Long Term Care Insurance - Calendar days Vs Service days?

Long Term Care Insurance

Since November is National Long Term Care Insurance Awareness month, let’s talk about a detail in long term care policies that can be confusing. All long term care policies have an “elimination period”. This is the period of time you would expect to self fund your own care before the policy takes over. This seems simple enough, however there are two types of elimination periods out there.

Most life insurance carriers offer a “service day” elimination period. What does this mean? Simply that you have to satisfy a certain amount of individual days of care, where you paid the bill. Keep in mind, most people are going to rely on Medicare for the beginning part of care. Medicare is a federally funded program, but it’s administered on a state-by-state basis, so the rules for every state are slightly different. For the most part, each state will pick up the first 20 days of your “custodial” care, then there is a deductible from day 21 to day 100. After day 100, if you don’t have long term care insurance, you would be self funding (paying out of pocket) your care from that point on.

You’ll see that most contracts are written with a 90 day elimination period for this reason. When you start to lose your independence you’ll rely on Medicare for those first 20 days, gladly pay the deductible from day 21 to day 91, then have your long term care policy take over.

Seems simple, but consider this. Let’s say you’re only getting care 2 days a week. With a “service” day elimination, within a month, you’ve only satisfied 8 days toward your 90 day elimination. Most people don’t go flying from their homes into a skilled facility, the care they need is gradual. So this could drag on for awhile until the 90 days of service are satisfied.

Now let’s look at the alternate approach. A carrier like Mutual of Omaha has what’s called a “calendar” day elimination period. What this means is that, once you’re able to trigger the policy and you go on claim, the clock will start ticking for 90 consecutive days in a row. This means you’ll go through your elimination period a lot faster than if you had a service day contract. It’s a small detail and one that gets overlooked, but it has a profound impact on how your policy will start paying out at the time you need the care.

So take careful consideration when you’re looking at long term care insurance policies to find out if their offering a “service” day elimination period versus a “calendar” day elimination period. 

About the author: Mark Yurkovic has been in the life insurance business for over 12 years, and holds CLTC, LUTCF, and CES designations. He enjoys building remote control boats, and playing instruments including the piano, guitar, banjo, and mandolin. Mark would love to discuss life insurance options and work towards finding the best policy fit for your family. You can contact Mark at 1-800-651-1953 or MYurkovic@Pivot.com.