LONG TERM CARE POLICY OPTIONS
The Long Term Care “elimination period”, also known as the deductible, is similar to deductibles with other types of insurance coverage, such as your homeowner’s or automobile insurance. But instead of being defined as a dollar amount, the elimination period is defined as the day between the time you begin to need care and the time the long term care policy begins to pay benefits. The more days you are willing to pay for your care out of your pocket before the policy begins paying benefits, the lower your premiums will be. The most common Long Term Care policy elimination period options are: 0, 30, 60, 90 or 180 days. These options vary somewhat from policy to policy and state to state. Policies with a 90 day elimination period are the most common.
The elimination period can be defined one of two ways, either in Calendar Days or Service Days
Calendar Days Method: With the Calendar Days method, for example if you had purchased coverage with a 30 day elimination period, On the 31st day of your need of care the long term care policy would begin to pay the benefit amount, even if you do not receive care on every day. Some companies include Calendar Days in the policy automatically, and with others require an extra premium for the luxury of having calendar day elimination periods.
Service Days Method: Other companies use a days of service method, whereby an elimination period day must be a day that care was actually received. If you only required care 3 days a week, then it would take 10 weeks (3 days/wk x 10 wks = 30 days) or 70 days to meet your elimination period.
Monthly Benefit Amount: Another term that needs to be defined is the monthly benefit amount. The monthly benefit amount is the maximum the long term care policy will pay monthly regardless of the cost of the long term care. For example, if your policy had a maximum benefit of $4500 a month or $150 a day, if your skilled care nursing cost $200 a day you would have to pay $1500 out of your pocket. ($200 x 30 days = 6000 – $4500 = $1500)
Calendar Day benefits can cost 3% to 5% extra on the premium. You have to decide whether paying the extra premium for Calendar Days is worthwhile for you. To many consumers, since they are being cared for by family members initially, having an initial elimination period of 30 or 90 days is not that important. To other consumer it is an important issue. The elimination period is the most practical way to save money on your premium. Without sacrificing significant benefits, an elimination period in the range of 90 days can save a significant amount of the cost of the premium.
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