Understanding insurance elimination periods

An insurance elimination period is the time between when you purchase insurance and when the insurance company will begin paying claims. Elimination periods are applied to short-term disability, long-term disability, and long-term care insurance policies. Keep reading to learn more about how this affects your coverage benefits including out-of-pocket costs like copays and deductibles.

Until your elimination period is over, you will have to pay for any medical services you receive. Policies with a longer elimination period are less expensive than those with no waiting period. The average waiting time for an insurance elimination period is anywhere from 30 to 180 days. The elimination period works in the same way as an insurance deductible except elimination periods are measured in time rather than a dollar amount.

According to information from the Insurance Information Institute (III), The elimination period begins when you first begin to need disability or long-term care benefits. During this elimination period, you are responsible for the cost of any healthcare coverage you receive. If you still need care after your elimination period is over, your long-term care disability insurance policy will then begin paying benefits. With some policies, if you need medical care during any one day of a seven-day period, you are credited with the full seven days with respect to the insurance elimination period. Some policies only require you to meet the elimination period once during the policy period.

The way insurance elimination periods work varies by policy and coverage type. For long-term care insurance for example, with a 60-day waiting period, you will be responsible for any long-term care you receive during the first 60 days of the policy. With short-term and long-term disability insurance, your benefits will begin after the elimination period is over. The elimination period runs concurrently with any sick leave or any other type of leave you may have. This leave must be exhausted before the policy will pay benefits.

Eligibility requirements

With disability insurance, to be eligible for coverage, your condition must meet eligibility requirements and cannot be caused by an excluded pre-existing condition. If you are able to work another job besides your primary employment, your disability does not qualify for benefits. Some insurance companies require you to have an attending physician’s statement (APS) that your disability prevents you from working.

To qualify for long-term care insurance, you must be chronically ill, defined by being unable to perform at least two daily pre-determined activities without assistance for a minimum of 90 days or require supervision because of a cognitive impairment condition. Activities of daily living are defined as bathing, eating, continence, dressing, toileting, and transferring (getting in and out of a wheelchair, bed, or chair).

When considering what elimination period to choose when purchasing short-term, long-term, or disability insurance, there are a few things to remember. Policies with a longer elimination period will be less expensive. However, before choosing a long elimination period in exchange for a lower insurance premium, you should be sure you are financially prepared to pay for any care you need before your policy benefits begin.