Glossary of TermsA-Z Glossary of commonly used Terms related to Long Term Care
Accelerated Death Benefit (ADBs)
A life insurance policy feature that lets you use or “accelerate” some of the policy’s death benefit before you die. Many carriers offer policies that only allow you to accelerate your death benefit with a Terminal Illness diagnosis. Some carriers offer ADBs for Critical, Chronic, and Terminal Illnesses. These “new” term life insurance policies can be a great way to protect against the potential cost of Long-Term Care.
Activities of Daily Living (ADLs)
Everyday functions and activities individuals usually do without help. ADLs include bathing, continence, dressing, eating, toileting, and transferring. Most LTC insurance policies will pay benefits if the insured is unable to perform 2 or more of the 6 ADLs.
Adult Day Care
Care given during the day at a community-based center for adults who need help or supervision during the day, including help with personal care, but who don’t need round-the-clock care.
A progressive, degenerative form of cognitive impairment that causes severe intellectual deterioration.
Assisted Living Facility
A residential living arrangement that provides personal care and health services for people who need some help with activities of daily living, but don’t need the level of care that nursing homes give. Assisted living facilities can range from small homes to large apartment-style complexes and also can offer different levels of care and services.
Washing oneself in either a tub or shower. This activity includes getting in or out of the tub or shower.
The criteria and ways an insurer decides when a policy pays benefits, such as being unable to do two or more activities of daily living (ADLs), or the need for substantial supervision due to having dementia or Alzheimer’s disease.
The amount the insurance company pays for covered services.
Care Management Services
A service in which a professional, typically a nurse or social worker, may arrange, monitor, or coordinate long-term care services (also called care coordination services).
Cash Surrender Value
The amount of money the insurance company owes you when you terminate a life insurance policy or annuity contract with this feature. The policy states the amount of the cash value.
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.
A term used in a tax-qualified long-term care contract to describe a person who needs long-term care either because of a severe cognitive impairment or because s/he can’t do everyday activities of daily living (ADLs) without help.
A loss of short- or long-term memory; difficulty knowing people, places, or the time or season; loss of the ability to make good decisions; or loss of safety awareness.
Services designed to help older people stay independent and in their own homes.
Being able to control bowel and bladder function or, if you can’t, being able to manage needed personal hygiene (such as a catheter or colostomy bag).
Contingent Benefit Upon Lapse
A requirement in some states that companies are required to offer if premiums increase to a certain amount (based on a table of increases) to enable policyholders to keep their policy without paying the higher premium. If offered, the policyholder could choose: 1) their current policy with reduced benefits so the premium stays the same; 2) a paid-up policy with a shorter benefit period but no future premiums; or 3) their current policy with the higher premiums.
A reduced benefit provided to some policyholders whose policies terminate, sometimes called a “lapse.” The amount of the reduced benefit is the total premiums you paid for the policy, without interest. Some states require the company to offer contingent nonforfeiture to policyholders whose premiums increase by a certain percentage or more. For example, suppose you bought a policy at age 65 for $2,000 per year, and didn’t buy the optional nonforfeiture benefit. Also suppose that after you paid premiums for ten years, the company raised the rates by 50% or more, and your coverage ends because you don’t pay the higher premiums. If the policy has contingent nonforfeiture, then you’ll be eligible for up to $20,000 (the total amount you paid in premiums) of benefits if you meet the benefit triggers in the future.
Continuing Care Retirement Community (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’re eligible for benefits. You can pay premiums monthly, quarterly, or once or twice a year. The policy is guaranteed renewable, which means the only reason the company can cancel it is if the premiums aren’t paid when due.
Custodial Care (Personal Care)
Care to help individuals with activities of daily living such as bathing, dressing, and eating. Usually, medical training isn’t needed to give this type of care.
The amount the policy will pay for each day of care, often limited to the amount charged for your care.
Another term for significant cognitive impairment.
Method of paying benefits that only requires you to meet the benefit eligibility criteria. Once you do, you receive your full daily benefit, even if you aren’t receiving any long- term care services.
Putting on and taking off all items of clothing and any necessary braces, fasteners, or artificial limbs.
Feeding yourself by getting food into the body from a receptacle (such as a plate, cup, or table).
Elimination Period (Waiting Period)
A type of deductible; the length of time the individual must pay for covered services before the insurance company begins to make payments. Increasing your policy’s elimination period reduces the premium, because the insurance company has to pay less benefit. Another term for this is a “waiting period.”
Episode of Care
The care provided by a health care facility or provider for a specific medical condition during a set time period.
Once there’s an expense for an eligible service, the insurer pays benefits either to you or your provider. The coverage pays either the amount of the expense or your policy’s dollar limit, whichever is less. Most policies sold today use the expense-incurred method.
