A

Activities of Daily Living (ADL's)

These are the basic activities that we all tend to take for granted. These "learned" activities are the ones, later in life, we need help with either due to illness, accident or the impact of aging. A Long Term Care Insurance policy generally requires your healthcare professional to certify you need help or assistance with at least two of the six ADL's. The six ADL's are the following: bathing, dressing, transferring, eating, toileting, and continence. Persons needing help performing ADL's are further classified as requiring "hands-on assistance" or "standby assistance".

Adult Day Care Facility

A facility that is:

Generally licensed by the state in which it is located;
is not an overnight facility;
maintains a written record of services rendered;
is open a minimum number of hours per day at least five days per week;
has established procedures for handling medical emergencies.

There are two general types of adult day care programs. One is based on a medical model and the other on a social model. The medical model provides comprehensive medical, therapeutic, and rehabilitation day treatment. The social model offers supervised activities, peer support, companionship, and recreation. Both models assist older adults and those with chronic conditions to remain as independent as possible, for as long as possible.

Programs organized along the medical model lines are often called adult day health care to distinguish them from social programs. Adult day health care programs offer health services such as physician visits, nursing care, and podiatry, as well as rehabilitation services such as physical, occupational, and speech therapy in a secure environment. This model of adult day care is offered to persons with a variety of chronic medical conditions including the following:

adults with Alzheimer's disease, other forms of dementia, or depression
persons recovering from stroke or head or spinal cord injuries
people with chronic conditions such as diabetes or cardiovascular disease
adults with developmental disabilities such as Down syndrome
adults suffering from mental illnesses
weak or frail older adults requiring nursing care or assistance with daily living activities

The social model of adult day care emphasizes supervised group activities such as crafts, gardening, music, and exercise. Participants in this model may require some assistance with the activities of daily living (e.g., eating, bathing, dressing, etc.) but they generally do not require skilled nursing care. Like adult day health care facilities, these social programs generally provide transportation and a midday meal for participants, as well as caregiver support groups, information and referral services, and community outreach programs.

Most insurance companies who offer Long Term Care Insurance will pay benefits toward adult daycare services.

Although the participants of adult day care are adults who attend the programs daily or several times each week, adult day care also meets the needs of families and other caregivers. Before women entered the workforce, they were available to care for relatives at home. Today, adult day care provides a secure, alternative source of care for women who work outside the home. It also offers respite, or much needed breaks, for caregivers. Older adults caring for spouses, or children caring for aging parents find that adult day care helps ease the burden of caring for ill, confused, or disabled family members.

Ancillary services

In a long term care policy it is coverage for items like physical, occupational, speech and respiratory therapies, wound care, medication management, supplies and services for continence care support and other similar care-related services and/or supplies that support a person's activities of daily living.

Assisted Living Facility

A type of Long-Term care facility for people who are able to get around on their own but who may need help with some activities of daily living or simply prefer the convenience of having their meals in a central cafeteria and having nursing staff on call. This residential living arrangement provides personal care and health services for people who need assistance with activities of daily living. These facilities can range from small homes to large apartment complexes. They also vary in the levels of care and services that can be provided. Assisted living facilities are much less institutional and provide a way for people to retain a relatively independent lifestyle who do not need the level of care provided by nursing homes. Most LTC policies provide benefits for assisted living.

Alternate Care Benefit

In a long term care policy the insurance company, under this provision, will consider paying for treatments, services, and supplies not specifically listed in the policy as long as it benefits care and can be cost effective for the insurance company. Generally needs to be in a plan of care recommended by a health care professional. The provision is placed in many long term care policies to cover items in the future that may benefit a person's care and still be cost effective. An insurance company will never force an insured to use an alternative type of care.

B

Bathing

One of the Activities of Daily Living used to trigger benefits in a Long-Term care insurance policy. It is defined as washing oneself by sponge bath, or in either a tub or shower, including the task of getting into or out of the tub or shower. (See also Activities of Daily Living.)

Bed Reservations

If you are in a nursing home and need to go to a hospital, some policies will pay to reserve your nursing home bed so you can return when your hospital stay is over. There is a limit on how many days your bed will be reserved depending on the company. Some companies allow payment for bed reservation for any reason. This is important since once you find a facility you and your family are happy with you don't want to lose it if you have to leave temporarily like go to a hospital. Sometimes you can get back into the same facility but not the same room with a view you enjoy. In either case, having this in a long term care policy is very valuable.

