LTC Glossary

 

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Accelerated Death Benefit: A life insurance policy option that will pay all or part of the policy’s face amount before death. This benefit can pay the cost associated with catastrophic medical conditions, which can include the need for nursing home residency. 

Accelerated Payment Option: This allows you to pay all of your premiums in a shortened period of time. To Age 65, Ten Pay, Twenty Pay and Single Pay premiums are available from various companies. They may or may not be able to raise the premium during this period, depending on the policy language. 

Activities of Daily Living (also known as ADLs): Functional everyday activities used to measure a person’s ability to live independently. ADLs include such things as eating, dressing, bathing, toileting, transferring and continence. 

Actual Charge: The carrier will pay the actual daily charge, not to exceed the daily benefit that the policyholder has. 

Acute Care: Care for illness or injury that has developed rapidly, has pronounced symptoms and is finite in length. 

Adult Day Care: Social, recreational and/or rehabilitative services provided in the daytime for persons who cannot remain alone. It includes health and custodial care, and other related support. This care – an alternative to care in the home or in an institution – is given in specific centers on a less than 24-hour basis. 

Adult Day Care Facility: A facility designated to provide custodial and/or minimum health care assistance to persons unable to remain alone, often during daytime working hours when the caregiver is employed. 

Adult Foster Care: A live-in arrangement where one adult lives with, and is provided care and / or services, by an unrelated person or family. These arrangements may be certified by the state or managed individually. 

Ageism: Prejudice against people because of their age. 

Aging in Place: An older person continues to live at home or within the community, not in an institution. 

Alternate Care Benefit: A long-term care insurance policy provision, which allows for a special arrangement of services specifically designed to allow the person to reside in a setting other than a nursing facility. 

Alternate Care Facility: A licensed residence other than a nursing facility where care services are delivered. Examples: a hospice, an assisted living facility, an Alzheimer’s facility or Christian Science setting. 

Alternate Plan of Care: A plan of care which is developed to provide services to a policyholder receiving benefits under an alternate care benefit agreement. 

Alzheimer’s Disease: A form of organic dementia resulting in cognitive impairment first described in 1906 by German neurologist Alois Alzheimer. Specified levels of impairment trigger benefits under the long term care insurance policy. 

Alzheimer’s Units: Special living units within nursing facilities or alternate care facilities specifically providing care and services for those with Alzheimer’s disease. 

Ambulatory Care: Medical services provided on an outpatient (non-hospitalized) basis. Services may include diagnosis, treatment, surgery and rehabilitation. 

American Association of Retired Persons(AARP): A non-profit organization engaged in activities such as education, lobbying, research, etc., for the benefit of seniors. Its 32 million members (1998) are ages 50 and beyond. 

Ancillary Services: Health care services conducted by providers other then primary care physicians. 

Aphasia: Loss of the ability to use or understand language. 

Assessment: An evaluation of physical and / or mental status by a health professional. The assessment is a central component in long term care insurance coverage and payment of claims. Upon the initiation of benefits – due either to the loss of two or more of the activities of daily living (ADLs), or a cognitive impairment, an assessment is performed by a healthcare professional, usually an R.N. This assessment, together with the attending physician notes, determines the level of functional incapacity and plan of care to be followed in assisting the policyholder in performing ADLs. 

Assisted Living Facility: A facility providing room, board, laundry, some form of personal care such as help with bathing or dressing, and usually recreation and social services. Licensed by state departments of social services, they’re known in some states as Community-Based Residential Facilities or Board and Care Homes. Generally they are less costly than nursing homes. Some assisted living facilities are designed specifically for the care of dementia. 


Benefit: The amount payable by the insurance company to the claimant when the policyholder suffers a loss covered by the policy. 

Benefit Increase Option: Also known as Automatic Increase Benefit and Cost of Living Adjustment Benefit. These are optional benefits that provide for annual increases in the benefit amount to offset the effects of inflation. Benefit Increase Options are paid for at the time of issue and increase the daily policy benefits by either 5 percent compounded or simple interest factor. Increases begin at the first policy anniversary and continue for the duration of the insurance policy, except where the insurance carrier “caps” the increase at a predetermined amount. 

Benefit Limit: This amount represents the daily benefit times the maximum number of days you can receive for all benefits combined under the policy. For example, a daily benefit of $100 a day x a benefit period of 1825 days (5 years) = a benefit limit of $182,500. 

Benefit Multiplier: The minimum number of days a company would pay your full Daily Maximum. 

