connect with people who have been following his journey, he said. A word of advice for anyone who learns a person in their life has cancer: “Don’t be afraid to reach out,” he said. “You may not hear back. But just knowing that people care makes a difference.”