A long term care elimination period is often stipulated for long term care and disability insurance, and it serves a function similar to that of an insurance elimination period. The insurance elimination period, also known as the “deductible period” or “benefit waiting period,” is the period when patients or residents are responsible for their medical costs after a benefit is triggered.
Depending on the insurance policy, long term care elimination periods will vary. However, most elimination periods are between 30 to 180 days, with insurance providers offering several different types of elimination periods depending on the policy, including the following:
- Long Term Care Insurance Elimination Period: This insurance policy usually offers different elimination period options—20, 30, 60, 90, 180, or 365 calendar days. An elimination period typically applies to any covered service that starts on the first day seniors are admitted into a facility and receive medical services.
- Short-Term Disability (STD) Insurance Elimination Period: Depending on the insurance company, this policy offers a choice of elimination periods between zero to thirty days. It covers medical conditions that prevent people from working by supplementing a percentage of their weekly or monthly income. Most people will have short-term disability coverage through their employer. However, it is also possible to take out private insurance if this is not offered.
- Long-Term Disability (LTD) Insurance Elimination Period: This insurance policy applies to severe or permanent disabilities. The elimination period varies depending on the policy. Long-term disability coverage is available through an employer or purchased privately.
When seniors or their families are purchasing insurance policies, it is essential that they thoroughly research their policy elimination periods and assess whether a cheaper insurance policy outweighs the costs of an extended elimination period with increased expenses.
It is worth noting that policies will often differentiate between an own-occupation policy (the insurance must pay a benefit if the policyholder cannot perform their profession or specialty) and any-occupation disability (the insurance company only pays a benefit if the policyholder cannot perform any work at all, including simple tasks that are outside of their profession.)
Understanding the Elimination Period Long Term Care Context
While seniors and their families gather information about an insurance’s elimination period long term care policy, facilities must also understand the terms and conditions of different insurance policies so they can accurately bill the residents during the elimination period. Nursing home management software can aid in this by recording when the resident is admitted into the facility and what services are needed.
How benefits are triggered
The Elimination Period (EP) is the time period before an insurance policy pays out. It is also known as the policy’s “deductible,” which states the number of days on the “Schedule of Benefits.” How and when these deductible days are counted depends on the policy.
An EP functions as a waiting period, but it also counts the days of benefit eligibility for receiving accurate payment for care services. While some newer insurance policies only ask policyholders to submit one EP—combining the number of days in a facility and skilled nursing homes—older policies may ask policyholders to submit two separate elimination periods for different facilities.
How elimination periods are calculated
When long term care elimination periods start, they are usually counted in the following four ways:
- Calendar Days: An EP calendar day counts the number of benefit eligibility days. Some insurance policies start counting benefit eligibility only after the insurance company has approved the claim. In contrast, others may backdate the claim and start counting from the day a person is deemed “disabled.” Therefore, policyholders should file a claim as soon as they see signs of impairment.
- Service Days: This tends to be the most problematic type of EP for home care beneficiaries, as policyholders must qualify for benefit eligibility and receive and pay for home care services covered under the Service Day insurance policy. However, most policies exclude “informal” caregiver coverage (spouse or family members). Therefore, if the policyholder was cared for by an informal caregiver, those days will not count towards the EP.
Alternatively, if a policyholder receives home care services from an agency that do not meet the policy’s requirements, these days are also not counted. For example, if a policyholder has a 90-day EP that includes Service Days for home health, they must receive and pay for 90-days of home health services that are covered and approved by the policy before the insurance policy will pay out.
- Service Days with Credit: This is an alternative to Service Day policies. These policies are also called “Weekly EP” because they count paid, covered “days of service” towards the EP. However, they will also give policyholders a week of credit (seven days), providing the policyholder pays for one day of the covered care.
Again, the terms and conditions may vary depending on the policy, as some older policies require three days of paid, covered care before crediting the policyholder to seven days. Therefore, policyholders need to understand how many days of home health are necessary so that they can enter their claim on time and receive the appropriate Service Day credits.
