What Does the Elimination Period on Long-Term Care Contracts Mean?
Long-Term Care contracts have four main variables that are essential in it its creation: daily, weekly, or monthly benefit; years of duration; inflation option; and the elimination period. The elimination period will be our topic of discussion here.
The easiest way to view the elimination period is to see it as either a “waiting period” or a “deductible period” in some regards. Unlike a deductible period on a health or auto insurance policy where a monetary amount of out-of-pocket expense must be incurred on behalf of the insured before the insurer pays their portion of the claim, the elimination period is both a time period that needs to be satisfied with a variable monetary amount paid throughout that period.
After the carrier has received a letter from the insured’s primary care physician stating that the insured has had difficulty performing at least two of the six activities of daily living, or has been diagnosed with some form of cognitive impairment, the insurer will be willing to start the elimination period.
The most common elimination period is 90 days. Most insurers have “service day” elimination periods where the insured must spend out-of-pocket a certain minimum amount per day (usually $50) to a care professional for 90 days and submit those receipts to the carrier to “prove” that they needed care for at least 90 days. Once the carrier has received those receipts then the elimination is “satisfied” and the insured can start receiving benefits.
A few carriers have “calendar day” elimination periods. Once the carrier has received a letter from the insured’s doctor and at least one day of care has been shown to have occurred, if the calendar elimination period is 90 days, then 90 days from those two documents the carrier will be required to start paying out the claim regardless of whether any additional out-of-pocket expense was incurred on behalf of the insured. No receipts are required for submission to the insurer during the elimination period.
Very few carriers waive the elimination period. Some will have an additional rider that can be added in the contract to waive the elimination period for care at home for an additional cost, but the insured would still be required to satisfy the contract’s elimination period if they were to go into a facility.
There’s a lot of information to know about purchasing a Long Term Care policy and the elimination period is only one small piece.
About the author: Kyle McDonald holds FIC, FICF, FSCP® & CLTC designations. His viewpoint on life insurance is simple, “Anyone with a family must have life insurance. In the end, life insurance is for others you care about, not you.” He is ready to help you and your family get the best option available. Contact Kyle today at 1-800-651-1953 or KMcDonald@Pivot.com.