Glossary of Terms
Glossary of Important Terms
Note: Benefit options vary by insurer and may not be available in every state. Some benefit options may require additional premium. Please refer to the sample policy or Outline of Coverage for benefit details in your state.
Everyday functions individuals usually do without help. ADL functions include bathing, continence, dressing, eating, toileting, and transferring. Many policies use the inability to do two out of six ADLs as one way to determine when to start paying benefits.
Care during the day for adults, usually at senior or community centers.
Varies by each company's specific definition. This feature usually provides a general plan of treatment which allows you to remain in your home when a nursing-facility stay is recommended. It also is used to denote when your recommended plan of care may need adjustments from what is specifically defined in your policy's provisions. It may provide such items as medical equipment such as ramps, home-modifications and medical alert systems. It may include visiting nurses, therapists, etc. Typically, you, your physician and the company must agree upon the Alternate Plan of Care.
A residential living arrangement, typically an apartment or condominium, that provides individualized personal care and health services for people who require assistance with activities of daily living. In CA, referred to as Residential Care Facility.
Pays the cost of reserving your place in a care facility should you need to be hospitalized during a covered stay.
The maximum time, usually measured in days or years, that a policy will pay the daily/monthly benefit when you meet the qualifications for a claim.
Term used to describe the requirements a policyholder must satisfy to start receiving paid benefits from the insurance company. For policies intended to be tax-qualified, they include suffering a severe cognitive impairment or an inability to perform two-of-six Activities of Daily Living (ADLs) for care expected to last for a period of at least 90 days. You only have to meet one of the two requirements.
Available in some policies, this is the initial amount of time during which covered services are received, but for which the policy will not pay benefits. It starts on the first day of disability for which a covered service is used and continues until the selected number of calendar days have passed during which the insured continues to meet the benefit eligibility requirements. The insured does not have to incur covered expenses during the elimination period, except for the initial day that starts the elimination period.
A service that arranges, monitors, and/or coordinates long-term care services. It is performed typically by a professional, like a nurse or social worker who is referred to as a "care coordinator". In some states and with some policies, use of the care coordination is voluntary, while in others, it's mandatory. Generally, expenses paid for care coordination do not reduce your lifetime coverage maximum. A care coordinator is not an employee of the insurance company.
This benefit pays expenses to provide training to an informal caregiver to enable them to provide care at home.
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 deficiency in a person's short-or long-term memory; orientation as to person, place and time; deductive or abstract reasoning; or judgement as it relates to safety awareness.
If you do not choose the optional Nonforfeiture benefit
, the Contingent Nonforfeiture Benefit will be included with your policy. If you lapse your policy due to a substantial premium increase, you will have the right within 120 days of the new premium due date, to either reduce your policy benefits so that your premium payments are not increased, or convert your coverage to a shortened benefit period, under which no further payments are due. For additional details, refer to the insurer's Outline of Coverage.
With long-term care coverage, covered services include a broad range of service settings. Typically, "integrated" or "comprehensive" policies include nursing-facility care, assisted living/residential facility care, home-health care, adult-day care, hospice care, respite care, care advisory services, supportive equipment and caregiver training.
Care to help individuals meet personal needs such as bathing, dressing, and eating. Care is typically provided by someone without professional training.
The maximum dollar amount that an insurer will pay a policyholder per day to cover the cost of covered care.
Deterioration of intellectual faculties due to a disorder of the brain.
A provision in an insurance policy that relieves both spouses (or, in some policies, "partners") of paying the premiums while one spouse or partner is receiving benefits.
The length of time a policy holder 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. Typically, the elimination period has to be satisfied only once.
This option provides voluntary increases of the original benefit amount at a fixed percentage on a specified policy anniversary. If elected, the policyholder pays additional premium at the same time of the increase. For example, one carrier may offer you the right to increase your original benefit amount by 5% every three years for an additional premium.
This means you have the right to continue the long-term care insurance in force by the timely payment of premiums. The insurer cannot make any changes in any policy provisions or riders while the insurance is in force and cannot decline to renew your coverage. However, your premium rates may be revised by the insurer on a class basis. You as the policyholder retain the right to cancel the policy with the required notice of cancellation.
Federal health insurance legislation passed in 1996 that addressed, for the first time, the tax status of long-term care insurance (see Tax-Qualified Long-Term Care Insurance Policy).
Medical or nonmedical services provided to ill, disabled or ailing
individuals in their home. Such services may include homemaker services,
assistance with activities or daily living, respite care services, case
management services, and maintenance or personal care services. In TX, home
health aide must be included.
Household services, like cooking, cleaning and shopping, done by someone other than yourself because you're physically or mentally unable to do them.
This benefit provides long-term care services and support to terminally ill patients.
With this type of coverage, the benefits are paid on a fixed indemnity basis for each day the insured is confined, rather than benefits being paid on an expense-reimbursement basis. In other words, benefits are paid regardless of the expense incurred or any other insurance benefits the policy holder may be receiving, including Medicare. Some indemnity policies pay the fixed amount on a monthly basis.
This is an optional benefit available for additional premium. It provides for increases in benefit levels to help pay for expected increases in the costs of long-term care services. Most plans offer you a choice: Either 5% of your original amount (called "simple") or 5% of the previous year's amount (called "compound"). Compound is better because it grows your benefits faster, but it's also costlier. In Texas, you must indicate on the application that you have rejected the 5% Compound option offer of inflation protection before you can consider other forms of inflation protection.
