LTC Definitions

The following definitions from the National Association of Insurance Commissioners and The California Department of Aging will help you understand the terminology of Long Term Care.

Click on the topic to reveal the definition.

 

Definitions

Accelerated Death Benefit

A feature of a life insurance policy that lets you use some of the policy’s death benefit prior to death.

Activities of Daily Living (ADLs)

Everyday functions and activities individuals usually do without help. ADL functions include bathing, continence, dressing, eating, toileting and transferring. Many policies use the inability to do a certain number of ADLs (such as two of six) to decide when to pay benefits.

Adult Day Care

Care provided during the day at a community-based center for adults who need assistance or supervision during the day, including help with personal care, but who do not need round-the-clock care.

Alzheimer’s Day Care Resource Centers

Individualized day care for people with moderate to late stage Alzheimer’s disease or related dementias.

Alzheimer’s Disease

A progressive, degenerative form of dementia that causes severe intellectual deterioration.

Alzheimer’s Facility

Alzheimer’s / Dementia facilities are specialized living arrangements for seniors with memory impairments that have progressed to the point where they can no longer communicate normally and/or take care of themselves. Besides a room and meals in a common dining area, these facilities provide constant supervision, formal nursing care plans, help with activities of daily living (ADLs) and personalized care designed to offer patients as much mental and memory stimulation as possible.

Assisted Living Facility

A residential living arrangement that provides individualized personal care and health services for people who require assistance with activities of daily living. The types and sizes of facilities vary; they can range from a small home to a large apartment-style complex. They also vary in the levels of care and services that can be provided. Assisted living facilities offer a way to keep a relatively independent lifestyle for people who don’t need the level of care provided by nursing homes.

Bathing

Washing oneself by sponge bath, in either a tub or shower. This activity includes the task of getting into or out of the tub or shower.

Benefit Eligibility Triggers

Term used by insurance companies to describe the criteria and methods they use to determine when you are eligible to receive benefits.

Benefits

Monetary sum paid or payable to a recipient for which the insurance company has received the premiums.

Care Management Services / Care Coordination Services

A service in which a professional, typically a nurse or social worker, may arrange, monitor or coordinate long-term care services (also referred to as care coordination services).

Cash Surrender Value

The amount of money you may be entitled to receive from the insurance company when you terminate a life insurance or annuity policy. The amount of cash value will be determined as stated in the policy.

Chronic Illness

An illness with one or more of the following characteristics: permanency, residual disability, requires rehabilitation training, or requires a long period of supervision, observation or care.

Chronically Ill

A term used in a tax-qualified long-term care contract to describe a person who needs long-term care either because of an inability to do everyday activities of daily living (ADLs) without help or because of a severe cognitive impairment.

Cognitive Impairment

A deficiency 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.

Community-Based Services

Services designed to help older people stay independent and in their own homes.

Continence

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

Continuing Care Retirement Communities (CCRC)

A retirement complex that offers a broad range of services and levels of care.

Continuous Payment Option

A premium payment option that requires you to pay premiums until you trigger your benefits. Premiums are usually paid on a monthly, quarterly, semi-annual or annual basis. The policy is not cancelable except when premiums aren’t paid; however, the insurance company can increase premiums on an entire class of policies. Premiums are usually the lowest available.

Custodial Care (Personal Care)

Care to help individuals meet personal needs such as bathing, dressing and eating. Someone without professional training may provide care.

Daily Benefit

The amount of insurance benefit in dollars a person chooses to buy for long-term care expenses.

Dementia

Deterioration of intellectual faculties due to a disorder of the brain.

Disability Method

Method of paying benefits that only requires you to meet the benefit eligibility criteria. Once you do, you receive your full daily benefit.

Dressing

Putting on and taking off all items of clothing and any necessary braces, fasteners or artificial limbs.

Eating

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.

