Long-Term Care Insurance Key Concepts and Terms

ADLs are the everyday functions and activities that healthy people do without assistance, e.g., bathing, continence, dressing, eating, toileting and transferring. Most policies require the loss of at least two ADLs for benefits to begin. Rarely it may require only one, sometimes three. Some older policies added mobility (defined as “walking without assistance”). This is not allowed under newer TAX-QUALIFIED policies issued since 1997.

A program for six or more individuals of social and health-related services provided during the day in a community group setting for the purpose of supporting frail, impaired elderly or other disabled adults who can benefit from care in a group setting outside the home.

An Alternate Plan of Care is an option contained in some (not all) policies. When included, the insurance carrier may consider and cover some types of care not specifically indicated by the policy language. For example, a policy that specifically is intended to pay for skilled nursing home care may allow for payment to an assisted living community.

Washing oneself: (a) by sponge bath; or (b) in either a tub or shower, including the task of getting into or out of the tub or shower.

The Benefit Amount is the amount of money the policyholder is eligible to receive. The Benefit Amount is typically listed as a daily, weekly and/or monthly amount. If the policyholder has an Inflation Growth option, the Benefit Amount shown on the original policy will have increased based on the specific growth formula used. Always request an updated benefit schedule to have the most accurate daily, weekly and/or monthly reimbursements.

Policies may offer (or require) the services of a case manager who typically evaluates the need for care and determines the best type of care for the person’s situation and needs. The person is supposed to be independent (though they are paid by the insurance company).

This can be a valuable resource in terms of helping a client find capable local care services and maximizing the benefits of your LTC insurance policy. In the past these were referred to as Geriatric Care Managers and are often now referred to as Aging Life Care Specialists. Many policyholders receive ongoing services through their long-term care policy from Geriatric Care Managers or Aging Life Care Specialists.

The ability to maintain control of bowel and bladder functions; or when unable to maintain control of bowel and bladder function, the ability to perform associated personal hygiene (including care for catheter or colostomy bag).

Coordination of Benefits is the offsetting or paying of benefits only after any other government agency (e.g., Medicare) or other insurance company has made a payment.

The daily limit on the combined total for all benefit payments provided an insured person under: the Respite Care Benefit; the Long Term Care Facility Benefit; and the Bed Reservation Benefit. It is also used to determine other Benefit limits.

A separate amount applies to each Insured Person. This amount is shown in the Schedule; and will increase over time in accordance with any Benefit Increases that apply.

Feeding oneself by getting food into the body from a receptacle (such as a plate, cup or table) or by a feeding tube or intravenously.

Simply explained, this is the deductible period, or the time before the insurance carrier begins to pay for eligible services. There are two calculations used for the Elimination Period – CALENDER DAYS and SERVICE DAYS. They can make an important difference in how soon the policyholder is eligible for benefits. The policyholder should check with the insurance carrier to be very clear on how their Elimination Period is calculated.

Your spouse and anyone who is related to you or your spouse (including adopted, in-law and step-relatives) as a parent, grandparent, child, grandchild, brother, sister, aunt, uncle, first cousin, nephew or niece.

The physical assistance (minimal, moderate or maximal) of another person without which the Insured Person would be unable to perform the Activity of Daily Living; or see Standby-Assistance.

Assistance a person provides with activities necessary to or consistent with the Insured Person’s needs to manage and maintain a household when he or she is no longer capable of managing those activities. This may include such activities as: preparing meals, doing laundry and doing incidental household tasks.

Assistance a persona provides with the following tasks when necessary to, or consistent with, the Insured Person’s ability to remain safely at home: simple health care tasks, personal hygiene, performing Activities of Daily Living, managing medications and other supportive tasks.

Providers of these services may be independent and do not need to be affiliated in some cases with a home care or home health agency.

Home Healthcare is the services for nursing care or occupational, physical, respiratory, or speech therapy. Also included in the definition of “home healthcare” are home health aide, homemaker services, and medical and social workers.

The LTC insurance policy may offer a sum of money to pay for necessary home modifications and/or durable medical equipment that will enable the client to remain in their own home for a longer period of time. This benefit typically comes in additional to whichever care benefits the policy covers. It’s often a lump sum amount, percentage of the total value or other measurement periods. Always confirm approval prior to any home modifications.

Services (not including prescription drugs) that are designed to provide palliative care to an Insured Person or to alleviate the person’s physical, emotional and spiritual discomforts because he or she is experiencing the last phases of life due to a terminal disease (diagnosed with six months or less to live).

An Indemnity policy will provide a fixed – amount benefit when care is received regardless of the actual cost. A policy with a $200. Daily indemnity benefit will pay $200. For each day any covered care is received no matter what the actual charges are. Most LTC insurance policies are REIMBURSEMENT policies.

