Acute Care- Care provided by a doctor or other medical professional designed to treat or cure an illness, injury or condition.
ADL (Activities of Daily Living) - These activities include things like bathing, dressing, eating, toileting, transferring (moving in or out of a bed or chair), and continence. They are used by insurance companies to determine eligibility for long-term care benefits.
Adult Day Care Center - A facility that provides long-term care to adults during the day.
Assisted Living Facility - An appropriately licensed facility that provides 24-hour a day care sufficient to assist clients who need long term care. This facility provides three meals a day, has arrangements for emergency medical care as required, and has methods and procedures to administer prescribed drugs. It uses aides trained or certified to provide a broad menu of services ranging from personal care to health maintenance. It is a facility with many of the resources of a nursing home in a more residential atmosphere.
Cash Benefit Rider – The Cash Benefit Rider allows insureds to use benefit payments in any manner they see fit, including the payment of informal caregivers. (Informal care is care that is provided without charge, and is typically provided by family, friends or neighbors.) This payment method pays the total Home and Community-Based Care Daily Maximum Benefit times the number of days in the month regardless of whether services we provided.
Cognitive Impairment - Certain conditions, such as Alzheimer's disease, require the same kind of long-term care as you would need if you had a physical disability, and would trigger your eligibility for benefits in the same way as the inability to perform Activities of Daily Living.
Custodial Care - Services aimed at maintaining a person's health and/or preventing deterioration in the person's functional status, provided on an extended basis to a person who is chronically ill.
Dual Waiver - Can be applied only when a policy covers both husband and wife. This rider provides for a waiver of premium for both of the insured in the event that either spouse needs to receive benefits.
Duration of Benefits - The length of time your insurance will pay your maximum daily benefits. For example, a four- year benefit is the amount of money your insurance would pay out in benefits at your maximum daily benefit. In fact, a four-year benefit can last considerably longer than four years, if the cost of care is less than the maximum Benefit amount. (see also Lifetime (Unlimited) Benefit)
Eligibility for Benefits - The conditions you need to satisfy to receive long-term care benefits under your policy.
Elimination Period – The number of days in which no payment of benefits will be made for eligible charges incurred. The longer the waiting period, the lower the premium.
Health Insurance Portability and Accountability Act (HIPAA) - The 1996 Federal legislation that makes long term care insurance premiums tax deductible if your non-reimbursable medical expenses, including part or all of your long term care premiums, exceed 7.5% of your gross income. You may be able to deduct the cost of these premiums if you itemize your deductions on your Federal Income Tax return. The deductibility of such premiums is subject to limitations based on your age. The same law also lets you exclude long-term care insurance benefits from your taxable income. Not all long-term care insurance coverage qualifies for the benefit.
Home Health Care - A wide variety of services that bring long-term care to the home and can also include skilled or unskilled nursing, physical therapy, and assistance with ADL's. This care can also include non-medical services, such as housekeeping, shopping, laundry, money management, meal preparation, or help with ADL's.
Inflation Protection - This feature increases the amount of your benefit by a fixed percentage automatically every year, to adjust for inflation.
Informal Care - Care you receive at home from friends, neighbors or relatives who are not health-care professionals. Some plans allow a benefit that provides some compensation to cover this care.
Long-Term Care - As opposed to acute- care, long term care is chronic - provided to people who need help with the activities of everyday life. This care can be delivered in a nursing home or other facility or at home.
Medicare - Congress established Medicare in 1965 as Title XVIII of the Social Security Act. It is a Federal health insurance program wholly funded by the Federal government with no state participation. Its coverage is divided into Part A and Part B. The former basically covers acute care in hospitals and limited post-hospital care in a skilled nursing facility and at home. Part B is a voluntary supplement medical insurance for a variety of outpatient hospital services.
Medicaid - Medicaid (Title XIX of the Social Security Act) is a medical assistance program financed jointly by the state and Federal governments. Medicaid is a means-tested program. Unlike Medicare, which is available regardless of financial need to most person's age 65 or older and to certain disabled individuals, Medicaid is available only to individuals with limited income and assets.
Modal Factors – Your mode of payment. Could either be Annually, Semi-Annually, Quarterly, or Monthly Bank Draft.
Monthly Benefit - Some insurance plans offer their home care benefit as a monthly rather than a daily benefit. The monthly benefit offers you the flexibility of spending the money when you need it - for example if you had someone come in three times a week instead of every day, you could still have the full amount available. (see also Daily Benefit and Maximum Daily Benefit)
Non-forfeiture Benefit - After you've paid for coverage for a certain length of time, some companies guarantee you a benefit, even if you discontinue the coverage, or stop paying the premium.
Nursing Home - A licensed facility that provides 24 hour-a-day nursing care sufficient to assist clients who need long-term care. The facility provides three meals a day, has arrangements for emergency medical care as required, and has methods and procedures to administer prescribed drugs. It uses aides supervised by a nurse, who are trained or certified to provide a broad menu of services ranging from personal care to health maintenance.