Elimination Period

A type of deductible; the length of time the individual must pay for covered services before the insurance company will begin to make payments. The longer the elimination period in a policy, the lower the premium. Sometimes also called a “waiting period”.

Expense-Incurred Method

Method of paying benefits where the insurance company must decide if you are eligible for benefits and if your claim is for eligible services. Your policy or certificate will pay benefits only when you receive services. Once you have incurred an expense for an eligible service, benefits are paid either to you or your provider. The coverage will pay for the lesser of the expense you incurred or the dollar limit of your policy. Most policies bought today pay benefits using the expense-incurred method.

Guaranteed Renewable

When a policy cannot be cancelled by an insurance company and must be renewed when it expires unless benefits have been exhausted. The company cannot change the coverage or refuse to renew the coverage for other than nonpayment of premiums (including health conditions and/or marital or employment status). In a guaranteed renewable policy, the insurance company may increase premiums, but only on an entire class of policies, not just on your policy.

Hands-On Assistance

Physical assistance (minimal, moderate or maximal) without which the individual would not be able to perform the activities of daily living.

Health Insurance Portability and Accountability Act (HIPAA)

Federal health insurance legislation passed in 1996 that allows, under specified conditions, long-term care insurance policies to be qualified for certain tax benefits.

Health Insurance Counseling and Advocacy Program

Federally funded program in California to train volunteers to provide counseling on the insurance needs of senior citizens.

Home Care

Care in the home which usually includes the following: home health care, personal care, homemaker services, hospice services and respite care.

Home Health Care

Formal paid health care services provided in the home by a nurse or other licensed professional.

Homemaker Services

Assistance with chores or activities that are necessary for an individual to be able to remain in their residence.

Hospice Care

Continuous care provided at home or in a facility with a home-like setting for a terminally ill person. A terminally ill person has a life expectancy of six months or less.

Indemnity Method

Method of paying benefits where the benefit is a set dollar amount and is not based on the specific service received or on the expenses incurred. The insurance company only needs to decide if you are eligible for benefits. Once the company determines you are eligible and you are receiving eligible long-term care services, the insurance company will pay that set amount directly to you up to the limit of the policy.

Inflation Protection

A policy option that provides for increases in benefit levels to help pay for expected increases in the costs of long-term care services.

Lapse

Termination of a policy when a renewal premium is not paid.

Limited Payment Option

A premium payment option in which the person pays premiums for a set time period. After the last premium payment, neither the company nor the person can cancel the policy. These plans are more expensive than continuous payment policies; however, their guaranteed fixed payment and no-cancel features make them attractive to some people.

Long-Term Care Ombudsman

A state-certified advocate serving residents in nursing homes and Residential Care Facilities for the Elderly.

Medicaid (MediCal – California label)

A joint federal/state program that pays for health care services for those with low incomes or very high medical bills relative to income and assets.

Medical underwriting

A method insurers use to evaluate an individual’s personal health and potential claim risk when determining whether to issue a policy, and sometimes how much to charge as a premium.

Medicare

The federal program providing hospital and medical insurance to people aged 65 or older and to certain ill or disabled persons. Benefits for nursing home and home health services are limited.

Medicare Supplement Insurance

A private insurance policy that covers many of the gaps in Medicare coverage (also called Medigap insurance coverage).

National Association of Insurance Commissioners (NAIC)

Membership organization of state insurance commissioners. One of its goals is to promote uniformity of state regulation and legislation related to insurance.

Noncancelable Policies

Insurance contracts that cannot be cancelled by the insurance company and the rates cannot be changed by the insurance company.

Nonforfeiture Benefits

A policy feature that returns at least part of the premiums to you as claim reimbursment if you cancel your policy or let it lapse.

Nursing Home

A licensed facility that provides general nursing care to those who are chronically ill or unable to take care of daily living needs. May also be referred to as a Long-Term Care Facility.

Partnership Policy

A type of policy that allows you to protect (keep) some of your assets if you apply for Medicaid after using your policy’s benefits. Not all states have these policies.