This is a policy option added to the basic policy. However, most people assume it is part of the standard policy. It increases benefit levels annually using a formula defined and described by the policy For Example, a policy may have initially provided a Daily Benefit of $100. An inflation rider could grow that benefit by 5% annually. After 10 years, the Daily Benefit would have increased to $155. After 20 years, it would have grown to about $250.

You, the Policyholder named in the Schedule, and your Insured Spouse, if any, who is also named in the Schedule or in an attached coverage rider.

Any of the following who is not a Family Member:

• A physician, as defined in Section 1861®(1) of the Social Security Act;
• A registered professional nurse;
• A licensed social worker; or
• Any other individual who meets such requirements as may be prescribed by the Secretary of the Treasury.

The combined total amount the carrier will pay as a benefit under the policy. The amount shown in the Schedule; and it will increase over time in accordance with any Benefit Increases that apply.

The Health Insurance for the Aged Act, Title XVIII of the Social Security Amendments of 1965 as then constituted or later amended.

Someone who is licensed as a Registered Graduate Nurse (RN), Licensed Practical Nurse (LPN), or Licensed Vocational Nurse (LVN), and is operating within the scope of that license.

Each twelve month period beginning with the Effective Date of the policy, as shown in the Schedule.

Some LTC insurance policies have a defined time or limit during which benefits are paid. Most policies, however, use a “Pool of Money” formula, meaning there is a maximum amount of dollars available in the policy. The policy will continue to pay until the entire pool of dollars is spent. This can be confusing to policyholders who selected a limited – duration policy (e.g., one with a three – year Benefit Period). A policy using a Pool of Money approach could pay benefits longer than the three years and, in fact, many using this approach do, especially where home care services are utilized.

Most LTC insurance policies utilize a Reimbursement approach. The insured submits a claim for care services provided, and the claim is paid up to the maximum amount specified by the policy. Part of the claim is proof of services by invoices and daily care logs after service.

Short-term care provided in order to relieve an Insured Person’s primary informal (unpaid) caregiver in the Insured Person’s home. It can be furnished in an institution, in the Insured Person’s home, or at a community-based program.

A LTC insurance policy may reinstate benefits the policyholder has NOT used after a period of time during which care is not needed. This typically is 180 days. For example, a person has a three-year Benefit Period but receives care for one year and then no longer needs care. Six months (or longer) passes, and the person again has their full three years of benefits to use.

A loss or deterioration in intellectual capacity that:

• Is comparable to (and includes) Alzheimer’s disease and similar forms of irreversible dementia; and
• Is measured by clinical evidence and standardized tests that reliably measure impairment in the person’s: short term or long-term memory, orientation as to people/places/or time and deductive or abstract reasoning.

Shared Care is another policy rider that allows two people to combine their pools of benefits. This is an increasingly popular option selected by couples who also opt for a limited Benefit Period. If the first person to need care exhausts their available Pool of Money, they have the option of utilizing the other person’s Pool of Money. If the first person dies with money still in their Pool, the surviving person inherits what is left for their own care. Some of the shared care policies waive future premiums upon death.

The presences of another person within arm’s reach of the Insured Person that is necessary to prevent, by physical intervention, injury to the Insured Person while he or she is performing the Activity of Daily Living. See Hands-on Assistance.

Continual supervision (which may include cueing by verbal prompting, gestures, or other demonstrations) by another person that is necessary to protect the severely cognitively impaired person from threats to his or her health or safety (such as may result from wandering).

LTC insurance policies that conform to federal law offer some tax advantages to individuals. Tax Qualified LTC insurance was established after Congress passed the Health Insurance Portability and Accountability Act of 1996 (the Act went into effect January 1, 1997).

Getting to and from the toilet, getting on and off the toilet, and performing associated personal hygiene.

A TPA is a company hired by the insurance carrier to manage and process long-term care insurance claims for the carrier. This normally includes establishing and managing a provider group to serve the needs of the policyholders who file long-term claims, includes invoices as well as daily care logs.

Moving in and out of a bed, chair or wheelchair.

Long-term care insurance policies with an Unlimited Benefit Period has no limit on the number of years benefits for qualifying care are needed. These types of policies are no longer being offered to new buyers.

This rider found in some LTC insurance policies waives the Elimination Period when a claim starts as home healthcare.

A Waiver of Premium is a policy provision that waives the payment of premiums while the policyholder is receiving benefits. How the waiver applies will be described in the LTC insurance policy.

This is an assessment of the individual’s current and ongoing need for care. It will describe impairments; care needs and how these needs will be met presently and in the foreseeable future.