Long Term Care Terms Glossary


To familiarize you with phrases commonly used in conjunction with Long Term Care Insurance policies, the following is a list of common terms.

A

Activities of Daily Living (ADLs)
Are basic activities and functions performed on a daily basis done without assistance from another person. There are six ADLs most commonly referred to in this industry and they are as follows:
  • Bathing
  • Continence
  • Dressing
  • Eating
  • Toileting
  • Transferring

Acute Care
This type of care is provided on a short term basis by a physician, nurse, and/or other skilled professional, where the primary goal is to recover after an illness or injury.

Additional Insured
A secondary person specifically listed as an insured on an insurance policy that is covered in addition to the primary insured.

Adult Day Care
A program that provides daytime supervision for social, recreational and/or rehabilitative care services outside the home in a group setting to support frail, elderly, or isolated adults with impairments on a day by day basis.

Age Limits
The minimum or maximum age an insurance company will accept an applicant.

Alternate Care Benefit
A policy benefit that provides care in a setting that may be different from the primary benefits of the Long Term Care Insurance policy.  This benefit normally has the following stipulations:
  • The normal benefit triggers are still required to be met
  • The type of care must be provided in or by a properly certified facility or agency
  • The providers of care must hold appropriate licensing, issued by the appropriate Government agency enabling them to provide the specific type of care.

Alzheimer's Care Center
A treatment center that specializes in providing care for persons with Alzheimer's Disease in a safe and controlled environment.

Alzheimer's Disease
A progressively degenerative, organic disease of the brain which attacks nerve cells in the cortex of the brain, impairing a person's abilities to think, reason and/or function independently.

Amendment
A formal document signed by both the insurance company and the policyholder, that makes changes to or clarifies the original terms of an insurance policy.

Application
Paperwork completed and signed by a person applying for an insurance policy; which is used by an insurance company to evaluate risk and ultimately decide whether or not to issue a policy. The application becomes part of the policy, should a policy get issued.

Assessment
An underwriting approach to determine a proposed insured’s level of physical ability and/or mental capacity performed via phone or in person interview, based on established medical guidelines.

Assignment
The legal transfer of one person's insurance policy or benefit(s) to another person or entity.

Assisted Living Facility
A non-medical facility which provides home services such as room, board, laundry, some forms of personal care, and usually recreational services, to residents, in a comfortable environment.  It is primarily designed for residents who are independent but may need limited assistance with Activities of Daily Living (ADLs).  These facilities are licensed by State Department of Social Services, and may also be referred to as a domiciliary care facility, community based care facility or residential care facility.


B

Baby Boomer
A person born between the years of 1945 and 1964.

Bed Reservation Benefit
This benefit pays for reserving a person’s bed in a care facility should they need to leave for whatever reason over a certain period of time during a covered stay.

Beneficiary
The person(s) designated by an insured on their insurance policy to receive specific benefits provided by the policy.

Benefit Maximum
The total amount of benefit available on the Long Term Care Insurance policy.

Benefit Period
The specified amount of time where an insurance company will make policy benefit payments for covered services.

Benefit Triggers
Contractual requirements that must be met in order to qualify for a claim.

Binding
A written agreement that temporarily places an insurance policy in effect during the underwriting process of a new application.


C

Cancellation
A client’s decision to discontinue/terminate their Long Term Care Insurance policy.

Caregiver
A medical professional, aide or family member who is providing care for a person with an illness or injury.


Care Coordinator
A professional who is contracted by the insurance company to facilitate your client’s claim and help them maximize their policy’s benefits.

Care Management
Services provided by a nurse or social worker to assess, coordinate and monitor the overall medical, personal, and social services needed by an individual requiring long term care.

Care Manager
A trained professional who is able to work with your client, their family and their doctors to assess your client’s situation and determine the appropriate Plan of Care. They also assist in finding available care resources such as selecting physicians, specialists, care centers, hospitals, etc. as well as coordinating time periods of care

Catastrophic Illness
A serious illness or injury that causes an immediate, life-altering change to a person's normal lifestyle.

