Terminology – Long-Term Care From A to Z & Everything In Between

 (A)

Accelerated Death Benefit: A benefit included in most life insurance policies that pay in advance due to a terminal illness and stated as a percentage of the policy’s face amount prior to death.  

Activities of Daily Living (ADL’s): These are the basic activities that enable you to take care of yourself in day-to-day functioning and maintain your independence.  Each policy will include what that insurance company defines as activities of daily living (ADL’s), and the list will include some or all of the following: bathing, dressing, transferring, eating, toileting, and continence.  People who need help from someone else in doing one or more of these are said to have an “ADL limitation” or “ADL’s” for short.  Long-term care insurance policies usually specify how many “ADL’s” you must have before they pay benefits (usually 2 out of 6) and are under doctor’s care.  Persons needing help performing ADL’s are further classified as requiring “hands-on assistance” or “standby assistance”.

Acute Care: Care for illness or injury that develops rapidly, has pronounced symptoms and is finite in length.  An example is medical care for a short time to cure a certain illness and/or condition.  Recovery is the primary goal of acute care.  Physician, nurse, or other skilled professional services are typically required and usually provided in a doctor’s office or hospital.

Adult Day Care Facility: A facility that…

1.  is licensed by the state in which it is located.

2.  has a full-time director and nurse present at least four hours per day.

3.  is not an overnight facility.

4.  maintains a written record of services rendered.

5.  is open a minimum number of hours per day at least five days per week.

6.  has established procedures for handling medical emergencies.

7.  provides adult care to persons who do not require 24-hour institutional care.

Adult Day Services: Services provided during the day at a community-based center.  Programs address the individual needs of functionally or cognitively impaired adults.  These structured, comprehensive programs provide social and support services in a protective setting during any part of a day, but not 24-hour care.  Many adult day service programs include health-related services.  

Alternate Plan of Care: This is an option offered by some LTC policies.  The plan of care must be developed by a health professional and is an alternative to going into a nursing home or other care facility.  The alternate plan of care may be initiated by you or the insurance company.  Services that might be covered by such a plan include home modifications (ramps and grab rails, etc.) home health care, or an adult care center.  

Alzheimer’s Disease: A progressive, degenerative form of dementia that causes severe intellectual deterioration.  First symptoms are impaired memory, followed by impaired thought and speech, and finally complete helplessness.

Assessment: A determination of physical and/or mental status by a health professional based on established medical guidelines.

Assisted-Living Care: Long-term care benefits in facilities that provide care for the elderly who are frail and no longer able to care for themselves but who do not need the level of care provided in a nursing home.

Assisted Living Facility / Residential Care for the Elderly: Residential living arrangement that provides individualized personal care, assistance with activities of daily living, help with medications, and services such as laundry and housekeeping.  Facilities may also provide health and medical care, but care is not as intensive as care offered at a nursing home.  Types and sizes of facilities vary, ranging from small homes to large apartment-style complexes.  Levels of care and services also vary.  Assisted living facilities allow people to remain relatively independent.  Most LTC policies provide benefits for assisted living, usually up to the same daily maximum as the nursing home benefit.

(B)

Bathing: One of the six Activities of Daily Living used to determine the need for long-term care.  Bathing is the ability to wash, either in the tub, shower or with a sponge.  See also activities of daily living.  

Bed Reservation Benefit: A benefit usually included in a long term care insurance policy that pays for reserving your bed in a nursing home or assisted living facility should you need to be hospitalized during a covered stay.  There is a limit on how many days your bed will be reserved.  See the policy for the specific amount of days and nursing home or assisted living benefits.

Benefit Increases (Compounding Interest) Cost-of-Living: Compound increases your maximum daily or monthly benefit and lifetime payment maximum each year by 3 to 5 percent of the previous year’s amount.  Benefit increases can run for a period of time e.g., 20-years or a lifetime depending on the company and product selected.  Benefits increase each year even while on a claim.  Premiums don’t increase even when your benefits are increasing.

Benefit Increases (Simple Interest) Cost-of-Living: Equal (or Simple) increases your maximum daily or monthly benefit and lifetime payment maximum each year by 3 to 5 percent of the previous year’s amount.  Benefits increase each year even while on a claim.  Premiums don’t increase even when your benefits are increasing. 

Benefit Period: The benefit period begins on the first day that the insurance company begins to pay for your care and ends when you no longer require care, reached the maximum benefits allowed by your policy, or death has occurred.