Benefit Period: The maximum length of time for which benefits will be paid. 

Benefit Schedule: Means a schedule of benefit coverage that is provided to each Covered Person which establishes Premium amounts, Premium payment modes, a summary of the benefits and limitations that may apply. 

Benefit Trigger: When certain conditions occur or requirements are met, they will trigger a company to begin paying a policy benefit. 


Caregiver: The person providing assistance to a dependent person because of medical reasons or the person’s inability to conduct routine activities of daily living. A primary caregiver is the key person – usually a relative – overseeing and providing care for the incapacitated person. Secondary caregivers are relatives or others who assist in giving care to the person. 

Caregiver Indemnity Benefit Option: Allows Home and Community Services Benefits to be payable regardless of who provides the care; i.e., a family member, friend, or other non-professionals allowed in the contract. 

Care Management Services: A service that may arrange for, coordinate and monitor long term care services. Those providing the service are usually professional nurses or social workers. 

Case Mix: Minnesota’s method for setting payment rates for nursing home and boarding home care. There are 11 case mix classification levels (A through K), and each corresponds to a different payment rate. Those who need the most care (level K) pay the highest rate and those who need the least care (level A) pay the lowest rates. An assessment is completed for the resident upon entering the nursing home and periodically thereafter. 

Catastrophic Illness: An illness resulting in a sudden change or significant disruption to a person’s normal lifestyle. Such changes may be temporary or permanent. 

Chronic Care: Care for illness continuing over a long period of time or recurring frequently. Chronic conditions often begin inconspicuously and symptoms are less pronounced than acute conditions. Long term care insurance is designed to assist people who have a loss of functional capacity due to chronic illnesses. 

Cognitive Loss: The deterioration or loss of one’s intellectual capacity, confirmed by clinical evidence and standardized tests, in the areas of: (1) short and long term memory; (2) orientation to person, place and time; and (3) deductive or abstract reasoning. This is a trigger for long term care benefits. 

Coinsurance: A portion of incurred medical expenses, usually a fixed percentage, that a policyholder must pay out of pocket. Also referred to as “co-payment.” 

Congregate Housing: Apartment houses or group accommodations that provide health care and other support services to functionally impaired older persons who do not need routine nursing care. 

Consumer Price Index (CPI): The Consumer Price Index is for all urban consumers and is published by the United States Department of Labor. It is the cost of grocery items and other goods and services based on a standard established in 1940 and stated in today’s dollars. 

Continuing Care Retirement Community (CCRC): Originally called “life care” communities, these organizations provide living arrangements and services ranging from independent to assisted to institutional care. Often, CCRCs require a large initial cash payment, ongoing maintenance fees, assignment of assets or a combination of all three. 

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. 

Custodial Care: The most common type of long term care services rendered, it provides assistance with the activities of daily living and generally is performed by a trained aide, most often in the home. These are services – mostly personal care – that can be given safely and reasonably by a person not medically skilled. They’re designed mainly to assist with activities of daily living or instrumental activities of daily living. 


Daily Benefit: The daily dollar amount that will be paid to a policyholder when policy requirements are fulfilled. 

Dementia: Severe impairment of cognitive functions (e.g., thinking, memory and personality). Of the elderly population, 5 to 6 percent have dementia. Alzheimer’s disease causes about one-half of these cases; vascular disorders (multiple strokes) cause one-fourth; other dementias are caused by heart disease, infections, toxic reactions to medicines, alcoholism and other rarer conditions according to the National Association of Health Underwriters. Most dementias are not reversible. 

Diagnostic-Related Groups (DRGs): Specific classifications of illnesses into which hospital inpatients are grouped. Under Medicare, hospitals are reimbursed a fixed amount that is determined in advance for each patient admitted for an illness in a given classification. 

Discharge Planning: Assessment of an inpatient’s medical condition for the purpose of arranging for appropriate continuing care upon leaving the facility. This planning includes the length of time the patient will be in the hospital, the expected outcome and whether there are special needs or requirements on discharge. 

Durable Medical Equipment: Mechanical devices, equipment and supplies which enable a person to maintain functional ability. Examples include wheel chairs, walkers and hospital beds. 

Durable Power of Attorney: A person’s appointment of a representative to act on his or her legal behalf via a legal document that remains in effect in the event of incapacity of the grantor. 


Elimination Period: Also known as the waiting period or deductible. It’s the number of days of service after becoming eligible that the policyholder is responsible for all costs before benefits become payable. In other words, the period during which no benefits are payable. In the case of home care, this is the number of home care visits that must be provided as per the plan of care before daily benefits will be paid. Elimination periods often range from 20 to 100 days. 