Certificate of Insurance
A written statement given to an insured that communicates their benefits and the terms of coverage

Chronically Ill
An illness or injury that the renders an individual unable to perform at least two of the Activities of Daily Living (ADL's) for at least 90 days. 

Chronic Care
Care for an illness continuing over a protracted period of time or recurring frequently.

Cognitive Impairment
Loss in a person’s ability to have rational and/or comprehensive brain functions due to a degenerative disease or disorder. The deficiency directly affects short and long term memory; orientation as to person, place and time; deductive or abstract reasoning and judgment as it relates to safety awareness.

Continuing Care Retirement Community (CCRC)
A residential community living arrangement that provides a variety of living options and services, which can range from Independent Living Apartments and Assisted Care Facilities (ACF) to Skilled Nursing Facility (SNF) care.

Custodial Care
Non-medical care normally performed by persons with little to no medical training in which the patient primarily receives help with their ADLs. Providers of this care are rarely professionally trained nurses or medical professionals.

Couples Discount
A discount that is available if both partners are eligible and apply for coverage.  However, there are companies who will still offer the Couples Discount to a person whose spouse was declined coverage.


D

Daily Benefit
The amount of benefit available to your client on a daily benefits

Declination
A decision made by an underwriter to not issue a policy based on the results of a client’s risk assessment.

Deductible
More commonly referred to as an Elimination Period, this is the amount of money an insured must pay before the insurance company assumes financial responsibility for the claimant’s expenses.


E

Effective Date
The date on which the eligibility for benefits of an insured’s insurance policy begins.

Elimination Period
The number of days that your client agrees to self insure before their coverage begins to pay benefits.

Evidence of Insurability
The proof a person is required to provide in order to be approved for coverage.


F

Free Look Period
Normally, it is the 30 day period of time after a policy was delivered where your client can decided whether they still want to accept the policy or not and if not, be guaranteed a full refund of their premium.  The exact Free Look Period of time varies by State.

Full Nonforfeiture Benefit
Upon death of the policy holder, or the second to die in a joint policy, all premiums paid would be returned to a designated beneficiary.


G

Guaranteed Renewable
Provides a written guaranteed that once your client’s policy is issued, their coverage will never be terminated; as long as they pay the premiums within the specified allotted timeframe.


H

High Risk Individual
A prospect who has a greater than average probability of claim related medical expenses once a policy is issued.

HIPAA
The Health Insurance Portability and Accountability Act of 1996 became a law on January 1, 1997. This act had many stipulations that apply to topics other than Long Term Care Insurance.  However, it did give Long Term Care Insurance policy guidelines that must be followed in order for premiums to be tax deducted as a qualified medical expense and so that any claim benefits would not be considered as taxable income.

Homemaker Service
Generally provided in combination with a Home Health Aide’s services and would include services such as cooking, light housekeeping, running errands, etc.

Home Health Aid
A licensed individual who performs nonmedical, daily care services for those in need of assistance in their homes. The services provided are usually nonmedical in nature and would include activities such as: bathing, eating, dressing, transferring, continence and toileting.

Home Health Care
Provides at home services for care such as occupational, physical, respiratory and speech therapies. Home Healthcare services may also include other types of medical care, home health aides, and homemaker services

Home Modification
Is the physical adaptation to a person’s home in order for them to stay and function efficiently in their environment.

Hospice Care Services
Are services provided by a licensed hospice provider to help terminally ill patients in the last stages of a terminal disease. They also provide support to the primary care giver and the family.


I

Incontestability Clause
A provision in a policy that allows an insurance company the ability to rescind coverage should any misrepresentation be made by a client on an application or during the underwriting process.  An insurance company cannot contest a policy after it has been in force for a specified period of time.

Incurred Charges
Actual services that are billable from a provider.

Indemnity Cash Benefits
A type of policy benefit that pays a predetermined cash amount, regardless of actual charges incurred, if any, once a person qualifies for care.