Benefit Triggers: Insurance companies use benefit triggers as criteria to determine when you are eligible to receive benefits.  The two most common benefit triggers for long-term care insurance are:

1.  Needing help with two or more Activities of Daily Living.

2.  Having a Cognitive Impairment such as Alzheimer’s Disease or Dementia.

Benefits: Monetary sum paid by an insurance company to a recipient or to a care provider for services that the insurance policy covers. 

Board and Care Home: (also called Group Home) Residential private homes designed to provide housing, meals, housekeeping, personal care services, and supports frail or a person with a disability.  At least one caregiver is on the premises at all times.  In many states, Board and Care Homes are licensed or certified and must meet criteria for facility safety, types of services provided, and the number and type of residents they can provide care for.  Board and Care Homes are often owned and managed by an individual or family involved in their everyday operation.

(C)

Caregiver: A caregiver is anyone who helps care for an elderly individual or person who lives at home.  Caregivers usually provide assistance with activities of daily living and other essential activities like shopping, meal preparation, and housework.  It can be someone you pay for their services or a family member who is unpaid.

Case Management: Some policies may require or offer case management if you need care.  A case manager is chosen either by you, your family, your doctor, or by the insurance company.  The manager evaluates your need for care and determines the best type of care for your situation.  Although insurers may use case management to control costs, it can also be a benefit to you, since managers know what care resources are available in the community and can identify options that you may be unaware of.

Cash Benefit: Policies providing a cash benefit after your claim has been approved that pays a fixed dollar amount and is less than the actual monthly benefit.   You received a check and can spend it however you choose.  See also indemnity.

Chronic Care: Care for an illness continuing over a protracted period of time or recurring frequently. 

Chronically Ill: Tax-qualified LTC policies require that an insured is certified as “Chronically ill” by a licensed health care practitioner.  This means the insured is unable to perform without substantial assistance at least 2 ADL’s for a period of at least 90 days due to a loss of functional capacity or have a severe cognitive impairment.  The 90-day requirement does not imply a waiting period for payment of benefits or a period during which services are not considered qualified long-term care services.  Tax-qualified policies may pay benefits provided the services are expected to be needed for at least 90 days.

Cognitive Impairment: A deterioration in a person’s short or long term memory; orientation as to person (who you are), place (where you are) and time (day, date and year); deductive or abstract reasoning; or judgment as it relates to safety awareness.  It requires continual supervision to protect yourself or others.  Alzheimer’s Disease is an example of a cognitive impairment.  Tax-qualified policies must specify “severe cognitive impairment” as a benefit trigger.  See severe cognitive impairment.  

Community-Based Services: Services and service settings in the community, such as adult day services, home-delivered meals, or transportation services.  Often referred to as home – and community – based services, they are designed to help older people and people with disabilities stay in their homes as independently as possible.

Continence: Ability to maintain control of bowel and bladder functions, or when unable to maintain control of these functions, the ability to perform associated personal hygiene such as caring for a catheter or colostomy bag.  This is one of the six Activities of Daily Living. 

Contingent Nonforfeiture: Provides nonforfeiture benefits in the event the policy issuer increases premiums on in-force policies.  The provisions are triggered by a cumulative percentage increase in premium exceeding a threshold that depends on issue age.  For issue age below 30, the trigger is a 200% increase over the initial premium, at age 65 it is 50%, and at age 75 it is 30%.  This benefit has been defined by the National Associated of Insurance Commissioners (NAIC) and applies to insured’s who choose not to purchase a standard nonforfeiture rider.  Once the contingent nonforfeiture benefit trigger occurs, the NAIC Model Regulation provides 3 options to the policyholder:

1.  Pay the higher premium for the same coverage.

2.  Pay the same premium for decreased benefit levels.

3.  Convert to a paid-up policy with a shortened benefit period.

Contingent nonforfeiture will be required in states that adopt these Model Regulations.  Insurers may also offer it where not required by state law.

Continuing Care Retirement Communities (CCRC): Retirement complex that offers a range of services and levels of care.  Residents may move first into an independent living unit, a private apartment, or a house on the campus.  The CCRC provides social and housing-related services and often also has an assisted living unit and an on-site or affiliated nursing home.  If and when residents can no longer live independently in their apartment or home, they move into assisted living or the CCRC’s nursing home.

Convalescent Care Facility: A skilled nursing facility or an intermediate care facility.  Most insurance companies require such facilities to be state licensed or Medicare approved.  The facility has to provide the following services:

1.  A doctor is available in case of emergency.

2.  At least one nurse who is employed full time and a nurse on duty at all times.

3.  Methods and procedures for handling and administering drugs and other treatments.

4.  Keeping medical records for all patients.

Coordination of Benefits: If your policy has coordination of benefits then it will pay benefits only after any other insurance policy or government agency has made payment.   It will not make payments in addition to other benefits you receive.