Benefit Period

The minimum period of time a long term care insurance policy will pay benefits. Some companies use 'benefit period' to create a pool of money and the pool of money can provide benefits well beyond the 'benefit period'. For example, you may have an initial $150,000 pool of benefits with $3500 a month available (not counting any inflation you may have in a policy). If you used the maximum available every month it would last a little over 3 years. However, most long term care insurance claims start with care at home. So this pool could last 4, 5 even 6 years or more depending on how the benefits are used. With some companies you would select a monthly benefit and a benefit period to create the pool. So if you selected $3500 a month and a 3 year benefit period, it would create an initial pool of money worth $126,000 (plus any inflation benefit). Again, the pool can last much longer than 3 years.

Benefit Triggers

These are the conditions a person must meet before a long term care policy pays benefits. The common triggers for tax-qualified long term care policies are:

You require help with a specified number of ADL limitations (usually 2) OR
You require supervision due to a cognitive impairment

C

Case Management/Care Management

Some policies 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. Since managers know what care resources are available, and the needs of the person requiring the care they can make the best recommendations based on both your needs and preferences. They continue to review your situation on an on-going basis to make sure the quality of care remains appropriate. In addition, many times they are able to obtain provider discounts. Some insurance companies offer this benefit to uninsured spouses or family members.

Cash Benefit

Policies paying a Cash Benefit pay a fixed amount while the insured qualifies as disabled, regardless of whether the insured actually receives care. The fixed amount may differ depending on whether the insured is in a facility or at home. See also Indemnity.

Chronic Care

Refers to care and services that help achieve functional independence for those with continuing and long term health problems as opposed to "acute" care which refers to short term care of a severe illness. Chronic conditions generally have no specific cure and require care over a protracted period of time. Chronic care is often used interchangeably with Long Term Care in the medical community.

Chronically Ill

Tax-qualified LTC policies require that an insured be certified as "Chronically ill" by a licensed health care practitioner. This means the insured is unable to perform without substantial assistance (actual hands-on or stand-by) at least 2 activities of daily living for a period of at least 90 days or require supervision due to a cognitive impairment. The 90-day requirement means the health care professional expects your need for care for at least that long.

Class

This is a group of people in a long term care insurance policy having the same application date, policy form, sex, issue age, issue year, rate classification and state of issue in common. It is used for any possible rate increase as any approved increase by a state's Department of Insurance must be by "class". In other words, an insurance company may not increase a premium to just one person or small group of persons, only a class of people.

Co-Insurance

This is the concept of sharing the cost of care with an insurance company, generally with the insurance company paying the majority but not all the costs in order to keep a premium much lower. Co-insurance refers to the amount that the insured must pay out-of-pocket to make-up the difference between their actual costs and the amount the policy covers. The greater the amount the insured is willing and able to "co-insure" the lower the policy benefits must be and therefore policy premiums.

Cognitive Impairment

The deterioration or loss in your mental capacity which requires continual supervision to protect yourself or others. It refers to your impairment in the following areas:

your short term or long term memory
your orientation as to person (who you are), place (where you are), time (day, date and year), and
your deductive or abstract reasoning.

Comprehensive Policy

Long Term Care insurance policy that covers care in multiple settings including facility and in-home care. Most long term care policies today are comprehensive and cover all areas of care in all types of settings.

Compound Inflation

A rider on a long term care insurance policy where the benefits increase by a rate compounded every year. For example, if your Maximum Daily Benefit (MDB) was $100 and you had a 5% compound inflation rider, the Maximum Daily Benefit would increase by 5% per year. Therefore in year two it would by $105, but in year three $110.25, in year four $115.76 etc. The difference between a compound and simple inflation rider is not significant in earlier years, but becomes greater as time goes on. The type of inflation options may determine if a long term care insurance policy qualifies for "partnership" certification.

Continence

The ability to maintain control of bowel and bladder function; or, when unable to maintain control of bowel or bladder function, the ability to perform associated personal hygiene (including caring for catheter or colostomy bag). It is one of the Activities of Daily Living used to trigger benefits in a Long-Term care insurance policy.

Contingent Nonforfeiture

The Contingent Nonforfeiture Benefit is the opportunity in all tax-qualified long term care policies to provide the policy holder options in the event the insurance company gets approved a rate increase of over a certain amount as listed in the policy. The policy holder may reduce coverage so that required premium payments are not increased or to convert to a paid-up status if there is a substantial premium increase. The offer to reduce coverage or to convert to a paid-up status does not require additional underwriting. While it is not easy for an insurance company to raise premiums on Long Term Care Insurance policies, this provision provides additional consumer protection.

Convalescent Care Facility

This is an institution devoted to providing medical, nursing, or custodial care for an individual over a prolonged period, such as during the course of a chronic disease or the rehabilitation phase after an acute illness.

Coordination of Benefits

Coordination of benefits means a long term care policy will pay benefits only after any other insurance policy or government agency has made payment. It will not make payments on top of benefits from some other policy.