Exclusions and Limitations: Instances in which a policy will not pay benefits. This can include : for anything provided by a member of the policyholder’s immediate family (unless stated otherwise); that for which no charge would be made in the absence of insurance; for care provided outside of the United States of America or its possessions (unless stated otherwise); for care provided in a Veteran’s Administration or federal government facility, unless the policyholder or the policyholder’s estate is charged for the services or confinement; care that results from war or an act of war, whether declared or not; services needed because of an attempted suicide or an intentionally self inflicted injury; any care needed that results from alcoholism or addiction to narcotics (but not addiction which results from the administration of those substances in accordance with the advice and written instructions of a doctor). It also may include an exclusion for mental or nervous disorders/conditions. 


Frail Elderly: Elderly persons whose physical and emotional abilities or social support system is compromised in such ways that maintaining a household or social contacts is difficult without regular assistance from others. 

Free-look Period: If you change your mind after buying a policy, most states allow you to return the policy within 30 days. 

Functional Age: An assessment of age based on physical or mental performance rather than on chronological age. 

Functionally Dependent Elderly: People who need assistance from another person to manage daily tasks. 


Generic Drugs: These drugs have the same active chemical ingredients as brand name drugs (the trade name given to a drug by its manufacturer) but at a lower cost. 

Geriatrics: The study of physical and mental changes in persons as they age – including diagnostic treatment and prevention of disorders. 

Grace Period: The length of time (usually 31 days) after a premium is due and unpaid that the policy and applicable riders remain in force. 

Guaranteed Increase Option: Some policies will give you an option every two years to increase your daily benefit by purchasing an additional amount of coverage. You will be given an offer on the second policy anniversary and each two-year anniversary thereafter through the tenth anniversary, unless you decline two successive offers (policies may vary). Those policies guarantee this offer regardless of your health as long as you are not receiving covered services. No additional underwriting will be required. 

Guaranteed Renewable: A provision that precludes cancellation of a policy or change in its provisions as long as the policy stays in force by timely payment of premium. The insurance carrier, however, may adjust the policy’s premium by class of insured and/or by state, typically with state approval. 


Health Care Financing Administration (HCFA): The federal agency that administers Medicare. 

Health Care Surrogate: A person designated as having a medical durable power of attorney to make medical decisions on behalf of another person. 

Health Insurance Portability and Accountability Act (HIPPA), also known as the Kassebaum-Kennedy law: Milestone legislation passed by Congress and signed into law in 1996. It sends a strong message that the federal government wants Americans to plan for their own long term care protection. The law clarifies tax treatment of qualified long term care policies. It also includes a provision that makes it a federal crime to willfully dispose of assets to qualify for Medicaid coverage of nursing home and other long term care services. 

Home Care: Professional, skilled and personal services delivered in a person’s residence. 

Home Health Aide: A person certified to provide personal care such as bathing and dressing, and who works under the direction of a registered nurse in a home care agency. 

Home Health Care: Professional or personal care services provided in the home or assisted living facilities. Professional services include skilled nursing care and physical, speech and occupational therapy. 

Home Health Care Agency: An organization providing home health care or home care. Agencies are state licensed as required, keep clinical records of all patients, and are supervised by a qualified physician or registered nurse. 

Hospice Care: A coordinated program for control of pain and symptoms for the terminally ill. It also may provide support services for the family. 


Immediate Family: Varies from policy to policy, but usually includes a person’s spouse, daughter, son, father, mother, sister or brother, grandchildren, or in-laws. 

Incontinence: Inability to voluntarily control bowel or bladder function. 

Indemnity Benefit: When a policy specifies a particular daily benefit, the amount will be paid regardless of what the facility charges for the policyholder’s care. 

Inflation Protection: An option within a long-term care insurance policy that will provide an increase in benefits, as the expected increased costs occur to provide long term care services. The options are usually simple / compound inflation. 

Institutionalization: A person’s admission to an institution, such as a nursing home. 

Instrumental Activities: The more complex tasks associated with independent living. IADLs include light housekeeping, taking medications, using the telephone, meal preparation, moving about outside, shopping and laundry. 

Intermediate Care: Care requiring intermittent, less intense skilled professional and personal care services. 


Joint Commission on Accreditation of Healthcare Organizations (JCAHO): A private, voluntary accrediting organization for all types of health care providers. 


Lapse: Termination of policy due to non-payment of premiums. 