Countable Assets: Assets whose value is counted in determining financial eligibility for Medicaid.  They include:

1.  Vehicles other than the one used primarily for transportation.

2.  Life insurance with a face value over $1,500.

3.  Bank accounts and trusts.

4.  Your home provided that your spouse or child does not live there and its equity value is greater than $500,000 ($750,000 in some states).

Couples/Partners Discount: A discount applicable if both spouses are eligible and apply for coverage.

Custodial Care: Custodial care helps you with the activities of daily living.  It is provided by a trained or capable person without medical training.  Custodial care may involve preparation of meals, help with taking medicines, other routine activities and personal needs.  Custodial care can be provided at home, adult day centers, assisted living communities or in nursing homes.  You must meet the policy’s definitions (such as 2 out of 6 ADLs) or severe cognitive impairment to receive custodial care benefits.  

(D)

Daily Benefit: The amount of insurance benefits per day a person can choose to cover long-term care expenses typically between $50 and $500 sometimes higher depending on the policy and coverage selected by the applicant.  

Deficit Reduction Act (DRA): This is a law passed in 2005 that significantly tightens the eligibility for Medicaid payment of long-term care services.  The law changed the look-back period for asset transfers from 3 years to 5 years.  It also changed the calculation of the penalty period for asset transfers with the look-back period.  Additional provisions prevent applicants with more than $500,000 in home equity from receiving Medicaid benefits and allow states not having LTC Partnership programs to create them.  The intent of the law was to eliminate or greatly reduce the use of asset transfers such as gifts to children, as a way to become eligible for Medicaid benefits, and to encourage the use of private long-term care insurance instead of Medicaid to pay for long-term care services.  Other provisions of the law require that agents receive ongoing continuing education before selling partnership policies or in some states, before selling any LTC policy.

Dementia: Deterioration of intellectual function (mental faculties) due to a disorder of the brain.

Dressing: Putting on and taking off all items of clothing and any necessary braces, fasteners, or artificial limbs.  This is one of the six Activities of Daily Living.

(E)

Eating: Feeding oneself by getting food into the body from a receptacle or by a feeding tube or intravenously.  It is one of the six Activities of Daily Living.

Elimination (Waiting) Period: An elimination or waiting period is like a “deductible” in health or car insurance; it’s the part you pay before the insurer starts to pay.  It’s the length of time between when you begin receiving care and the policy begins paying benefits.  Most policies give you a choice of elimination (waiting) periods, for example, 30, 60, 90, 100, 180 or 365 days.  The shorter the elimination period, the sooner the policy begins paying benefits and the more expensive the policy.  Some policies allow a zero-day elimination period for home care services.  This allows you to begin receiving home care benefits immediately with no elimination period to satisfy.  Days of home care can be used to meet the elimination (waiting) period selected for assisted living and nursing home benefits.   Here are some different types of elimination (waiting) period.    

1.  A service day elimination (waiting) period is satisfied by each day of the period on which you receive covered services.

2.  Some policies will allow 1 hour of care counts 7 days towards your elimination (waiting) period.

3.  A calendar day elimination (waiting) period doesn’t require that you receive covered services during the entire waiting period, but only requires that you meet the policy’s benefit triggers to qualify during that time period.  Once the elimination period has been satisfied, benefits for covered services are paid to you each month, up to the maximum monthly benefit you selected.

4.  Some policies, in addition, will allow you to accumulate your elimination period, e.g., 90 days can be satisfied within 180 calendar days and does not require consecutive days.

Estate Recovery: Process by which Medicaid recovers an amount of money from the estate of a person who received Medicaid.  The amount Medicaid recovers cannot be greater than the amount it contributed to the person’s medical care.

Exceptions / Exclusions: All policies specify certain situations in which they will not pay benefits.  These usually include care: required by declared or undeclared war, conditions presumed to be brought on by yourself, in other words, intentionally self-inflicted injury, received as a result of participation in a felony, riot, or insurrection, alcoholism, drug addiction, paid by the government (Medicare), state or worker’s compensation law, for which no charge is made in the absence of insurance.  The policy may not cover all expenses associated with long-term care needs, care provided by a member of the insured’s immediate family unless specifically stated in the policy, services or supplies covered by another long-term care policy or health insurance policy.  If you have more than one long term care insurance policy, payments so that the combination of benefits under all policies and certificates will not exceed one hundred percent (100%) of the actual charges for covered services.  Other exclusions are care received outside the United States.  Benefits paid out of the country may be limited to 1 year depending on the company and policy.  See a sample policy for the specific exceptions / exclusions for the coverage you are considering.

