What’s a Long-Term Care Insurance Elimination Period?

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An elimination period (EP) in a long-term care insurance policy is the waiting period or number of days that you are considered “benefit eligible” and typically receiving care, but before you start to receive payment for services.

Think of an elimination period like your deductible on your car insurance, except it’s measured in time instead of a dollar amount.

During this time, you must self-fund your long-term care (LTC) costs before benefits can begin. Your EP is determined at the time you purchase your policy. This waiting period could be 0 days up to 365 days. The most common EP is 90 days, although some carriers have a zero day EP for home care with 90 days for facility care.

Benefit Eligible

What does “benefit eligible” mean? Tax-qualified policies sold since 1997 will require specific “benefit triggers” for benefits to be paid out. There are two ways to be benefit eligible in a tax-qualified policy:

  1. Physical impairment – If you need substantial assistance with at least 2 out of the 6 activities of daily living (transferring, toileting,          bathing, dressing, eating, and continence) OR
  2. Cognitive impairment – If you have a deterioration or loss in mental capacity which requires substantial supervision to protect yourself  or others from threats to health and safety. Alzheimer’s disease is an example of a cognitive impairment.

You only need to have a physical OR cognitive impairment, NOT both.

Calendar Days vs. Service Days

Calendar Days

A calendar day method is typically the most desirable, but the least common.

There are 2 specific ways a company may count the calendar days:

  1. The EP clock starts after you’ve met the benefit triggers and are considered “benefit eligible” and AFTER the first day of service started.
  2. The EP clock starts after you’ve met the benefit triggers and are considered “benefit eligible” and BEFORE before the first day of                        service.

Using a calendar day method, if you only receive care 2 days a week, the full 7 days of the week still count towards the elimination period.

It’s important to know most cash indemnity policies use a calendar day EP.

You can use a professional caregiver or family member during the EP. However, a professional caregiver during the EP will likely properly document care more effectively than an informal caregiver.

Service Days

A service day method is the most common EP. The EP clocks starts after you’ve met the benefit triggers and AFTER you receive the first day of approved, professional LTC services. Only the days that you pay for services covered by the policy count towards the EP.

If you receive care from a family member or informal caregiver, that does not count towards meeting your EP. If you receive care services just 2 days per week, it will take longer to fulfill your EP than if you receive services 5 days per week.

If you choose a policy that has service days, just make sure you understand it will take you longer to receive benefits if you aren’t receiving care every day.

2 Variations of Elimination Periods

There are also 2 variations that an insurance company may use to count the EP: “service days with credit” and “0-day EP for home care.”

Service Days with Credit

The “service days with credit” requires you to receive professional LTC services like a typical service day EP, but this will give you a full week’s credit of 7 days even if you only have 1 day of care.

0-Day for Home Care

The “0-day for home care” simply means you there is no waiting period. You can receive benefits day one if you’re benefit eligible.

File your claim as soon as you are benefit eligible, so that the EP clock starts.

If you can customize your EP, generally a shorter elimination period will have a higher premium and a longer elimination period will have a lower premium. Think about what you can afford to pay out-of-pocket during that time. Not all policies allow you to customize the EP. The most common option is a 90-day elimination period.

The Bottom Line

Make sure you know how your policy calculates an elimination period, using a calendar day OR a service day method AND if they require you to meet the EP just once in your lifetime or for each episode of care. Most insurance companies require you to meet the EP just once during the policy. In both the calendar and service day methods, you’ll need to self-fund your care costs during the EP before benefits begin. Understanding what type of elimination period you have will help you be prepared at claim time.

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