Periodic Inflation Protection - Under this option your initial premium pays for the coverage you choose. From time to time, you will be offered an opportunity to increase your coverage. As long as you take this extra coverage periodically, you will be entitled to receive it without taking a medical exam. The premium will be increased based on your attained age.
Rate Class – Could be Preferred, Standard, Select, Class 1 or Class 2 depending on the company and product.
Restoration of Benefits – Some plans allow the full benefit amount to restored if an insured goes on claim and then goes off claim for the number of days specified in the contract.
Shared Care – Some plans allow for additional Daily Benefit to be purchased at certain times and can be used by either spouse.
Spousal Discount or Marital Discount – A percentage discount given to married couples or for just being married or for couples who share financial responsibility for a household but are not legally married. Each plan is different review the outline of coverage.
Survivorship Benefit – Some policies will not require a surviving spouse to pay premiums after the death of one spouse if the death occurs after the policy has been held for a specific period of time, usually 10 year but could be less.
Waiver of Premium – After you receive care in your home, a nursing home or and alternate care facility for “x” number of days, as specified in your contract, under a plan of care, your premium payments are waived.
Additional Long Term Care Terms
ACTIVITIES OF DAILY LIVING
These are the basic activities that enable you to take care of yourself. 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, continence and mobility.
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. Insurance policies usually specify how many "ADL's" you must have before they pay benefits.
ADULT DAY CARE FACILITY
It does not include care received at home or in a hospital or a convalescent care facility. Not all policies cover adult day care, and those that do cover it pay for the service at different rates.
The benefit period begins on the first day the insurance company begins to pay for your care and ends when you no longer require care or have reached the maximum benefits allowed by your policy. A new benefit period begins after you have been carefree for a set period of time, usually 180 days.
Any waiting period required by your insurance policy will have to be satisfied for each new benefit period, unless the policy has a specific provision to credit you for previous waiting periods.
These are the conditions you must meet before the policy pays
benefits. The three most common triggers are the following:
It is best to have a policy that pays when ANY ONE of these three conditions is met. Policies requiring ADL limitations AND medical necessity are less likely to pay claims.
The deterioration or loss of your mental capacity which requires
continual supervision to protect yourself and/or others. It
refers to your impairment in the following areas:
Tax-qualified policies must specify "severe cognitive impairment" as a benefit trigger.
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.
Copayment or coinsurance is a percentage of the cost of care that you pay. Some LTC policies pay a percentage of charges up to a daily maximum. A typical percentage is 80%, meaning that your copayment is 20% of charges.
Custodial care helps you with the activities of daily living. It is administered by people without medical training. Custodial care may involve preparation of meals, help with taking medicines and other routine activities. Custodial care can be given in nursing homes, adult day centers or at home.
Most LTC policies pay for custodial care in an approved nursing home, and those with home care benefits pay for custodial care at home. Usually, you must meet the policy's disability conditions (such as 2 out of 5 ADL limitations) to get paid custodial care.
Policies do not usually cover custodial care given in rest homes, residence homes or similar living arrangements. Custodial care is usually the most costly LTC because it is required for longer periods of time.
The amount a policy will pay for a day of care. Usually, the daily benefit is higher for nursing home care than for home care.
An amount not paid by insurance, usually specified as a dollar amount. It is the amount you pay out of pocket before the insurer begins payment of an insurance claim.
For LTC insurance, the deductible is usually the number of days of care you pay for before the insurer begins paying.
The time between when you begin receiving care and the policy begins paying benefits. Most policies give you a choice of periods, such as 20, 60 or 100 days.
The shorter the elimination period, the sooner the policy begins paying benefits, and the more expensive the policy. The period may be different for nursing home care and home care.
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.
If you change your mind after buying it, most states allow you to return a policy within 30 days and still get your money back. The process for doing this is described in the policy.
To make sure you have this option, get written evidence of when you received the policy. If you decide not to keep the policy, send it back to the insurer with a letter asking for a refund by certified mail. Keep the mailing receipt.
You are considered functionally disabled when you have cognitive impairment or are unable to perform a prescribed number of the activities of daily living (ADL) outlined in you insurance policy.
For example, your policy may require that you be unable to perform two of these five ADL's to receive benefits: eating, transferring, 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.
This refers to how many days after your premium remains unpaid that the policy will remain in effect. The standard grace period is 31 days. This means that you have 31 days after your premium due date to make the payment without any lapse of coverage.
The insurance company cannot cancel your policy for any reason unless you're not paying the premiums. If a policy is guaranteed renewable, it will say so in those exact words.
Almost all LTC policies are now guaranteed renewable. If not, the company is not obligated to continue insuring you.
This is the physical assistance of another person, without which the disabled individual would be unable to perform an ADL.
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 paid not be considered taxable income.
