Whether we want to admit it or not, long-term care will be a critical aspect of our healthcare needs. We might need assistance with daily living activities, in-home care, or even need to move to a nursing home. If that wasn’t enough, we’re also expected to understand the intricacies of insurance, including the elimination period in long-term care policies.
The elimination period can have a substantial impact on your out-of-pocket costs if you do need long-term care services. Today, we’re going to take you through the details of the elimination period, how it impacts your coverage, and how to choose the elimination period duration that works best for you.
First, let’s run through a little refresher on what long-term care is. Long-term care refers to a variety of services that help take care of our personal and medical needs when we are no longer able to - or at least when we need some assistance. Long-term care services help people continue to live as independently (and safely) as possible.
Long-term care isn’t just for the elderly, though it’s certainly not uncommon for us to need long-term care the older we get. Other people who may need these services include those with chronic illnesses or disabilities. It provides assistance with activities of daily living (ADLs) like bathing, dressing, eating, using the restroom, and transferring from beds or chairs.
As you can imagine, long-term care is often expensive. Costs of long-term care vary based on the type of care you need, where you receive it, and how long you need it. In 2020, the average cost for a semi-private nursing home room was nearly $100,000 per year. Ouch! That’s why today, we’re talking about one of the critical aspects of long-term care health insurance - the elimination period.
The elimination period is also known as a “waiting” period or “qualifying” period. It’s a specified amount of time that begins at the start of a disability when no benefits are paid by the insurance carrier. Basically, it’s a period of time that you’ll be responsible for all costs associated with your care - kind of like a deductible in other health insurance policies.
Long-term care elimination periods range from zero to 100 days, and they usually only happen once over the life of the policy, not annually, as you’d see with a deductible. The length of the elimination period impacts the monthly premium and the overall benefit the policy provides.
As an example, if your policy had a 30-day elimination period and you needed long-term care, you’d be responsible for all costs during the first 30 days. After that, benefits begin.
What many people don’t realize is that an elimination period doesn’t always begin when you enter a nursing home or other facility. Rather, it starts when a healthcare professional certifies that you are chronically ill and need substantial assistance with at least two ADLs.
We now know that the longer your elimination period is, the more you’ll have to pay out-of-pocket. However, longer elimination periods have lower monthly premiums. It’s important to weigh the risks of a longer waiting period versus lower premiums.
Imagine having a 90-day elimination period, and you suddenly need long-term care. Considering the costs we discussed earlier, you could be responsible for tens of thousands of dollars. If you’re willing to pay a slightly higher premium up front, you could save yourself a lot of money in the long run. You should consider things like your current health status, family history, and budget when choosing your long-term care elimination period. Let’s talk about that next.
Unless you have a crystal ball, it’s not easy to predict when and if you need insurance for long-term care. Should you pay more for a shorter elimination period or risk not having the coverage when you need it? No one can know which decision is the right one, but there are some key factors we’ll consider to make an informed decision.
Financial Resources: Do you have other financial resources or assets that can help pay for costs during a longer elimination period or would higher (but consistent) monthly payments be more manageable?
Support Network: Sometimes, long-term care services can be provided in your own home. If that happens to you, do you have a support network who might be able to help you during the elimination period?
Health Status and Family History: Looking at long-term care insurance overall, let’s think about your current health status and family history. How likely do you think it is that you’ll need long-term care? What have people in your family experienced?
Risk Tolerance: Are you comfortable with a long elimination period? If so, a lower monthly premium may allow you to save and invest more money now so it’s there when you need it later.
At Local Medicare Specialists, we understand how difficult it is to navigate long-term care planning. That’s why our team of experts is here to guide you through the process. Find a local insurance agent near you and get peace of mind today.
Schedule a FREE Medicare plan consultation with an agent in your neighborhood.
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We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area which are United Healthcare, Aetna, Humana, Cigna, Blue Cross Blue Shield of Arizona, Centene, Devoted, and Scan. Please contact Medicare.gov, 1-800-MEDICARE, or your local State Health Insurance Program to get information on all of your options.