In a long term care insurance (LTCI) policy, the elimination period is often referred to as the policy deductible. In many ways it is similar to the deductible used in major medical insurance policies. One significant difference is this: rather than a certain dollar amount that you will initially pay for your own care expenses, there is a specified number of days for which you will be the one responsible for your own care.What are My Options? These days very few carriers offer a zero-day elimination period. The most common choices are 30, 60, 90, 180 and 365 days, although these periods differ from one carrier to another carrier. The choice of 180 or 365 days is most often made by those who have significant assets of their own. Selecting a longer period helps them keep the cost of LTCI extremely low.
Even if one chooses a 90-day elimination period, the amount of funds put at risk is miniscule when compared to the asset protection afforded by the policy’s total pool of benefits.What is a Reasonable Choice for an Elimination Period? Some of the popular financial authors suggest setting it as low as possible, perhaps even at zero. It’s true that once the elimination period is short, the less likely it is that you will have to pay out when the time comes for you to begin receiving continuous care.
On the other hand, low elimination periods can have a dramatic effect on the premiums that you pay throughout the life of the policy. Usually some form of compromise is necessary for the sake of affordability. In deciding the elimination period, many policyholders remember that insurance is often used as a way to avoid extremely dangerous financial losses rather than insuring against every possible expense. Accepting even just a small portion of the risk involved can be a reasonable and economical choice for most individuals.
The Smartest Thing You Can Do: What’s right for most people, however, may not be right for you. In deciding on the best elimination period for your particular situation, it is prudent to consider what the expenses would be for the most expensive assisted care that you may have to receive, which is most often facility care. Once you have a good idea of the daily costs for facility care in your area, simply multiply the costs by the various elimination period choices and determine the amount that you feel is affordable.
Once you have decided on the elimination period that will best fit your situation, earmark those funds for your care, and then let them grow, so that they keeps pace with inflation, at the very least. Using a little financial common sense goes a long way toward making a wise decision about the LTCI elimination period.