Criminalization

Under the provisions of the Health Insurance Portability and Accountability Act which became law January 1, 1997, persons who knowingly and willfully dispose of assets in order to become eligible for Medicaid payment of long term care expenses are subject to criminal penalties, if doing so results in a period of ineligibility for Medicaid benefits. This was modified by the Deficit Reduction Act (DRA) of 2005, the period of ineligibility is now 5 years.

Custodial Care

Custodial care refers to the type of care most people will need when they need long term health care services. This is care that helps a person with the activities of daily living. It may be provided by people with little or no medical training. Custodial care may involve preparation of meals, help with taking medicines, and other routine activities. Custodial care can be given in assisted living facilities, nursing homes, adult day centers, or at home. Generally, LTC policies pay for custodial care in any setting if you meet the trigger for benefits.

D

Daily Benefit: The amount a policy will pay for a day of care. Often people choose a monthly benefit since the out-of-pocket expense is less due to how home care is delivered.
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 provided for Qualified State LTC Partnerships, which will permit States with approved State plan amendments (SPA) to exclude from estate recovery the amount of LTC benefits paid under a qualified LTC insurance policy. For States that elect this option, the State plan must provide that, in determining eligibility for Medicaid, an amount equal to the benefits paid under a qualified LTC policy is disregarded. The State must also allow, in the determination of the amount to be recovered from a beneficiary's estate, for the same amount to be disregarded.

E

Elimination Period: The length of time you must wait between the date you are diagnosed as needing care and the date your long-term care insurance policy starts paying benefits. It is similar to a deductible, but measured in days rather than dollars. Depending on the policy, this period can range from 0 days to 100 or more days.

F

Facility Care: Care provided in a licensed facility such as a nursing home, assisted living facility, or continuing care retirement community.
Frail Elderly: An older adult who is unable to perform at least one activity of daily living without substantial human assistance, or who has a severe cognitive impairment.

G

Guaranteed Renewable: A policy feature that guarantees your insurance company cannot cancel your policy as long as you continue to pay your premiums on time, and they cannot change your coverage based on changes in your health.

H

Home Health Care: A range of nursing and other professional support services provided in your home by a licensed home health agency.
Home Modification Benefit: A provision in some policies that pays to modify your home (such as building a ramp or widening doorways) to allow you to remain safely at home.

I

Indemnity Model: A policy structure that pays a set daily or monthly benefit amount once you meet the eligibility triggers, regardless of the actual cost of care or who provides the care.
Inflation Protection: An optional rider that increases your policy's benefit amount over time to help keep pace with the rising costs of long-term care.

L

Long-Term Care (LTC): A variety of medical, personal, and social services designed to help people who have lost their ability to care for themselves due to illness, aging, or disability.

M

Medicaid: A joint federal and state program that helps with medical costs for some people with low incomes and limited resources, including long-term nursing home care.
Medicare: A federal health insurance program primarily for people aged 65 and older, which provides very limited coverage for long-term care.

N

Nursing Home: A facility that provides 24-hour round-the-clock nursing care and supervision for individuals who require high levels of medical and personal assistance.

P

Partnership Program: A joint state and private initiative that allows individuals who purchase a qualified long-term care insurance policy to protect a portion of their assets from Medicaid spend-down requirements.
Pre-existing Condition: A medical condition for which you received treatment, diagnosis, or advice within a specified period before applying for insurance coverage.

R

Reimbursement Model: A policy structure that pays out benefits based on the actual expenses incurred for covered long-term care services up to a maximum daily or monthly limit.
Respite Care: Short-term relief care designed to give family members or regular informal caregivers a temporary break from caregiving duties.

S

Simple Inflation Protection: An inflation rider where the benefit increases each year by a fixed percentage calculated from the initial benefit amount rather than compounding.
Substantial Assistance: Hands-on or standby assistance required by an individual to safely perform activities of daily living.

T

Tax-Qualified Policy: A long-term care insurance policy that meets specific federal guidelines, making the benefits received generally tax-free and premiums potentially tax-deductible.
Transferring: One of the Activities of Daily Living defined as moving into or out of a bed, chair, or wheelchair.

U

Underwriting: 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, an in-home physical and cognitive assessment by a nurse or health aide. The underwriting process for long-term care insurance is always dependent on the age and health of the person applying for coverage. Generally, the cost of underwriting is paid by the insurance company.

V

Veterans Benefits: Programs provided by the Department of Veterans Affairs (such as the Aid and Attendance Allowance Program) that provide financial support for eligible veterans and surviving spouses to help pay for home and community-based long-term care services.

W

Waiver of Premium: A provision that a policy holder of a long term care insurance policy will not have to pay the premiums after receiving benefits from a policy.