Elimination periods or deductible periods are terms you may hear tossed around when shopping for long-term care insurance. It’s important to understand what these terms mean, and how they could impact your future financial situation should you need long-term care.
Elimination period is a term used to describe the number of days that you must reside in a nursing home before the long-term care insurance begins covering your stay. For example, a policy with a 30-day elimination period means that the long-term care insurance will begin covering your stay on the 31st day. If your cost of care is $100 per day, you would owe $3,000 out of pocket before your insurance began paying out.
Most policies offer elimination or deductible periods ranging from zero to 180 days. The higher elimination or deductible period you choose, the lower your premium will cost. While it may seem cheaper to choose a lower premium amount, you need to seriously consider how much you can afford to pay when you need long-term care.
To put things into perspective, if you choose a policy with a 100-day deductible period, and your cost of care is $150 per day, you would owe $15,000 before your insurance company would pay a dime. However, if you chose a policy with a 30-day deductible, and stayed in long-term care for a year, you would only owe $4,500.