(F)

Facility Care: Means qualified long-term care services provided to an insured in a residential care or nursing facility.  

Financial Eligibility: Assessment of a person’s available income and assets to determine if he or she meets Medicaid eligibility requirements.

Free-Look Period: Most states allow you to return the policy within 30 days if you change your mind after buying it, and want to get your money back.  The process for doing this is described in the policy.  The policy would then be considered to never have been issued.

Functionally Disabled: You are considered functionally disabled when you have a cognitive impairment or are unable to perform a prescribed number of the Activities of Daily Living (ADL) outlined in your insurance policy.  For example, your policy may require that you are unable to perform two of these six ADL’s to receive benefits: eating, transferring, continence, toileting, bathing, and dressing.  Some insurance policies require that your treatment must also be medically necessary before they will pay any benefits when you are functionally disabled.

Future Purchased Option (FPO): A form of inflation protection where the insured has the right to increase benefits periodically (e.g., annually or every 3 years) to reflect increases in the cost of care.  These increases can be elected without providing evidence of insurability as long as the insured is not receiving benefits at the time.   Most plans, if the insured declines 2 or 3 successive offers of additional coverage, no further chances to increase are available.  If additional coverage is purchased, the additional premium is based on attained age, i.e. the insured then-current age.

(G)

Group Home: (also called Board and Care Home) Residential private homes designed to provide housing, meals, housekeeping, personal care services, and supports to persons with a disability or other frail residents.  At least one caregiver is onsite at all times.  In many states, group homes are licensed or certified and must meet criteria for facility safety, types of services provided, and the number and type of residents they can provide care for.  Group homes are often owned and managed by an individual or family involved in their everyday operation.

Guaranteed Renewable: The insurance company cannot change, alter, or cancel your policy for any reason except for non-payment of premiums.  However, they reserve the right to increase premiums on all insureds covered under a particular policy series in the approved state where the policy was issued.  Premiums are projected to remain level not guaranteed to remain level.  Rate increases must be filed and approved by the department of insurance.  Rate increases do not occur or increase each year. You cannot be singled out for an increase because of a change in your age or health.

(H) 

Hands-on Assistance: This is the physical assistance of another person, without which the disabled individual would be unable to perform an ADL.

HIPAA: The Health Insurance Portability and Accountability Act of 1996 became law on January 1, 1997.  The Act specifies requirements that a long-term care insurance policy must meet in order that premiums paid may be deducted as medical expenses, and benefits received are not considered taxable income.

Home Care: Care provided to the insured in the home and not medical services.  Home care includes home health care provided by a home health care agency, personal care / hygiene assistance, homemaker services, hospice services, and respite care.

Home Care Agency: Licensed or certified under state law, if any, to provide home health care.

Home Health Aide: A health worker employed by a Home Health Agency, other than a doctor, nurse, or therapist, who provides help at home with activities of daily living, and in some cases homemaker or companion services.

Home Health Care: This is care provided by a state licensed agency and includes home services for occupational, physical, respiratory, nutrition, speech therapy, or nursing care; typically included are, medical, social worker, and home health aide services.  It does not usually cover services provided by members of your family.  When it is received, the services may be covered as part of the long-term care policy, an option or rider available with the policy, or a separate policy.

Homemaker Services: Assistance with activities necessary to or consistent with the insured’s ability to remain in his or her home, that is provided by a skilled or unskilled person under a plan of care developed by a physician or a multidisciplinary team under medical direction.  Licensed homemaker services provide “hands-off” care such as helping with cooking, housekeeping, laundry, shopping, and running errands.  Often referred to as “Personal Care Assistants” or “Companions.” 

Home Modification: Physical adaptations to a home that enables a person to stay and function in that environment safely.  It may include a ramp or grab bars in the bathroom.  This is a benefit included in most long-term care policies.

Hospice Care: Short-term, supportive care for individuals who are terminally ill and have a life expectancy of six months or less.  Hospice care focuses on pain management and emotional, physical, and spiritual support for the patient and family.  It can be provided at home or in a hospital, nursing home, or hospice facility.  Medicare typically pays for hospice care.

(I)

Incontinence: One of the Activities of Daily Living used to determine the need for long-term care.  Incontinence is the ability to control one’s urination or bowel movements.  See also activities of daily living.

Inflation Protection: An optional policy feature that is available for additional premiums that provide for increases in benefit levels over time to help pay for expected inflation in the costs of long term care services.  See benefit increases.

Informal Caregiver: Any person who provides long-term care services without pay.

