Available LTCi Elimination Period Options for Your Clients

Choosing the most appropriate elimination period of the long-term care insurance (LTCi) policy requires careful consideration.  The elimination period refers to a specific period of time before the LTCi policy will begin to pay benefits or reimburse the cost for covered care to the insured that has become eligible to receive them. Meanwhile, insureds will be responsible for paying the full cost of their long-term care during the elimination period (also called the waiting or deductible period).

Because most LTCi policies provide a variety of options when it comes to the elimination period, it is important for producers to help their clients find the one that is most appropriate for them. The elimination period varies from one provider to another but the typical options are 0 days (a rarity), 30 days, 90 days, 100 days, 180 days and even 365 days.

A policy with zero or no elimination period means the claims or payment process for covered costs begins on the first day the insured meets the eligibility triggers. In contrast, a policy with an elimination period of 100 days requires the insured to pay for those services for that long.

Because elimination periods can be expensive, it is important to pick one that the client can afford throughout the life of the policy - which may cover several decades. While some advisors recommend setting the elimination period as low as possible, it can have a significant effect on the premiums. Clients with significant assets may opt for longer elimination period in exchange for a much lower premium rate.

How the elimination period days are actually counted is another matter that must be verified before making a decision because the number of days before the policy actually begins paying benefits could be much longer than expected.

For example, in the "calendar day" definition, each calendar day counts toward the elimination period starting from the time the insured has been certified as being chronically ill, even if no formal long-term care services have been received. In a 30-day elimination period, the insured may get informal care from family or friends and receive payment or reimbursement of benefits after 30 days. In another method each home care visit per calendar week is counted as seven days toward the policy's elimination period so payment begins much sooner than the 30 days.

Other policies may count only each day that the insured actually received long-term care. If the patient received home care three days per week, it could take 75 days or 10 weeks before the 30-day waiting period is satisfied. If the insured is in a nursing home, he or she would have to pay the cost of care for the first month.

Typically, the premium might be higher for polices that are more liberal than policies that enforce stricter terms. In many cases the insured needs to make some form of compromise on the features to make the policy as affordable as possible.

Some companies are now offering an elimination period that is a compromise between benefits and price. The LTCi carries a 90-day elimination period for facility care but has a zero elimination period for home care. This is an excellent option for people who want to receive care at home initially before moving to a nursing home at a later time. Basically the policy provides some type of first-day coverage but at a much affordable rate of a 90-day elimination period.

Which is the best option for your client? One way of determining the best elimination period is to identify the client's most expensive care that he or she may require - often this is the cost of facility care where the insured plans to receive the care. After computing the daily costs for facility care that value is multiplied by the various elimination period options to see which plan is most affordable while providing the most financial protection.