Independent Caregiver
An individual who provides home health care or hospice care services who is:
  • licensed to provide the care they are giving
  • employed by an actual home healthcare agency
  • qualified under your client’s policy’s definition as an Independent Care Giver
  • most policies do not allow a member of your client’s immediate family to receive policy benefits for providing care

Indemnity Daily Benefits
A type of policy benefit that pays a predetermined, daily cash amount, regardless of actual amount billed, but care must have been provided in order for the indemnity benefit to get paid.  An Indemnity benefit is not available on days where care is not provided.

Inflation Protection
A policy rider that provides benefit increases without proof of future insurability to help pay for expected inflation cost for future long term care services.

Informal Caregiver
Is usually an unpaid individual who accepts responsibility for providing care.

Instrumental Activities of Daily Living (IADLs)
Activities such as shopping, telephone use, housekeeping, laundry, taking medications and managing finances.

Intermediate Care
This type of care provides assistance for people with stable conditions that require daily nursing supervision but not on a 24 hour basis. This type of care is initially ordered by a physician and supervised by registered nurses. It is less specialized than skilled care, often involves more personal care services, and is normally needed for a longer periods of time.


L

Lapse
The termination of an insurance policy due to the non-payment of a premium.

Level Premium
A premium that is either designed or guaranteed to remain the same throughout the life of the policy.

Long Term Care
Is Skilled, Intermediate and Custodial Care provided to people who have lost some or all of their capacity to function independently due to an illness or injury.

Long Term Care Insurance
The insurance designed to protect your client’s retirement during the Asset Preservation Stage of Life.


M

Married Couples Discount
A premium discount offered to couples who apply for coverage.  Some Insurance Companies will still offer a lesser discount if only one of the partners apply or are approved for coverage.

Maximum Lifetime Benefit
The total amount of benefit available on your client’s policy.

Meals on Wheels
A program created to provide meals to people who are unable to cook for themselves.

Means Test
A measurement of income and assets, used by Medicaid to determine eligibility for benefit programs.

Medicaid
Was set up by Title XIX of the Social Security Act of 1965 and is a means-tested, Federally funded, State administered welfare program that also provides healthcare assistance to those with extremely limited means and assets and are determined to be at poverty level.

Medical Help System
A communication system set up in your client’s home that is used to contact medical personnel in case of an emergency.

Medicare
A Federal program administered by the Centers for Medicare & Medicaid Services, designed to provide healthcare benefits to individuals over the age of 65 specifically for hospital and medical related expenses. Medicare provides limited benefits for short term, skilled care expenses but does not provide benefits for Intermediate or Custodial Long Term Care expenses.

Medigap
Also referred to as Medicare Supplement Insurance, is a private insurance, guaranteed renewable supplemental coverage used to cover the gaps in the original Medicare Plan, such as deductibles, co-insurance and cost share amounts.


N

National Association of Insurance Commissioners (NAIC)
Is a national association made up of each State’s Department of Insurance Commissioner.  They are responsible for regulating insurance in their respective State. They have considerable regulatory influence and strive to provide consumer protection.

Non-Forfeiture Benefit
An automatic policy benefit that makes available all premiums paid to be used for benefits/coverage should your client decide to stop paying their premiums in the future.

Non-Tax Qualified Long Term Care Insurance
An older type of policy where premiums are not eligible for tax deduction and any benefits paid in claim will have a 1099 issued each year.  These benefits could be taxed as income but as of 2011, no tax has been assessed on benefits paid from NonQualified Long Term Care Insurance policies.


O

Outline of Coverage
A summary overview of a policy’s features and benefits.


P

Partnership Program
A program endorsed by certain States that protects a portion of your client’s assets from Medicaid Spend Down on a “per dollar of claim paid” equaling a “per dollar of asset protected” basis.  Partnership program benefits vary from State to State.

Personal Care
Assistance provided by another person to help with walking, bathing, eating and other routine Activities of Daily Living.