Instrumental Activities of Daily Living (IADL): Activities that are not necessary for basic functioning, but are necessary in order to live independently.  These activities may include:

1.  Doing light housework.

2.  Preparing and cleaning up after meals.

3.  Taking medication.

4.  Shopping for groceries or clothes.

5.  Using the telephone.

6.  Managing money.

7.  Taking care of pets.

8.  Using communication devices.

9.  Getting around the community.

10.  Responding to emergency alerts such as fire alarms.

Persons unable to perform one or more of these without assistance are said to have an IADL limitations.  These limitations may be early warnings of disability requiring long-term care, and evidence of IADL limitations may be used in the underwriting process to deny insurance to an applicant.  Some LTC policies include IADL limitation as a benefit trigger for providing home health care benefits.

Indemnity Benefit: An indemnity benefit is a fixed amount paid when care is received, regardless of the cost of care.  An indemnity policy with $8,000 monthly home, assisted living or nursing home pays $8,000 regardless of the actual monthly charges.  They send you a check and you can spend it however you choose.  See also cash benefit.

Inflation Protection: Because long-term costs are expected to rise in the future, policies provide inflation protection or benefit increase options that increase the maximum daily benefit and the total lifetime benefit each year.  Usually, the buyer can choose between simple and compound inflation increases.  Simple inflation increases add the same dollar amount to the daily benefit each year, typically 3 to 5% of the original benefit.  Compound inflation protection increases the benefit by a percentage of the current benefit, again usually 3 to 5%.  Because price inflation is a compound effect, compound protection is more likely to keep up with the cost of care in the long run.  Guaranteed purchase options allow the insured to increase the benefit in future years for an additional premium.  Often the option expires if it is not used for 2 or 3 successive years.  Capped increases may also be offered, such as compound inflation with a 2X cap.  This means that increases stop when the benefit reaches twice the original benefit.  Alternatively, the increase may stop after 10 years, 20 years, or some other designated period.  See benefit increases.

Informal Care: Care provided by family or friends is referred to as informal care.  Some LTC policies provide benefits for informal care.  Whether benefits are available may depend on the relationship of the caregiver to the insured, and on whether the caregiver lives with the insured.

(L)

Licensed Healthcare Practitioner: Any physician, any registered professional nurse or licensed social worker, or other individual who meets state requirements, excluding any member of your immediate family.

Lifetime Limits: Most insurance companies set a limit on the amount of benefits that a policy will pay.  These limits are set in terms of either dollars or years.  You will select a choice of dollar benefit limits.  For dollar benefit limits, the higher the dollar amount that you choose, the more expensive the policy.  If the benefit limit is given in terms of years (for example 2, 3, 5, or lifetime) then you choose whether you want coverage for a set number of years or for your lifetime.  The longer the period, the more expensive the policy.

Limited Payment Options: A premium payment option in which the person pays premiums for a set time period such as for 10 years or to age 65.  Some plans offer a single premium payment, 3 to 5-years or even to 20-years.

Long-Term Care (LTC): Personal care and other related services provided on an extended basis to people who need help with activities of daily living (see ADL’s) or who need supervision due to a severe cognitive impairment (Dementia, Alzheimers or Parkinsons, etc.).  It can be provided at home, in an adult day care center, assisted living facility or a nursing home.  Formal long-term care is care provided by paid caregivers such as nurses or home health aides.  Care provided by family or friends is referred to as Informal Care.  Some LTC policies provide benefits for informal care.  Not all LTC is long-term; some people may stay in a nursing home for only a month, or require home care for a few weeks while recovering from acute illness or surgery.

Long-Term Care Insurance: Insurance policy designed to provide income to pay for long-term care services.

If you lose your ability to independently perform at least two activities of daily living such as dressing, bathing, eating, toileting, continence, transferring (getting in and out of a bed or chair), for at least 90 days or require substantial supervision due to a severe cognitive impairment (Alzheimers, Parkinsons, etc.) long-term care insurance can help  cover the costs.

Long-Term Care Services: Services that include medical and non-medical care for people with a chronic illness or disability.  Long-term care helps meet health or personal needs.  Most long-term care services assists people with activities of daily living, such as dressing, bathing, and using the bathroom.  Long-term care can be provided at home, adult day care, assisted living or in a nursing home facility.

Look Back Period: Five-year period prior to a person’s application for Medicaid payment of long-term care services.  The Medicaid agency determines if any transfers of assets have taken place during that period that would disqualify the applicant from receiving Medicaid benefits.  This period of time is called the penalty period.  

Loss of Functional Capacity: Means requiring the substantial assistance of another person to perform the specific activities of daily living.