Personal Care (Custodial care)

Care to help individuals meet personal needs such as bathing, dressing and eating. Someone without professional training may provide care.

Pre-existing Condition

Illnesses or disability for which you were treated or advised within a time period before applying for a life or health insurance policy.

Premium

A specified sum of money paid to an insurance company for a policy that guarantees the payment of specified benefits. This payment may be a single sum or periodic payments.

Rescind

When the insurance company voids (cancels) a policy.

Residential Care Facility for the Elderly (RCFE)

Commonly referred to as assisted living facilities, they provide non-medical care and supervision for persons who need assistance with activities of daily living.

Respite Care

Care provided by a third party that relieves family caregivers for a few hours to several days and gives them an occasional break from daily care giving responsibilities.

Return of Premium

Guarantees that a policyholder is paid back the total accumulated premiums of the long term care policy as either claim dollars and/or life insurance dollars at time of death.

Reverse Mortgage

A type of mortgage in which a homeowner can borrow money against the value of his or her home. No repayment of the mortgage (principal or interest) is required until the borrower dies or the home is sold. The money available to the homeowner at the time the reverse mortgage is taken increases with age.

Rider

Addition to an insurance policy that changes the provisions of the policy.

Shortened Benefit Period

A nonforfeiture option that reduces the benefit period but retains the full daily maximums applicable until death. The period of time for which benefits are paid will be shorter. For example, you buy a policy for three years of coverage with a $150 daily benefit, but if you let the policy lapse, the benefit period is reduced to one year, with full daily benefits paid. The exact amount of the reduction depends upon how much premium you have paid on the policy.

You can use shortened benefits at any time after you let the premium lapse (until death).

Skilled Care

Daily nursing and rehabilitative care that can be performed only by, or under the supervision of, skilled medical personnel. This care is usually needed 24 hours a day, must be ordered by a physician, and must follow a plan of care.

Individuals usually get skilled care in a nursing home but may also receive it in other places.

Skilled Nursing Facility (SNF)

A facility or distinctly separate part of a hospital or other institution that is appropriately licensed or certified by the state. Provides both skilled nursing and personal care services. Residents receiving skilled nursing care are usually recovering from serious illness or surgery and need continuous nursing services, observation, and rehabilitation or therapy services.

Spend Down

A requirement that an individual use up most of his or her income and assets to meet Medicaid eligibility requirements.

Stand-by Assistance

Caregiver stays close to the individual to watch over the individual and to provide physical assistance if necessary.

State Health Insurance Program

Federally funded program to train volunteers to provide counseling on the insurance needs of senior citizens.

Substantial Assistance

Hands-on or stand-by help required to do ADLs.

Substantial Supervision

The presence of a person directing and watching over another who has a cognitive impairment.

Survivorship Benefit

Upon the death of the spouse/partner, the policyholder’s long term care policy no longer requires premium payments to stay in force.

Tax-Qualified Long-Term Care Insurance Policy

A policy that conforms to certain standards in federal law and offers certain federal tax advantages.

Term Life Insurance

Covers a person for a period of one or more years. It pays a death benefit only if you die during that term. It generally does not build a cash value.

Third Party Notice

A benefit that lets you name someone whom the insurance company would notify if your coverage is about to end because the premium hasn’t been paid. This can be a relative, friend or professional such as a lawyer or accountant.

Toileting

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

Transferring

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

Triggers (Benefit Triggers)

Term used by insurance companies to describe when to pay benefits.

Underwriting

The process of examining, accepting or rejecting insurance risks, and classifying those selected, to charge the proper premium for each.

Universal Life Insurance

A kind of flexible policy that lets you vary your premium payments and adjust the face amount of your coverage.

Waiver of Premium

A provision in an insurance policy that relieves the insured of paying the premiums while receiving benefits.

Whole Life Insurance

Policies that build cash value and cover a person for as long as he or she lives if premiums continue to be paid.