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 the 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 services provided by a nurse, home health aide, nutritionist or occupational, speech, respiratory or physical therapist. It does not usually cover services provided by members of your family, special companions or homemakers.
Home health care is not covered by all insurance companies. When it is offered, 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.
A program providing care for those who are terminally ill. Treatment must be administered under the direction of a doctor and be provided by a hospice care organization that is state licensed or Medicare approved.
Hospice care is covered by some but not all policies, usually as part of the home health care benefits.
An indemnity benefit is a fixed amount paid when care is received, regardless of the cost of care. A policy with a $100 nursing home indemnity benefit will pay $100 for each covered day in a nursing home, no matter what the nursing home charges.
Because long-term care costs can be expected to rise in the future, policies may provide for an annual increase in the maximum daily benefit. Usually, this is an option available at extra cost.
Sometimes the buyer can choose between simple and compound increases. Simple increases means the same dollar amount is added to the daily benefit each year, usually 5% of the original benefit.
Compound inflation protection increases the benefit by a percentage of the current benefit, again usually 5%. Because price inflation is a compound effect, only compound protection will keep up with inflation in the long run. However the difference between simple or constant dollar protection and compound inflation protection is usually not large for people already 65 or over.
INTERMEDIATE NURSING CARE
This is care for stable conditions requiring daily but not 24-hour nursing supervision. The care is ordered by a doctor and supervised by registered nurses. Intermediate care is less intensive than skilled care and usually needed for a longer period of time than skilled care.
Virtually all LTC policies pay for intermediate care in an approved nursing home. Policies with home care or Alternative Plan of Care benefits will pay for intermediate care given at home.
The premium you pay when you buy a policy will not go up later because you get older or if your health changes. However, it can be raised by the insurer for an entire group of policy holders in a state.
Most insurance companies set a limit on the amount of benefits that a policy will pay. These limits are set in terms of either years or dollars, but not both. You will usually be given a choice of lifetime limits. For dollar limits, the higher the dollar amount that you choose, the more expensive the policy.
If the 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.
LONG-TERM CARE (LTC)
LTC is care you may need due to illness or disability if you are unable to care for yourself and family or friends are not available to care for you. LTC can be given in a nursing home, at home, in an adult day-care center or elsewhere.
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.
Medicaid is the joint federal and state government program to pay medical costs for the poor. 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.
The federal government program to provide health insurance for people over 65. While everyone over 65 is eligible for Medicare, it pays for very little long-term care. If you need daily skilled nursing or rehabilitative care in a nursing home after a hospitalization, Medicare will pay for up to 100 days, but you must pay $96 of the daily charge between days 21 and 100. Some private Medicare Supplement (Medigap) policies will pay the copayment for you.
Similarly, Medicare will pay for home health care if you are receiving skilled or rehabilitative care, but not for "maintenance" care or help with activities of daily living. Neither Medicare nor Medigap pays for this custodial care, the most common and costly form of long-term care.
Medigap or Medicare Supplement policies are private insurance policies that pay for care that is approved but not paid by Medicare. Typically, Medigap policies pay part or all of the coinsurance and deductibles associated with Medicare coverage.
Medigap policies will not pay for services not covered by Medicare.
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.
If you stop paying the premiums on a policy, it is cancelled. In this case, the insurer may give something back. It may be a fraction of the money you have paid in, called "return of premium" (see definition). It may be extra months of coverage at your regular daily benefit, or a paid-up policy at a reduced daily benefit.
The amount of non-forfeiture benefit depends on how long you have held and paid premiums on the policy. A benefit may also be paid if the policyholder dies while the policy is in force.
Non-forfeiture benefits may increase the cost of a policy by 30-50%.
Premiums are the cost of insurance. They are paid to the insurer annually, quarterly, monthly or at other intervals. Premiums depend on your age, the amount of coverage or benefits you choose, and for some policies they may depend on your current health.
Sometimes a couple applying together for LTC insurance will get a discount of 5-20% of the usual premium.
This is care provided by a paid caregiver as a replacement to care you usually receive at home from a relative or friend. Respite care is provided to give relief to the person who normally cares for you without charge at home.
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 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.
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.
After you apply for an LTC policy, the insurer examines your application to decide whether it is willing to take the risk of insuring you. This process is called "underwriting."
Often the insurer provides a list of conditions that will disqualify you from receiving coverage from them. Those who are already disabled will usually not qualify for insurance.
WAIVER OF PREMIUM
A provision that you will not have to pay your insurance premiums after a prescribed number of days while you are receiving care. The waiting period for waiver of premium is often 90 days, but the insurer can start counting days with the day you first receive care or the day you first receive benefits.
For instance, if you have a 90-day waiver of premium that begins with payment of benefits and you have a 60-day elimination period before benefits are paid, then you will be receiving care for 150 days before the premium is waived.
Also, a policy may have different waiver of premiums rules for nursing home care and home care, or may waive the premium only for nursing home care.