Background: Proposals for reducing Medicare spending include measures that increase beneficiary cost-sharing by regulating the extent of supplemental insurance. However, the financial burden on patients of such policies is unclear, particularly for health shocks such as cancer. To address this question, we used the Health and Retirement Study (HRS) to characterize the out-of-pocket (OOP) cost burden of newly diagnosed cancer and its relation with supplemental insurance. Methods: Medicare-eligible, community-dwelling HRS participants who did (N = 1409) or did not (N = 16,757) report a new cancer diagnosis from 2002-2012 were identified. Supplemental insurance was classified in order of increased cost-sharing as public (dual-eligible/VA), private (employer-sponsored/Medigap), or none (Medicare alone). OOP costs included hospital stays, doctor visits, outpatient surgery, prescription drugs, home health, dental, and special facilities. Financial burden was defined as OOP costs over per-capita household income. Multivariable quantile regression was used to assess the median and 90^thpercentile (p90) of OOP costs and financial burden. Results: Newly diagnosed cancer patients experienced increased annual OOP costs (median: $2222 vs. $1791, p < 0.001; p90: $10,420 vs. $7807, p < 0.001) and financial burden (median: 9.0% of household income vs. 7.4%, p < 0.001; p90: 51.0% vs. 42.4%, p < 0.001). Supplemental insurance significantly affected cancer patients’ median financial burden (public: 3.3%, private: 9.9%, none: 16.6%, p < 0.001), which was magnified at the 90^th percentile (public: 31.8%, private: 48.3%, none: 106.2%, p < 0.001). Importantly, financial burden at the 90^thpercentile did not increase following a new cancer diagnosis for patients with public or private supplemental insurance, but significantly increased for patients with Medicare alone (p90: 106.2% vs. 58.1%, p < 0.001). Conclusions: More than 10% of newly diagnosed cancer patients with Medicare alone faced OOP costs greater than their income. Proposals to increase cost-sharing in the Medicare population should include provisions that protect patients from health shocks such as cancer, potentially though OOP cost limits or value-based exceptions.