Every industry has its jargon. Whether it’s an IPO, a URL, SEO, if you don’t know the acronym you can be left scratching your head.
It doesn’t just apply to acronyms. Often there are words or terms that are used that seem to make no sense.
In the LTC (that’s Long Term Care!) insurance world, I think the strangest word is Elimination Period or “EP”.
Where the heck did that word come from?
I have no clue. But I do know what it means.
The Elimination Period is the initial number of days at the start of an insurance claim where your long term care policy does NOT pay for your care.
Think of it as a deductible. Just as with your other insurance policies you generally have a deductible that must be met, the same is true with long term care insurance. Except this deductible is measured in days rather than dollars.
It is also referred to as a “waiting period”.
The length of the elimination period is one of the decisions that you make at the time that you purchase a long term care insurance policy. A higher deductible on your auto insurance lowers your premium but raises your out of pocket costs if you have a claim. The same is true when deciding on the EP for your long term care policy.
A longer EP will lower the cost of the policy but if you have a claim you will be responsible for more of the costs at the beginning of the claim.
Common options offered are 30 days, 90 days, or 180 days. There is significant savings on your premium if you choose 90 days rather than 30 days. Oddly, there is very little savings by choosing 180 days vs. 90 days.
Variations on the EP
In general, there are two different ways that an insurance company defines an elimination period. Those are “service days” vs. “calendar days”. It is vitally important that you understand the difference as it can make a HUGE difference at the time of claim.
A “service day” elimination period means that only the days on which you received paid, professional care are counted. If you are at home and you have a home care agency coming in three days a week to help and your family is providing care the other days ONLY the three days that you have professional care are counted towards your elimination period. So in this scenario, it would take 30 weeks at 3 days each week to meet a 90 day elimination period.
If you are not aware of this it can be a very rude awakening at the time of claim. Please understand, with the service day EP, the days that your family provides care are NOT counted.
A “calendar day EP” simply means that each day counts as a day of your elimination period regardless of what transpires during that time and regardless of who provides the care. This can significantly reduce your out of pocket costs during this time if your family is able to provide some or all of the care.
Keep in mind that you must have received the certification that you are “chronically ill” from a licensed health care practitioner in either of these situations for the days to count towards your elimination period.
Waiving the EP for HHC
Well I just came up with another acronym used in the LTC world. “HHC” is home health care. Some policies give you the option to have coverage available starting at the first day that you need home care (and have the required certification). This means that you would NOT be responsible for the first 90 (or 30 or 180) days that you are getting care at home.
The option to have the EP waived if you are getting home health care is a rider that can be added to a policy for an additional cost.
Generally, you would still have responsibility for EP if you later went into a facility but many companies give you credit for any days that you received home care. For example, let’s say you had a 90 day EP and had the “waiver of EP for HHC” included in your policy. If you then received care at home for 50 days before going into a facility, the insurance company would pay for those first 50 days and you would only be responsible for the remaining 40 days of the 90 day EP.
What About Medicare or my Health Insurance?
The LTC insurance company doesn’t care who pays during the elimination period. If Medicare or your health insurance pay for those initial days, you win!
What EP should you choose?
Making the decision about the length of the EP that’s best for you and whether to add the “Waiver of EP for HHC” is an important part of the discussion when purchasing a policy.
Any more acronyms you should know about?
“TTFN” (ta ta for now)!