(M)

Means Test: Measures of income and assets to determine eligibility for some government benefit programs such as Medicaid.

Medicaid: A means-tested medical and health welfare program supported by federal, state and local funds, and administered by each state to provide health care for eligible poverty level individuals.  Medicaid will pay nursing home and some home care costs if you are disabled, provided that your financial assets and monthly income are below certain allowed levels.  If your assets are above the allowed level you will have to “spend down” your assets to the allowed level before Medicaid will pay for your care.  Medicaid pays for about half of all long term care for which payment is made.  It is the largest public payer of long-term care services.

Medicaid Eligibility General Requirements: 

You must be:

1.  A resident of the state in which you are applying.

2.  Either a United States citizen or a legally admitted alien.

3.  Age 65 or over.

4.  Or meet Medicaid’s rules for disability, or blind.

Medically Necessary Care: This is usually defined as care provided in accord with “accepted standards of medical practice” which is required by the patient’s condition, is specified by a “plan of care” written by a doctor or other health professional, and which is not solely for the convenience of the patient or care provider.  An insurer requiring that care be “medically necessary” can refuse to pay benefits if you are disabled and need custodial care.  Some insurers accept your doctor’s statement that care is medically necessary, while others may review your claim and make their own decision as to whether the care is medically necessary.  Medical necessity is a benefit trigger only on non-tax-qualified plans.  Thus it may be more difficult to qualify for benefits under a tax-qualified plan.  See also benefit triggers.  

Medicare: The federal program providing hospital and medical insurance to people aged 65 or older and to certain younger ill or disabled persons.  Benefits for a nursing home are limited to 100 days with a Medicare supplement policy and are for skilled or rehabilitative care, not “custodial” care to help with (ADLs) activities of daily living, the most common form of long-term care. 

Mental and Nervous Disorders: Refers to a mental or emotional disease or disorder of any kind that does not have an organic origin.  Both Alzheimer’s Disease and senile dementia are considered organic in origin: most insurance companies cover these and it should say clearly that “Alzheimer’s Disease, senile dementia, and other organic” brain disorders are covered by the policy.  Most insurance policies will not cover “nonorganic” mental and nervous disorders and disorders due to alcohol or drug-related problems.

Monthly Benefit: The amount of insurance benefits per month in a long term care policy a person can choose to purchase typically between $1,500 and $15,000 or more depending on the policy and benefits selected by the applicant.

(N)

Non-countable Assets: (also called exempt assets) Assets whose value is not counted in determining financial eligibility for Medicaid.  They include:

1.  Personal belongings.

2.  One vehicle.

3.  Life insurance with a face value under $1,500.

4.  Your home provided that your spouse or child lives there and its equity value is less than $500,000 ($750,000 in some states).

Non-Forfeiture Benefit: If your policy lapses after X years, you’ll be provided with a reduced paid-up lifetime maximum.  This reduced amount is the greater of all premiums paid to your policy or X times your maximum daily benefit at the time of lapse.  No further premium payments are required to maintain this benefit.

Nursing Care: Qualified long-term care services performed in an assisted living facility or maintenance or personal care services performed in an assisted living facility.

Nursing Home (Convalescent Care Facility): Generally a state licensed facility that provides room and board and a planned, continuous medical treatment program, including 24-hour-per-day skilled nursing care, personal care, and custodial care for those who are chronically ill or unable to take care of daily living needs.

(P)

Partnership Long Term Care Insurance Policy: Private long-term care insurance policy that allows you to keep some or all of your assets if you apply for Medicaid after using up your policy’s benefits.  The Deficit Reduction Act of 2005 allows any state to establish a Partnership Program.  Under a Partnership policy, the amount of Medicaid spend down protection you receive is generally equal to the amount of benefits you received under your private Partnership policy.  State-specific Partnership programs vary in design.  

1.  Dollar for Dollar allows insured’s to keep assets equal to the total dollar benefit paid by the policy they purchased, rather than having to spend down to $2,000 in order to become Medicaid eligible.

2.  Total asset protection allows insured’s to keep all their assets if they buy a qualifying policy.

Per Diem: The daily benefit a policy will pay under an indemnity model.  If you purchase a per diem LTC policy, you choose the daily benefit.  Check with your tax advisor regarding your personal situation and daily indemnity limits as in most cases, charges above that daily amount are taxable income to you.

Personal Care (also called Custodial Care): Skilled or non-skilled service or care, such as help with bathing, dressing, getting in and out of a bed or chair, moving around, using the bathroom, and instrumental activities of daily living using the telephone, managing medications, shopping, preparing meals, laundry and light housekeeping.  It also includes protection of an insured’s health and safety due to severe cognitive impairment.  A plan of care is developed by a physician or a multidisciplinary team under medical direction.