Plan of Care
A program of care and/or treatment that should be designed by your client in advance of them needing care.  A proper Plan of Care should provide a detailed outline of your client’s needs and who they want to have provide the care, where they want that care provided and what type of health services they want in order to be prepared should care ever be needed.

A formal Plan of Care is a written plan formulated by a health care professional after an assessment has been done on the individual with a qualifying chronic illness or injury.

Policy Lapse
When a policy is past its Grace Period due to nonpayment of premiums.

Pre-Existing Conditions
A condition diagnosed prior to the Application Date, which can result in higher premiums, coverage limitations and/or exclusions or an underwriting decision to decline coverage due to the increased risk.

Preferred Health Discount
An underwriting discount on policy premiums, available to applicants who are determined to be in better than average health.

Premium Taxes
A State controlled tax that is charged by each State’s Department of Insurance to all insurance companies operating within that State, used to protect policyholders from a complete loss of insurance policy benefit due to carrier insolvency.  These taxes can be two to three percent of the total premiums paid.


Q

Quote
An illustration that reflects proposed policy benefits for a particular planned premium amount.  An illustration is not a guarantee or formal offer of coverage or premium.  All Quotes and illustrations are subject to underwriting approval.


R

Rated Policy
Also known as a “High Risk” or “Substandard Risk” policy, this policy is issued with a higher than standard premium rating due to the additional risk from the policy holder.

Reimbursement
A benefit payment given to the insured for out of pocket expenses incurred.

Respite Care
Long term care services provided at home or in a facility to temporarily relieve the family or friends who normally provide care for an impaired individual.

Return of Premium
An amount of premium that is returned to the policyholder once the insurance company receives notice that the policyholder is deceased.

Rider
A written addendum that changes or provides clarification to a policy.

Risk
The possibility of loss due to factors that increase probability of a claim.


S

Senior Centers
Provide an assortment of social and recreational services and may also provide programs offering low cost or free meals.

Senior Transportation Services
Transportation services that help seniors with their shopping, medical appointments, etc.
Severe Cognitive Impairment
See Cognitive Impairment

Skilled Nursing Care
Is the highest level of care available and provided by a Registered/Licensed Medical Professional for up to 24 hours a day. It is prescribed by a physician for the most severely impaired person who needs significant rehabilitative services.

Spend Down
The process whereby an individual is required to spend down their income and assets to meet Medicaid eligibility requirements.

Substantial Supervision
Is continuous supervision that is normally provided to those who have severe enough Cognitive Impairments that could threaten their health and safety.

Survivorship Benefit Option
A benefit that permanently waives premiums on a surviving partner's policy upon death of the other spouse but only after both spouses have had their policies in force for a minimum of ten years.


T

Tax Qualified Long Term Care Insurance
Tax Qualified Long Term Care Insurance was introduced in the Health Insurance Portability and Accountability Act (HIPAA) legislation and was implemented on January 1st, 1997. The HIPAA Act established tax advantages to policyholders who purchased Long Term Care Insurance and gave them the ability to receive favorable tax advantages.  This act allowed policies to be tax deductible to individuals who itemize their deductions, as long as medical expenses are greater than 7.5% of their adjusted gross income.  The Act also gave the policyholder a guarantee that benefits would not get taxed as income, for benefit amounts up to  $300 per day (in 2011).

Temporary Insurance
Is temporary insurance coverage provided to policyholders during the underwriting process, prior to a policy getting approved and issued.

Third Party Notification
This benefit allows a friend, relative or other person to be notified should your clients policy be in risk of lapsing for non-payment of premium.


U

Underwriting
The process an insurance company uses to evaluate risk in order to responsibly make an offer or decline to make an offer for the particular type of insurance applied for.


V


W

Waiting Period
See Elimination Period

Waiver of Premium
A policy benefit that waives premium payments for the primary insured beginning 90 days after they have qualified to be on claim.  Some policies will also waive premiums for the spouse of the insured who has qualified for claim.