When Does Long Term Care Insurance Kick In?

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   William Bridgers

   Specialist, LTCi, DI, Annuities, Life, Designs In Life, LLC, Utah

   Similar to disability income insurance, long-term care insurance has an "elimination period".  This is like a "time deductible" during which one has to pay out-of-pocket for care costs while satisfying the elimination period.  Elimination periods are chosen by the applicant and are usually 30-, 60-, 90-, 180-, or 365-days.  The longer the elimination period, the lower the premium.Some carriers provide a 0-day elimination period for home care, either as part of the policy or as an extra-cost add-on rider.  If a person goes on claim at home, they may receive approved claim payments (reimbursement plan) or cash (indemnity plan) as soon as they are declared eligible for payment by the carrier.  The contract indicates what the insured needs to submit to the carrier in order to be approved for payment of care costs or to receive a cash payout.There are two ways an elimination period may be satisfied:      - Service Days.  The insured must pay for care on any given day in order to satisfy one day of the elimination period.  For example, the insured has chosen a 90 day elimination period.  The insured must pay for long-term care services out-of-pocket for a total of 90 days (they do not have to be consecutive) before the elimination period is satisfied.  If the person is paying for home care, satisfying the elimination period could take longer than 90 consecutive days if care is not needed on any given day or days.  Carriers may have different ways of calculating the fulfillment of the elimination period using the "service days" method.       - Calendar days.   The elimination period is satisfied when a majority of days during the elimination period required care and the insured paid out of pocket.  In other words, the insured does not have satisfy the elimination period with days where services were paid out of pocket.  Each carrier defines how the elimination period is satisfied using the calendar day method.  This method is often offered as an additional cost rider.If a person goes immediately into a full-service nursing facility, the elimination period will be fulfilled as care is received.  All facility care will need to be paid out-of-pocket by the insured or the insured's family during that period of time.  It won't matter that much which type of elimination fulfillment method is used in such a case unless the person leaves the facility before the elimination period is fully satisfied.Some carriers do not offer a calendar day method for satisfying the elimination period.  Some have a choice between the two.  Some carriers only have a calendar day elimination period.  Once the elimination period is satisfied in full, it does not have to be satisfied again. Since the way a carrier allows for the fulfillment of the elimination period can be the difference in hundreds - if not thousands - of dollars in out-of-pocket payments, the prospect for long-term care insurance should make this a priority question before choosing a carrier.  Be sure that you read the section of a specimen or sample policy on "Payment of Claims" so that you understand how the proposed insurance company defines "when long-term insurance kicks in".

   Answered on July 8, 2013

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