Extended Term Benefits
After you stop paying premiums, this coverage provides full benefits for use during a certain period of time. If you don’t collect benefits during that period, the contract ends and you have no coverage.
A policy that an insurance company can’t cancel and must renew, unless the benefits listed in the policy have been completely used or the premiums haven’t been paid. Note: The insurance company may increase premiums for a guaranteed renewable policy, but only on an entire class of policies, not just on your policy.
Physical help (minimal, moderate, or maximal) an individual must have to do an activity of daily living.
Health Insurance Portability and Accountability Act (HIPAA)
Federal health insurance legislation passed in 1996 that allows, under some conditions, long-term care insurance policies to be qualified for certain tax benefits.
Home Health Care
Services in the client’s home. Can include nursing care, social services, medical care, homemaker services, and occupational, physical, respiratory, or speech therapy.
Home for the Aged
A general term for a facility that cares for elderly people. It is often not covered under a long term care policy.
Household services done by someone other than yourself because you’re unable to do them.
Care for a person who isn’t expected to live very long, so the care is designed to reduce pain and discomfort.
A healthcare facility for the terminally ill in which hospice care is provided.
Method of paying benefits where the benefit is a set dollar amount that isn’t based on the specific service received or the expenses incurred. Once the company decides you’re eligible for benefits because you’re receiving eligible long term care services, it pays the set amount to the limit of the policy.
A policy option that increases benefits levels to cover expected increases in long-term care services’ costs.
Termination of a policy when a renewal premium isn’t paid.
Limited Payment Option
A premium payment option in which you pay premiums for a set time period but the policy covers you for the rest of your life.
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.
The federal program that provides 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 to a short period of time.
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. A goal is to promote uniformity of state insurance regulation and legislation.
Insurance contracts that cannot be cancelled by the insurance company and the rates cannot be changed by the insurance company.
A policy feature that keeps some coverage available to you if the policy ends because the premiums weren’t paid.
A licensed facility that provides nursing care to those who are chronically ill or can’t do one or more activities of daily living.
When you stop paying your premiums but your insurance policy is considered paid-in-full. You don’t pay any more premiums, and your policy benefits depend on how much you’ve already paid in premiums, not the level of benefits that you first bought.
A type of policy that lets you protect (keep) some of your assets if you apply for Medicaid after you use 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 personal care.
Personal Care Home
A general term for a facility that cares for elderly people. Long term care insurance policies often don’t cover care here.
An illness or disability for which you were treated or advised within a time period before you applied for insurance.
A policy covering two people who can access the same benefits until one or both people have used up the benefits.
Reduced Paid-up Policy
A nonforfeiture option that reduces your daily benefit but keeps the full benefit period on your policy until death. For example, if you bought a policy for three years of coverage with a $150 daily benefit and let the policy lapse, the daily benefit would be reduced to $100 but the benefit period still would be three years. Just how much less your benefit would be depends on how much premium you’ve paid on the policy. Unlike extended term benefits, which must be used in a certain amount of time after the lapse, you can use reduced paid-up benefits at any time after you lapse (until death).
When the insurance company voids (cancels) a policy.
Care a third party gives to relieve family caregivers for a few hours to several days and give them an occasional break from daily caregiving responsibilities.
A general term for a facility that cares for elderly people. It is often not covered under a long term care policy.
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. Unlike extended term benefits, which must be used in a certain amount of time after the lapse, you can use shortened benefits at any time after you let the premium lapse (until death).
Daily nursing and rehabilitative care that can be done only by, or under the supervision of, skilled medical personnel. This care usually is 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 also may get it in other places.
A requirement that an individual use up most of his or her income and assets to meet Medicaid eligibility requirements.
Caregiver stays close to watch over the person and to give physical help if needed.
State Health Insurance Assistance Program (SHIP)
Federally funded program to train volunteers to counsel senior citizens about insurance needs.
Hands-on or stand-by help required to do ADLs.
Help from a person who directs and watches over another who has a cognitive impairment.
Tax-Qualified Long-Term Care Insurance Policies
Long-term care policies that meet 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 cash value.
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.
Getting to and from the toilet, getting on and off the toilet, and doing related personal hygiene.
Moving into and out of a bed, chair, or wheelchair.
Triggers (Benefit Triggers)
The criteria and ways an insurer decides when a policy pays benefits, such as being unable to do two or more activities of daily living, or the need for substantial supervision due to having dementia or Alzheimer’s disease.
Collecting and reviewing information to determine whether to issue an insurance policy.
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
An insurance policy feature that means an insured who’s receiving benefits no longer has to pay premiums.
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.