Long term care insurance has a feature called an elimination period (EP), which is a length of time during which an injury or illness begins, and receiving benefits from your long term care policy starts, also known as the waiting or qualifying period. Expenses for this period of time are out of pocket.
The EP can be thought of like a medical or automotive insurance deductible. Instead of paying a dollar amount before your benefits begin, you must wait a number of days (based on what you apply and are approved for) before your coverage will begin to pay out. However, some policies have a cash benefit or waive the elimination period altogether for care at home. This can help cover some of the cost during this period.
You should know your options and the terms before you buy. Many carriers offer a broad spectrum of days for an EP, ranging from 0-365 days and even longer. Of course the policy with the shortest EP will carry the most expensive premium rate. This is due to the fact that the carrier is incurring more cost the sooner you go on claim. In contrast, the policy with the highest EP supports a much lower premium rate, but will require you to pay more out-of-pocket during that waiting period.
Based on an evaluation of about 2,000 of our applicants, 96% selected a 90 day elimination period.
Ninety days is also the time frame of which many carriers require a licensed health care professional sign-off stating you are unsuccessful in completing 2 out of 6 activities of daily living without help.
Examples of activities of daily living;
- Transferring (moving to and from a bed or a chair)
- Caring for incontinence
- Cognitive impairment
Another important distinction between elimination periods is calendar days versus service days. This is how the days of your EP are calculated. Calendar days means the clock starts day 1 and on the 91st day your policy will begin paying regardless of how many days you received care. With service days, only the days you received care will count toward your EP days. You can think of it as a pay as you go. If you receive home care for 4 days a week, and choose an EP for 90 days, that would spread your EP out over 22 weeks (5 months).
How do you know how much you will likely spend during an elimination period?
If your policy has a $280 daily benefit and you choose a 90 day EP, assume care will be $280 a day during your EP. $280 x 90day = $25,200, so you will be responsible to pay for the first $25,200 of care cost.
Who wants to worry about out of pocket expenses once a life changing event has happened? Certain carriers offer a zero-day elimination period used for care received in the home. You can receive care the first day and these days will be used toward satisfying any other EP days, should you need to move to a facility later. Working with a specialist in long term care insurance can help you make the right decision for the type and length of elimination period that fits your needs. We have some of the best specialists in the country available for your questions and quotes.
LTC Consumer is an independent, free online service to help consumers understand what long term care insurance is, how it works, and how to evaluate coverage options. Our mission is to provide an educational, no-pressure resource for learning about long term care planning, with the opportunity to speak with specialists who can help them.