Activities of Daily Living
Personal care activities that include bathing, dressing, eating, transferring, toileting, and continence.
Critical care provided by a doctor designed to treat or cure an illness, wound, or condition. This care is usually received in a hospital or acute rehabilitation center. Long-term care is not acute care.
Adult Day Care
A program that provides care during the day for individuals in need of long-term care.
An ongoing neurological disease that affects brain functions, short-term memory loss, inability to reason, the deterioration of language, and the inability to care for oneself.
Asset-Based Long-Term Care
A long-term care plan that is funded using an asset as a lump sum or combination of lump sum payments.
Assisted Living Facility
A residential facility that provides room, board, and 24-hour personal care to individuals with long-term care needs. It is a care option for individuals who are not able to manage at home but do not need the level of skilled care provided in a nursing home.
Benefit Amount (Daily/Monthly)
Your Benefit Amount represents the maximum amount of money per day or per month, as chosen by you, that your policy will provide to cover your long-term care needs.
The minimum period of time you can expect your coverage to last. Coverage can last longer if insured and not using the full monthly or daily benefit.
Benefit Triggers (Triggers)
Insurance companies use benefit triggers as criteria to determine when you are eligible to receive benefits. The benefit triggers for long-term care insurance are:
A. Needing help with two or more Activities of Daily Living
B. Diagnosis of Cognitive Impairment, such as Alzheimer’s
Most long-term care policies assign a care coordinator to walk you through your claim and coordinate with other insurance or government programs such as Medicare and Medicaid.
Someone who helps an individual with an impairment complete his or her activities of daily living.
Cash Surrender Value
The sum of money an insurance company will pay to the policyholder in the event that they decide to cancel their policy.
A patient has been certified by a licensed health care practitioner as (1) being unable to perform, without substantial assistance from another person, at least two ADLs for a period that is expected to last at least 90 consecutive days due to a loss of functional capacity or (2) requiring substantial supervision to protect themselves from threats to health and safety due to a severe cognitive impairment.
A deterioration or loss in intellectual capacity that results in impairment in some or all of the following: short and long-term memory, orientation to people, place, and time, and/or deductive or abstract reasoning (including judgment).
Continuation of Benefits
An optional feature to Asset-Based plans that allows the insured to add on additional months of coverage up to a lifetime benefit.
Nonmedical assistance with the activities of daily life.
The maximum amount your long-term care insurance will pay for care in a single day.
Date of Service
A day that you are eligible for benefits under your policy, including Dates of Service during the Elimination period.
The tax-free amount payable by a life insurance policy in the event of the death of the insured.
Also known as a waiting period. This is the number of days after the insured qualifies for and begins receiving services before the policy begins to pay benefits. Policies determine the waiting period using “Days of Care” Or “Calendar Days.”
Facility Only Policy
Policy where benefits are only covered if the policyholder is receiving care in a licensed Long-Term Care facility, such as a Nursing Home or Assisted Living Facility.
Free Look Period
A provision which allows the insured to cancel the policy for a full refund within 30 days of receiving the policy.
Guaranteed Level Premium
Premium is guaranteed to stay the same for a given period of years or the life of the policy.
Guaranteed Renewable means that the insurance company cannot cancel a policy or change any of the benefits, unless a policyholder fails to pay the premiums. Insurance companies are only allowed to increase premiums for a “class” of policies but not for an individual personally for any reason including a change in health or age.
Skilled and unskilled Long-Term Care services provided in the home.
These are “hands-off” services that provide assistance with the personal chores or activities that are necessary to live at home. They would typically include housekeeping, cooking, and running errands.
Designed to give supportive and palliative care to people in the final phase of a terminal illness. Hospice care can be provided at home or in a hospice facility. It encompasses physical, emotional, and spiritual support for the patient and their family.
Hybrid Long-Term Care Insurance
A long-term care policy that is designed with a life insurance or annuity chassis to add additional benefits and functionality to the policy. Also known as Linked Benefit plans.
Indemnity (Cash Benefit)
Policies pay a monthly cash benefit once the policyholder is on claim, regardless of the level of care provided. Few long-term care insurance companies still offer this option.
A rider you can add on to your long-term care insurance plan that adjusts the benefits over time to account for inflation. Inflation protection riders can adjust benefits annually based on a simple or compound fixed rate (e.g. 3 or 5).
Care provided by family and friends of a loved one. While unlicensed and generally unpaid, informal care makes up the majority of in-home care and has been termed the “backbone” of our national long-term care system.
Both spouses are on one policy, usually meaning that either spouse can use the benefits or both can draw from the plan until benefits are gone.
Termination of a policy due to the policyholder’s failure to pay the premium.
Policyholders can pay past-due premiums and reinstate their policies up to 5 months after they have lapsed if the failure to pay was the result of cognitive or functional impairment.
Lifetime Maximum Benefit
The maximum amount an insurance carrier will pay over the life of a policy. If a policy pays $200 a day or $6,000 a month for 3 years, the policy’s benefit maximum will equal $216,000.
