What About A Deductible?

Is There a Deductible Before I Get Benefits?

Yes.  LTC benefits are payable after a deductible (an “elimination period”).  You are responsible for your expenses during that period.  In virtually all policies on the market today, you only need to meet your deductible once in your lifetime.

You select your deductible at the time you apply for your policy.  30, 60, or 90 days are typical choices.  Some policies offer a zero day deductible.  The shorter the deductible, the more expensive the policy, but the sooner your benefits will be available to you on claim.

You should do the math when selecting an elimination period.  Think about the value over, say 20 years, of the premium you’ll save with a 90 day deductible compared to the cost of the same policy with just a 30 day up front wait.  Compare your possible savings against the out-of-pocket cost you’ll incur paying for care yourself during the 31st through the 90th day.  Remember that the cost of care will also increase over those 20 years.

If you don’t actually save the difference, having to pay out of pocket for care for two months at an otherwise already difficult time could be a significant burden.

Many insurers, however, offer a provision that waives the deductible for home health care.  That financial relief valve is important both because most long term care claims begin with home care and it makes the premium savings achieved with a 90 day elimination period much more attractive. 

Be sure that the days you receive home health care count toward satisfying the 90 day deductible that will apply should you later require care in an assisted living facility or skilled nursing home.

Occasionally we are asked about using a 180 day or a 365 day elimination period.  If you compare the premium savings for such a long deductible to the out-of-pocket cost you would have on claim before becoming eligible for benefits to be paid, you'll inevitably find that the premium "savings" pale in comparison to the cost of your care during that long period of out-of-pocket expense.

Calendar versus Service Days

Be sure to also consider whether your deductible is satisfied by calendar or service days.  Calendar days are preferable because you know that you will be eligible for policy benefits in 30, 60, or 90 actual days from the day you would be eligible for benefits but for the deductible.  Service days could stretch out the point at which you actually become eligible to receive benefits to longer than your nominal (e.g., 90 day) elimination period.