Lifetime Waiver of Premium for Survivor: In the event of the policyholder’s death or a covered spouse’s death after a specified number of years, the surviving person may continue the policy in force for the rest of his or her life, with all subsequent premiums waived. 

Living Will: A document which enables a person to declare his or her wishes in advance concerning the use of life-sustaining procedures in the event of a terminal illness or injury when the person has become incompetent. 

Long Term Care: The physical, mental and social care given to individuals who have severe, chronic impairments. The types of long term care available include nursing home care; alternate facilities and community care options such as adult day care and home health care. 


Managed Care: The establishment of control mechanisms before during and after delivery of services that ensure high quality and cost effective care. 

Meals on Wheels: A program designed to deliver meals to the homebound. 

Medicaid: A federally funded, state-managed program of medical aid for persons of any age who are unable to afford regular medical services. Commonly called Title 19. 

Medicare: A national health insurance plan for people over 65, and for some under 65 who are disabled. It includes two parts; A) covers hospital costs and some short-term skilled nursing care stays, and B) the supplemental portion for which the person pays premiums covering a portion of the physician’s fee as well as various types of therapy. 

Medicare Risk Plan: A type of Medicare supplement coverage where the Medicare recipient “assigns” his or her benefits to an HMO. The HMO contracts with the federal government to provide medical services to the Medicare recipient at a capitated rate from the government. 

Medicare Supplement Plan (Medigap): A private insurance program designed to pay Medicare coinsurance amounts and other benefits. 

Medigap: Medigap or Medicare Supplement policies are private insurance policies that pay for care that is approved but not paid by Medicare. Medigap policies will not pay for services not covered by Medicare. 

Mental and Nervous Disorders/Conditions: Refers to a mental or emotional disease or disorder of any kind that does not have an organic origin. (Alzheimer’s and senile dementia are considered organic.) These “non-organic” mental and nervous disorders (such as depression) and disorders due to alcohol or drug related problems may or may not be covered by a policy. See the “Exclusions and Limitations” section of the contract. 


National Association of Insurance Commissioners (NAIC): A national organization of state officials charged with regulating insurance. NAIC has no official power but wields considerable influence. The association was formed to promote national uniformity in insurance regulations. 

Non-Cancelable: A provision that precludes a cancellation of a policy or a change of any of its terms or rates by the insurance company, as long as the policy remains in force. The policyholder need only make timely payments of premiums. 

Nonforfeiture Benefit: This benefit returns part of what the policyholder has paid in premiums if the policyholder chooses to cancel the insurance coverage. 

Non-Tax-Qualified Long Term Care Plans: Policyholders do not need certification from a health care professional to receive insurance benefits under these plans. However, the U.S. Treasury Department has not yet clarified whether benefits under this plan are taxable as income or whether or not premiums are tax-deductible. It’s a clarification that’s long overdue. (See Tax-Qualified Long Term Care Plans) 

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Occupational Therapy: Rehabilitation through the teaching of an art or a specific occupation for persons physically or mentally impaired, with the intent to restore functional ability. 

Out-of Pocket Expenses: Those health care costs that must be paid for by the policyholder because they are not covered under an insurance contract. 

Over-the Counter Drugs: Non-prescription medicines. 


Partnerships: A state-level joint public/private sector program that allows consumers to buy an approved long term care insurance policy to conserve some assets before qualifying for Medicaid. States with federally authorized partnerships include Connecticut, New York, Indiana and California. Other states with partnership programs must recover Medicaid costs from the estates of deceased policyholders, i.e. assets are only protected during the insured’s lifetime. 

Personal Care Advocate: A representative of the nursing facility resident who reviews care, addresses concerns and provides advocacy support for a patient and his or her family. 

Personal Care Services: A component of home care, these services provide assistance with activities of daily living or instrumental activities of daily living. 

Physical Therapy: Rehabilitation for disease or impaired motion through the use of physical methods such as heat, hydrotherapy, massage, exercise or mechanical devices. 

Physician Assistant: A person who works under the supervision of a physician and performs tasks such as taking medical histories and making routine examinations. 

Policy: The legal contract issued by the insurer to the insured that contains all the conditions and terms of the insurance. 

Pre-existing Conditions: A diagnosed injury or sickness for which medical advice or treatment was sought prior to the effective date of a long term care insurance product. 

Preferred Provider Organization (PPO): An arrangement in which an insurance company contracts with a number of medical care providers to furnish services at lower than usual fees in return for prompt payment and a certain volume of patients. 