- Zero-Day EP for Home Care: This policy is also called the “Waiver of EP for Home Care” because the elimination period for home health is set to zero days. This means that policyholders who qualify for benefit eligibility are covered by home health services starting from day one.
After seniors and their families understand how EP is counted, they can progress onto the next stage by assessing different insurance policies and finding the most appropriate one that best meets their needs.
Contact us here to learn how long term care software can accurately calculate resident billing and services.
Understanding Long Term Care Insurance with 4 Helpful Tips
It is inevitable that as people age, they will need long term care assistance. Seniors tend to suffer from multiple chronic conditions that require care, putting more demand on healthcare providers. However, despite the increasing need for more care, surprisingly, few seniors purchase long term care insurance.
In 2020, there were only 7.5 million seniors who purchased long term care insurance. Seniors who do not have long term care coverage will need to pay for long term care medical services out of their pockets or until their savings run out and they become eligible for Medicaid assistance.
Those investigating long term care insurance policies must know the ins and outs of the insurance policy before investing in one. Therefore, a part of understanding long term care insurance means understanding the market—which has been susceptible to change—and identifying misinformation about today’s long term care policies and what is included in the policy.
Below are some helpful tips for people who are shopping for an insurance policy:
- Look For a Short Elimination Period
Long term care policies with short elimination periods can save the policyholder a lot of money in the long run, as the seniors do not need to pay for medical services for a prolonged period. Most long term care elimination periods are for 90-days, which means policyholders can rest easy knowing that, beyond this time frame, they are covered by their insurance, making the benefit payments more manageable.
- Find the Right Daily Benefit Amount
When purchasing a long term care insurance policy, it is crucial to determine an accurate daily benefit amount. This allows policyholders to buy an appropriate insurance policy that covers all their needs without skimping on any services. Therefore, before taking out an insurance policy, a senior or their family should research the different facility prices in the local area to determine an approximate monthly bill. This will give them an estimate of how much long term care services would cost.
- Look for Policies With Inflation Protection
Some LTC elimination period policies will include inflation protection. This safeguards the maximum daily benefit without increasing the premium. The best inflation protection coverage will keep pace with rising care costs and automatically increase the benefit amount by five percent. Even though these insurance policies tend to be more expensive, the premiums remain a fixed price even if the benefit amount increases, making elimination period payments more manageable.
- Determine What Medical Services Are Included
When shopping for long term care insurance, it is vital to determine the elimination period long term care context, services, and what pre-existing conditions are excluded from the policy.
Some common exclusions include:
- Mental disorders, which would be detrimental if someone develops dementia or Alzheimer’s later in life and needs to pay out-of-pocket for assistance and care.
- Addiction (alcohol or drugs)
- Illnesses resulting from military service
- Previously paid for treatments by the government
- Self-inflicted injury and attempted suicide
It should also be mentioned that insurance policies differ widely in terms of the calendar day elimination periods and medical service coverage. Therefore, it is important to read the fine print and know the full details of the insurance policy before purchasing.
Why the Long Term Care Elimination Period Matters for Seniors
Before purchasing long term care insurance, it is advisable to assess several factors:
- Age and life expectancy
- Gender
- Family situation
- Health status
- Income and wealth
Unfortunately, most people are deterred from purchasing a policy because they do not understand the benefits and financial security long term care insurance policies bring. By assessing the factors above, one can determine the long term care insurance that best meets their future needs and purchase an affordable policy.
Low-income individuals may choose a policy with a low long term care elimination period as an effective way to safeguard their future when long term care assistance is needed. Some long term care elimination periods are between 60 to 90 days, meaning the policyholder only needs to pay for their care for this period. This takes a significant weight off anyone’s shoulders, knowing they will be cared for in the future.
For more on recent trends in long term care, read our blog and subscribe to the LTC Heroes podcast.
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