Glossary of Long Term Care Terms

Accelerated Death Benefit
A life insurance policy feature that lets you use some of the policy’s death benefit before you die.

Activities of Daily Living (ADLs)
Everyday functions and activities individuals usually do without help. ADLs include bathing, continence, dressing, eating, toileting, and transferring. Many policies determine benefit eligibility based on being unable to do two of six ADLs.

Adult Day Care
Care given during the day at a community-based center for adults who need help or supervision. This includes help with daily personal care, but does not include around-the-clock care.

Alzheimer’s Disease
A progressive, degenerative form of cognitive impairment causing severe intellectual deterioration.

Assisted Living Facility
A residential living arrangement that provides personal care and health services. Assisted living is for people who need assistance with activities of daily living, but don’t need the level of care a nursing home provides. These facilities can range from small homes to large apartment-style complexes and may offer different levels of care and services.

Bathing
Washing oneself in either a tub or shower. This activity includes getting in or out of the tub or shower.

Benefit Triggers
The criteria an insurer uses to decide when a policy pays benefits. This often includes being unable to do two or more activities of daily living or needing substantial supervision due to a cognitive impairment such as dementia or Alzheimer’s.

Benefits
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.

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 due to a severe cognitive impairment or because s/he is unable to do everyday activities of daily living (ADLs) without help.

Cognitive Impairment
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.

Community-Based Services
Services designed to help elderly stay independent and in their own homes.

Continence
Being able to control bowel and bladder function, or being able to manage personal hygiene (such as a catheter or colostomy bag).

Contingent Benefit Upon Lapse
A requirement in some states companies must offer if premiums increase to a certain amount (based on a table of increases). This enables 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.

Contingent Nonforfeiture
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. Example: you bought a policy at age 65 for $2,000 per year and didn’t buy the optional nonforfeiture benefit. If the company raised the rates by 50% or more after you paid premiums for ten years, you must pay the higher premiums or your coverage will end. However, if the policy has contingent nonforfeiture and lapses due to non-payment after a rate increase, you’re eligible for up to $20,000 (the total amount you paid in premiums) of benefits if you meet benefit triggers in the future.

Continuing Care Retirement Community (CCRC)
A retirement complex offering 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, semi-annually, or annually. 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.

Daily Benefit
The amount the policy will pay for each day of care, often limited to the amount charged for your care.

Dementia
A term for significant cognitive impairment.

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, even if you aren’t receiving any long term care services.

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

Eating
Feeding yourself by getting food into the body from a receptacle (such as a plate, cup, or table).

Elimination Period (Waiting Period)
A form 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.

Expense-Incurred Method
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 this period, the contract ends and you have no coverage.

Guaranteed Renewable
A policy 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.

Hands-On Assistance
Physical help (minimal, moderate, or maximal) an individual needs to do an activity of daily living.

Health Insurance Portability and Accountability Act (HIPAA)
Federal health insurance legislation passed in 1996 which allows, under some conditions, long-term care insurance policies to be qualified for certain tax benefits.

Home Health Care
Care services received in the 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. It is often not covered under a long term care policy.

Homemaker Services
Household services done by someone other than yourself because you’re unable to do them.

Hospice Care
Care for a person who isn’t expected to live long. This care is designed to reduce pain and discomfort.

Hospice Facility
A healthcare facility for the terminally ill where hospice care is provided.

Indemnity Method
Method of paying benefits where the benefit is a set dollar amount and isn’t based on the specific service received or the expenses incurred. Once the company decides you’re eligible for benefits by receiving eligible long term care services, it pays the set amount to policy limits.

Inflation Protection
A policy option that increases benefits levels to cover expected increases in long-term care service costs.

Lapse
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.

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

Medicare
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. The goal is to promote uniformity of state insurance regulation and legislation.

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

Nonforfeiture Benefits
A policy feature that keeps some coverage available to you if the policy ends because the premiums weren’t paid.

Nursing Home
A licensed facility that provides nursing care to those who are chronically ill or can’t do one or more activities of daily living.

Paid-up Policy
When you stop paying your premiums because your insurance policy is considered paid-in-full. You won’t pay any more premiums, and your policy benefits depend on how much you’ve paid in premiums, not the level of benefits you first bought.

Partnership Policy
A type of long term care policy that lets you protect (keep) some of your assets if you apply for Medicaid after you exhaust your policy’s benefits. Partnership policies may not be available in all states.

Personal Care (Custodial Care)
Care to 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. Long term care insurance policies often don’t cover care here.

Pre-existing Condition
An illness or disability for which you were treated or advised within a time period before you applied for insurance.

Pooled Benefit
A policy covering two people who can access the same benefits until one or both people use up the benefits (also known as Shared Care).

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, you bought a policy with a $150 daily benefit for three years. If you let the policy lapse, the daily benefit would be reduced to $100 but the benefit period would remain three years. The lesser benefit depends on how much premium has been 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).

Rescind
When the insurance company voids (cancels) a policy.

Respite Care
Care a third party gives to relieve family caregivers for a few hours to several days. This gives them an occasional break from daily caregiving responsibilities.

Rest Home
A general term for a facility that cares for elderly. It is often not covered under a long term care policy.

Rider
Additional feature added 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 with a $150 daily benefit for three years of coverage. 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).

Skilled Care
Daily nursing and rehabilitative care that can be done 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 often get skilled care in a nursing home and may be available in other locations.

Spend Down
A requirement where an individual must spend most of his or her income and assets to meet Medicaid eligibility requirements.

Stand-by Assistance
When a caregiver stays close to watch a person and offer physical help if needed.

State Health Insurance Assistance Program (SHIP)
Federally funded program to train volunteers to counsel senior citizens about insurance needs.

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

Substantial Supervision
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 by federal law and offer 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.

Third-Party Notice
A benefit that allows you to name someone the insurance company will notify if your coverage lapses due to unpaid premiums. The third-party 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 doing related personal hygiene.

Transferring
Moving onto and out of a bed, chair, or wheelchair.

Triggers (Benefit Triggers)
The criteria an insurer uses to decide when a policy pays benefits. This often includes being unable to do two or more activities of daily living or needing substantial supervision due to a cognitive impairment such as dementia or Alzheimer’s.

Underwriting
The screening process an insurance company does to collect and review information to determine whether to issue an insurance policy.

Universal Life Insurance
A flexible life insurance policy that lets you vary your premium payments and adjust the face amount of your coverage.

Waiver of Premium
An insurance policy feature that allows an insured who is receiving benefits to no longer pay premiums.

Whole Life Insurance
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.