Plan of Care: A written, individualized plan prescribed by a physician or developed by other qualified health care professionals, that specifies the type and frequency of long term care services required by the recipient of the care.

Pre-existing Condition: An illness or disability for which you were treated or advised within a time period before applying for a long-term care policy.  The “look back period” (how far back in your medical history the insurance company will go prior to the policy’s purchase) varies from insurance policy to insurance policy.  The shorter the look-back period, the fewer conditions in your past will be considered pre-existing.

Preferred Health Discount: A discount received on policy premiums available to applicants who are determined to be in very good health.

(Q)

Qualified Long-Term Care Services: Are necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative services, and maintenance or personal care services.

(R)

Reimbursement: Reimbursement is the standard way that policies pay for long-term care.  The insured or a care provider submits a claim for the charges for care delivered, and the claim is paid up to the daily or monthly maximum specified in the policy.

Residential Care Facility (Assisted Living Facilities): This level of care and supervision is for people who are usually 60 and older, and unable to live by themselves but who do not need 24-hour nursing care.  A facility licensed and inspected by the Department of Social Services.  They engage primarily in providing room, board, housekeeping, supervision, and personal care assistance with basic activities to help with personal hygiene, dressing, eating, and walking.  Medications are centrally stored and distributed for residents to self-administer.  These facilities are considered non-medical and are not required to have nurses, certified nursing assistants or doctors on staff.

Residual: If 2 spouses or partners buy policies with a Shared Care rider, each can access the unused benefits of the other person, up to a residual amount, which is reserved for use only by the insured who owns the benefits.  Example:  a couple buys policies with a 3-year benefit and a shared care rider with a 1 year residual.  Either insured can then use up to 2 years of the other insured benefits.  

Respite Care: Long-term care services provided at home or in a facility to temporarily relieve family or friends who normally provide care for an impaired individual without charge.  See policy for the specific number of days this benefit is provided for in a calendar year.  

Restoration of Benefits: A policy may reinstate benefits you have used, after you have not needed care for a prescribed period, usually 180 days.  Example: you have a 3-year policy, receive benefits for 1 year, and then recover and need no care for 6 months.  The policy gives you back the year, and you again have 3 years of coverage to use.  A new waiting period may be required unless the policy states differently.  Please see the policy for specific details.

Return of Premium: Some policies offer riders that return some or all of the premiums you have paid, if you cancel the policy (for example, by not paying) or at your death.  The amount they give back is often based on the total you have paid in; minus any claims they have paid you.  Return of premium is almost always an optional rider.  Its cost is usually high.

Reverse Mortgage: Type of loan based on home equity that enables older homeowners (age 62 or older) to convert part of their equity in their homes into tax-free income without having to sell the home, give up title, or take on a new monthly mortgage payment.  Instead of making monthly payments to a lender, as you do with a regular mortgage, a lender makes payments to you.  The loan along with financing costs and interest on the loan does not need to be repaid until the homeowner dies or no longer lives in the home. 

(S)

Severe Cognitive Impairment: Means a deficiency (such as Alzheimer’s or Dementia) in a person’s short or long-term memory; orientation as to person, place and time; deductive or abstract reasoning; or judgment as it relates to safety awareness and requires substantial supervision by another person to protect the insured and others from threats to health and safety.  This is measured by clinical evidence and standardized tests that reliably measure an insured’s impairment.  Tax-qualified policies must require that cognitive impairment be “severe” in accord with this definition.

Shared Care: Shared care is typically an optional benefit available when spouses or domestic partners both buy the same coverage.  With this option, either partner can use the unused benefits of the other partner, up to a residual amount that is reserved for use only by the partner who is not using benefits.  The benefit is triggered when one spouse uses all of the benefits under his/her plan while the other spouse’s plan has benefits remaining.  This benefit may also be available to unmarried domestic partners, depending on the insurer.  Some carriers offer joint policies for which all of the policy benefits can be used by either spouse or partner.  In this case, a shared care rider is not needed since the sharing is built in.  See residual.

Skilled Care: Nursing care such as help with medications, injections, feeding tubes, and caring for wounds.  It may also include therapies such as occupational, speech, respiratory, and physical therapy.  Skilled care usually requires the services of a licensed professional such as a nurse, doctor, or therapist.