Premiums: Periodic payment to keep an insurance policy in force. 

Prescription Drug: A drug that can be obtained only by means of a physician’s written order. 

Professional Care: Services that must be delivered or supervised by a health care professional such as a registered nurse, therapist or physician. 


Rehabilitation: The goal of restoring disabled policyholders to maximum physical, mental and vocational independence, and productivity commensurate with their limitations. 

Reimbursement: A method of payment in long term care insurance policies. A reimbursement method pays for incurred expenses up to the limits of the policy. 

Respiratory Therapy: Rehabilitative services for respiratory impairments, such as emphysema and chronic bronchitis. 

Respite Care: Temporary, intermittent relief for family member or other person providing the primary ongoing care for a person who is functionally or cognitively impaired. These services can be provided by a home health care agency or other state-licensed facility and may be reimbursable under long term care insurance policy. 

Restoration of Benefits: This benefit restores the original policy maximums if an insured has recovered for a stated period, normally 180 days. 

Return of Premium: The carrier will return to the policyholder an amount of cash determined by a specific chart upon the carrier’s receipt of the proof of the policyholder’s death, or after the carrier receives notice that the policyholder wishes to terminate the policy and claim the return of premium amount. 

Rider: An attachment to a policy that changes the provisions of that policy. 


Sandwich Generation: Persons caring for both dependent children and parents or relatives. 

Senescence: The normal process of growing older. 

Senile Dementia: An outdated term for dementia, used when dementia was thought to be a normal part of the aging process. Likewise, senility also is an outdated term. 

Severe Cognitive Impairment: This is a loss or deterioration in mental capacity that is comparable to Alzheimer’s Disease and similar forms of irreversible dementia, and is documented by clinical evidence and standardized tests of memory, orientation as to people, places, and time; and deductive or abstract reasoning. Tax-qualified policies must require that cognitive impairment be “severe” in accord with this definition. 

Short Term Stay: Residence in a nursing facility usually for rehabilitative or convalescent purposes. 

Skilled Care: The highest degree of medical care. The patient is under the supervision of a physician, care is provided 24 hours a day, and the facility has a transfer arrangement with a hospital. It’s the only type of care eligible for reimbursement in a skilled nursing facility under Medicare. 

Social Services: Advisory and counseling services usually provided by social workers to assist persons with problems that concern housing, transportation, meals, etc. 

Speech Therapy: Rehabilitative services for those with speech impairments. 

Spend Down: A requirement that a person uses up most of their income and assets in order to meet eligibility requirements for Medicaid. 

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. 

Subacute Care: Assistance provided by nursing homes for health services such as stroke rehabilitation and cardiac care for post-surgery that offers a lower cost alternative to hospital treatment of the same kind. 

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: Continual supervision (such as cueing 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. 

Survivorship Benefit: If both spouses have policies, some policies will, on the death of one spouse, convert the policy of the surviving spouse to paid-up status. That is, the surviving spouse need pay no further premiums. 


Tax-Qualified Long Term: These require a 90-day certification period before insurance benefits can be paid. In other words, a health care professional must certify that a condition is expected to last for three months or more. This requirement was included in the 1996 Health Insurance Portability and Accountability Act to help ensure that tax-qualified long term care insurance provides protection only for “chronically ill persons”. (The federal government anticipates that Medicare Supplement policies will cover many of the costs associated with shorter term medical conditions.) The tax implications: long term care premiums are tax deductible if a policyholder itemizes his or her medical expenses and they total at least 7.5 percent of the person’s annual gross income. Benefits received are not taxable as income. 

Third Party Notice: An individual that would be notified by an insurance company if your coverage was about to end due to lack of premium payment. This person would usually be a relative, close friend, attorney or an accountant. 


Underwriters: Insurance professionals who determine if and on what basis an insurer will accept an application for insurance. 


Waiver of Premium: A policy provision of a long term care insurance contract that suspends premium payment after a specified period of time, during which the policyholder is receiving policy benefits for long term care services. The suspension continues until recovery, at which time the resumption of premium payment is expected. 

DISCLAIMER:

Please consult each individual policy or contract for the exact policy language for each company. The definitions listed in this glossary are generalizations only. 

We tried to offer what we thought to be the clearest and briefest definitions for these long term care terms. In order to do this, we oftentimes summarized an entire page of policy language descriptions into a just a few lines. 

The definitions in this glossary should not be seen as the ultimate definition of any one term. Please ask your insurance professional for clarification on any terms, or consult the glossary in your insurance policy or contract.