A washout period is a specified duration defined in disability insurance policies that determines whether a subsequent disability claim is considered a continuation of an earlier claim or a new, separate one. This period begins once you have recovered and returned to work after an initial disability.
If you experience the same illness or injury again during the washout period, your insurer treats it as part of the original claim, allowing for an immediate resumption of benefits without re-starting the elimination period—a waiting time before benefits begin. However, if the relapse occurs after the washout period, the insurer sees it as a completely new claim, requiring a new elimination period and resetting the total benefit period.
The length of washout periods varies by policy but commonly ranges from 3 to 6 months and can be up to a year. For example, if your policy has a 6-month washout period, becoming disabled again within 6 months counts as a continuation. Beyond 6 months, it’s a new claim.
Difference from the Elimination Period: While the elimination period is the initial waiting period from the onset of disability until benefits start, the washout period is a “reset” timer that starts once you recover, determining whether a recurring claim restarts the elimination wait or continues seamlessly.
Understanding this distinction is crucial when reviewing disability policies, especially if you rely on these benefits to protect your income. Knowing the washout period can help you anticipate how relapses will be handled and plan your finances accordingly.
For those exploring disability insurance, including employees selecting group policies during open enrollment or self-employed individuals comparing plans, prioritizing a shorter washout period can provide more flexible benefit access.
Learn more about related insurance terms like elimination period and disability insurance to better understand your coverage.
Sources:
- Investopedia, “Recurrent Disability Definition” (https://www.investopedia.com/terms/r/recurrent-disability.asp)
- Forbes Advisor, “What Is an Elimination Period in Disability Insurance?” (https://www.forbes.com/advisor/life-insurance/disability-elimination-period/)
- Policygenius, “How Does Disability Insurance Work?” (https://www.policygenius.com/disability-insurance/how-does-disability-insurance-work/)