Navigating Long-Term Care Insurance Elimination Periods

By Robin Lacrimosa, Life Care Coordinator

Not long ago, one of my clients—I’ll call her Kathy—came to me with an interesting question about a long-term care insurance policy she had purchased more than 20 years ago. Kathy was considering moving into an assisted living facility and she had found the legal language in the policy documents difficult to decipher. What, exactly, were her benefits? How could she make sure she was using them properly?

As a Life Care Coordinator at Kimbrough Law, I hear questions like this all the time. People are often confused about their long-term care insurance policies and there are very few places where you can go to get help.

After Kathy gave me her policy documents, I started reading. Her policy, like most, had an elimination period, which means the policy holder must pay for service out of their own pocket for a certain number of days before the policy starts paying benefits. Elimination periods can range anywhere from 20 to 90 days.

Kathy’s long-term care policy had a 20-day elimination period. If she moved into an assisted living facility, she would have to pay out of her own pocket for 20 days before the long-term care insurance benefits would kick in.

Was moving to the assisted living community the best use of her long-term care insurance policy, given the 20-day elimination period?

It was a question Kathy hadn’t thought to ask. Kathy hadn’t heard of an elimination period, nor did she realize that moving to an assisted living facility wasn’t the only way she could use her long-term care benefits.

Home care was an option for Kathy, but she hadn’t thought to consider it. I showed her how the elimination period might apply in a home care situation, and how that compared to the assisted living option.

We estimated that Kathy needed four hours of home care per day. In that scenario, her policy required her to self-pay those four-hour home care visits for 20 days. However—and here’s the catch—the days didn’t have to be consecutive. Kathy could receive this care over a much longer period.

In Kathy’s case, it was much cheaper to use her elimination period for home care. The home care provider charged $25 per hour, which totaled $100 per day. By opting for four hours of home care per day and stretching those days out over time, Kathy was able to satisfy her elimination period by paying just $2,000 out of pocket. In contrast, the assisted living facility Kathy had chosen cost $6,000 per month ($200 per day), which meant she would have paid $4,000 of her own money to satisfy her long-term care insurance policy’s elimination period.

For most long-term care insurance policies, you only have to satisfy your elimination period one time, as long as you are continuously receiving services. When the day comes that Kathy needs to move to assisted living, she will have already satisfied her elimination period, and her policy will pay benefits right away.

The moral of this story is simple. If you have a long-term care insurance policy, pay attention to the elimination period. Find out what it is, then think through all the ways you might satisfy it.

As a Life Care Coordinator at a Life Care Planning Law Firm like Kimbrough Law, I help my clients do this kind of analysis every day. If you could use this kind of support, Kimbrough Law is here for you. Just give us a call at 706.850.6910.