Skilled Nursing Care: This is for medical conditions requiring care by skilled medical personnel, such as registered nurses and professional therapists.  The care must be available 24 hours a day and is ordered by a doctor, usually in accord with a care plan.  Skilled care is often needed only for short periods, such as when recovering from acute illness or surgery.  All LTC policies cover skilled care in an approved nursing home.  Sometimes skilled care can be given at home by visiting nurses.  A long-term care policy with home care benefits or alternative plan of care benefits would pay for skilled nursing care.

Skilled Nursing Facility (SNF): Generally a state-licensed institutional setting that provides skilled care by skilled medical personnel.  This care is available 24-hours-a-day and is ordered by a physician under a treatment plan.

Spend Down: This is a process of spending down your income or assets to satisfy financial eligibility criteria for Medicaid long-term care benefits.  Unmarried people must use up all but $2,000 (not including a primary home, a car, personal effects, and burial expenses) before Medicaid will pay.  For couples, the spouse not receiving care can keep some of the joint assets.  The amount varies from state to state. 

Standby Assistance: Standby Assistance means the presence of another person within arm’s reach of the individual that is necessary to prevent injury while the individual is performing an ADL.  It is sometimes referred to as supervisory assistance.  An example is being ready to catch an individual who may fall getting into or out of a bath or shower.

Substantial Assistance: Tax-qualified LTC policies must require that a disabled policyholder must need “substantial assistance” in performing at least 2 ADL’s in order to receive benefits.  “Substantial Assistance” is defined as either “hands-on assistance” or “standby assistance”.

Substantial Supervision: Under a tax-qualified LTC policy, an insured with cognitive impairment may receive benefits if he or she requires “substantial supervision.”  This is defined as continual supervision (such as cuing by verbal prompting, gestures, or other demonstrations) that is needed to protect the cognitively impaired individual from threats to his or her health or safety.  An example is the need for someone to be present to prevent the individual from wandering.

Supervisory Care: Long-term care service for people with memory or orientation problems.  Supervision ensures that people don’t harm themselves or others because their memory, reasoning, and orientation to person, place, or time are impaired.

Survivor & Joint Waiver of Premium Benefits: The policy to trigger these benefits must be in effect for 10 years, and require no claims during the first 10 years of the policy.  If one partner is receiving covered long-term care services, and the premium is waived.  It will also be waived for the partner’s premium.  Policies with a survivor benefit will on the death of one spouse, convert the policy of the surviving spouse to paid-up status with no further premiums due.  This benefit requires an additional premium.

(T) 

Tax-Qualified Policies: Beginning January 1, 1997, long-term care policies meeting certain requirements qualify for favorable tax treatment.  Buyers of Tax-Qualified (TQ) plans can deduct the premiums if they itemize deductions on their federal tax return.  The maximum deductible amount depends on age and is adjusted annually for inflation.  Premiums are treated like other health insurance and medical expenses and must total more than 10% of adjusted gross income (2019).  Seek the advice of your tax advisor regarding the deductibility of your premiums.  Benefits received under a qualified long-term care policy are generally federal income tax-free because they are considered insurance reimbursements for medical expenses.  Amounts you receive from them generally are excluded from income.

Third-party Notification: A process that lets you name someone who the insurance company would notify if your coverage is about to lapse due to a failure to pay a premium.  The notice can go to a relative, friend, or professional such as a lawyer or accountant, for example. 

Toileting: One of the six Activities of Daily Living used to determine the need for long-term care. Toileting is the activity of using a toilet to relieve bowels or bladder, with or without assistance.  See also activities of daily living.

Transfer of Assets: Giving away property for less than it is worth or for the sole purpose of becoming eligible for Medicaid.  Transferring assets during the look back period result in disqualification for Medicaid payment of long-term care services for a penalty period.      

Transferring: One of the six activities of daily living used to determine the need for long-term care.  Transferring is the activity of getting into and out of bed or a chair.  See also activities of daily living.

(W)

Waiver of Premium: A provision in a policy that eliminates the insured from having to pay premiums while receiving care and benefits.  You will not have to pay your insurance premiums after a specific number of days.  It is usually the elimination period (30, 60, 90 days or longer) designated at the time of your application.    

 

Disclaimer:  These are general definitions of long-term care terminology.  The policy you are considering must be reviewed for specific benefits, provisions, limitations, and exclusions before applying for long-term coverage.  Sample long-term care policies are available upon request, which we can review together.

Please seek the advice of your tax advisor regarding the deductibility of your premiums and taxability of benefits.  You should also consult with the appropriate attorney to discuss or create important legal documents relevant to long-term care planning.

Marc Maretsky Personal Insurance Services based in Beverly Hills, serves all of California and the United States.  I help my clients acquire life, disability, long-term care, and critical illness insured solutions, as well as enroll them into Medicare when eligible.

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