You pay a set premium for a certain number of years, after which the policy is fully paid up and no further premiums are required. The pay periods can range from 2-20 yearly payments.
Also known as hybrid plans, linked benefit plans are long-term care policies built with a life insurance or annuity chassis to add additional benefits and functionality to the policy.
Look-Back Period For Medicaid
In order to qualify for long-term care benefits under Medicaid many people “give away” money to children or transfer assets to a trust. Medicaid will “look-back” to any asset transfers you have made in the 5 years before applying for Medicaid benefits. Any transfers made during this period can be counted as part of your assets for the purposes of determining Medicaid eligibility and can result in an “exclusionary” period before eligibility can be restored.
Lump Sum Premium
A one-time payment made to fund a policy in lieu of recurring payments.
A federal-state program for individuals with low income and limited resources that pays for healthcare services.
A federal healthcare program for adults 65 and older and certain disabled individuals. Medicare will pay for long-term care for only a short period of time.
The maximum amount your long-term care insurance will pay for care in an entire month.
This is an optional rider on long-term care insurance policies that allows the policyholder to retain some limited policy benefit (usually equal to the amount of premiums paid-in) if you lapse your policy.
A long-term care insurance policy approved by your state for participation in the partnership program. This program allows you to receive benefits from Medicaid for Long-Term Care services without spending down all of your assets if you have previously purchased and depleted the benefits in a partnership-certified policy.
Pension Protection Act of 2006 (PPA)
Encourages the purchase of long-term care insurance by allowing policyholders to take tax-free distributions from their life and annuity policies to pay their long-term care insurance premiums (Section 844).
Plan Of Care
A documented, individualized plan of long-term care services prepared by a Licensed Health Care Practitioner (LHCP). Typically, a Plan of Care would include the types and frequency of care needed and whether the care was to be provided by family caregivers or through formal, paid care providers. If formal care is required, the care plan should include a list of potential providers including whatever community services are available in the area.
Medical conditions that existed, were diagnosed, or were under treatment before the policy was issued. If the application is approved by underwriting, most long-term care insurance policies will cover pre-existing conditions as long as they were revealed at the time of application.
Policyholder is reimbursed either daily or monthly for the costs they incurred for long-term care services.
Respite care refers to temporary or short-term care provided to the patient so that the primary informal caregiver can take a break or rest. Respite care can be provided at home or in a facility and allows the primary caregiver a temporary relief from caregiving.
Restoration of Benefits
Most long-term care insurance policies have this either built in to the policy or as an optional rider that allows the policyholder to restore their benefit amount to the original value if you recover from an illness or injury after receiving benefits. The percentage of benefit that can be restored may vary.
Each spouse has their own separate policy. Yet, if one spouse goes through their entire policy or lifetime maximum benefit, they can then access their spouses’ policy to cover continued long-term care costs.
This is an optional rider on some long-term care insurance policies that guarantee your benefit for a specific amount of time based on how much you paid in to the policy.
Skilled Nursing Facility/Nursing Home
The highest intensity level of long-term care. A skilled nursing facility is defined as a health facility or a distinct part of a hospital that provides 24- hour a day nursing care on an inpatient basis. Skilled nursing facilities will have a registered nurse or LPN on duty at all times and a licensed physician on call at all times.
A policy feature which allows a policyholder to reduce coverage in exchange for a lower premium. For instance, a policyholder can reduce the Daily Benefit, or the total number of years the policy will pay, or increase the elimination period. A policyholder has the right to step down policy benefits anytime after the first year, and this option should always be considered before lapsing coverage.
Refers to the life insurance portion of an Asset-Based long-term care policy. Meaning, if one spouse passes away, the other will not receive the death benefit but may keep the policy in force; the death benefit will then be paid upon the death of the last surviving spouse.
In 1996, Congress passed the Health Insurance Portability and Accountability Act (HIPAA). Under this bill there are federal tax advantages for LTC policies that are designated “tax-qualified” (TQ). For example, on a tax-qualified policy you may be able to deduct part of the policy premium from your taxes as a medical expense if you qualify for a medical expense deduction. Insurance benefits from a Tax Qualified policy, in general, are not taxable as income. To be defined as “tax-qualified” the Long-Term Care policy must meet the provisions of the federal guidelines defined in HIPAA. Policies purchased on or after January 1, 1997 may or may not be tax-qualified. All Long-Term Care insurance policies purchased before January 1, 1997 are “grandfathered in” and are considered qualified for tax-favored status.
The process whereby the insurance carrier reviews an individual’s health status prior to issuance of a policy in order to determine if they are eligible for coverage. Underwriting for Long-Term Care generally involves one or more of the following: completion by applicant of medical questionnaire, review of applicant’s medical records, a telephone interview by a nurse or health aid (including a cognitive test), and an in-home physical and cognitive assessment by a nurse or health aide.
Waiver of Premium
A common provision in Long-Term Care insurance policies that waives the requirement to pay premiums while the insured is receiving claim benefits.