Assistance needed for stable conditions that require daily, but not 24-hour, nursing supervision. Such care is ordered by a physician and supervised by registered nurses. It is less specialized than skilled nursing care, often involves more personal care and is generally needed for a long period of time.
Termination of a policy when a renewal premium is not paid.
A physician, registered nurse (R.N.), licensed social worker, or any other individual who meets the requirements as may be prescribed by the Secretary of Treasury.
P. O. Box 559004
Austin, TX 78755-9004
Austin, TX 78755-9004
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.
Medi-Cal in California.
Medi-Cal in California.
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.
A private insurance policy that covers many of the gaps (i.e., co-payments and deductibles) found in Medicare's coverage.
Membership organization of state insurance commissioners. One of its goals is to promote uniformity of state regulation and legislation related to insurance.
The insurance company cannot refuse to renew your policy each year and cannot raise your premium rates, guaranteed.
Texas residents click here.
Maryland residents click here.
If you stop paying premiums after the third year, your policy will remain in force with a reduced policy limit equal to the sum of the premiums you have paid. If the nonforfeiture benefit is not elected, a contingent nonforfeiture benefit may be available should you lapse your policy due to a substantial premium increase. For additional details, refer to the insurer's Outline of Coverage.
Maryland residents click here.
If you stop paying premiums after the third year, your policy will remain in force with a reduced policy limit equal to the sum of the premiums you have paid. If the nonforfeiture benefit is not elected, a contingent nonforfeiture benefit may be available should you lapse your policy due to a substantial premium increase. For additional details, refer to the insurer's Outline of Coverage.
For an additional premium payment, this rider (or option) provides that upon death, if the policy has not previously lapsed due to nonpayment of premium, the total premiums paid, with no deductions for benefits already paid to you, will be paid to your beneficiary.
Typically, premiums may be paid through electronic funds transfer from a bank account on a monthly basis, or by direct bill on a quarterly, semiannual or annual basis. Paying annually typically saves about eight percent in premium each year compared to the monthly mode.
Typically, a Personal Care Advisor helps coordinate your plan of care much like a care coordinator (see "Care Coordination" above). However, the difference is that a Personal Care Advisor is generally employed by the insurance company and usually works at the home office. The advisor is available via a toll-free number and, in most cases, the service is provided free to policyholders.
This means your coverage can be used in any state in the U.S.
Some policies offer the policyholder a 10-pay option (where their policy would be fully paid up and noncancelable after the 10th year of paying premiums) or a to-age-65 option (where their policy would be fully paid up and noncancelable after paying premiums until after age 65). Some policies also offer a one-time, lump sum payment option.
Some policies either accept or reject an applicant while others offer rated polices to those applicants who represent a slightly higher claim risk because of the status of their health. A "Table 1 Rate Class" typically increases the premium by 25% while a "Table 2 Rate Class" typically increases the premium by 50%.
This option, available for an additional premium, provides a refund of premium less any claims that have been paid when the insured dies. The benefit is generally paid income-tax-free to a named beneficiary or to the estate. Some policies offer a "total refund of premium at death" option (also known as Optional Full Refund of Premium Benefit Rider). This provides a full refund of premiums paid, regardless of claims paid, at death.
A provision to restart a policy that lapsed because the policyholder was diagnosed with impairment of cognitive ability and/or loss of functional capacity. The company will most likely require you to pay any outstanding premiums from the date the policy lapsed. They may also require a doctor's certification of your medical condition.
Offers a few hours to several days of help to relieve family, or other informal, caregivers.
The insurance company will restore your maximum Policy Benefit if you are not eligible for the payment of benefits for a continuous period of time, usually 180 days.
An additional or optional benefit to an insurance policy. A rider supplements the provisions and benefits of that policy, usually at an additional cost.
Some insurance companies allow policyholders to pay for their coverage in one lump sum payment. These are commonly referred to as "single premium policies." All single premium policies contain a "noncancellation provision" (see "non-cancellable" above). Additionally, there is no refund of unearned premium upon death or cancellation unless you have included a "total refund of premium option" (officially called an "optional full refund of premium benefit rider"), at an additional cost. See Optional Full Refund of Premium Benefit Rider above.
Assistance needed for medical conditions that require care by skilled medical personnel, such as registered nurses or professional therapists. This care is available 24 hours a day, is ordered by a physician and involves a treatment plan. Can be provided in a nursing-facility setting or at home. Note: Medicare and Medicaid have their own definitions of skilled nursing care which don't necessarily match those definitions found in long-term care policies.
A requirement that an individual use up most of his or her income and assets to meet Medicaid eligibility requirements.
Federally-funded program to train volunteers to provide counseling on the insurance needs of senior citizens.
Long-term care insurance regulations vary by state. There may be differences in certain policy features in your state from what is available in another state.
You need hands-on or standby assistance while you are performing an activity of daily living. Hands-on assistance means the physical assistance of another person without which you would be unable to perform the activity. Standby assistance means the presence of another person within arm's reach of you that is necessary to prevent, by physical intervention, injury to you while you are performing the activity. Standby is as favorable as hands-on and standby combined.
You need continual supervision due to your cognitive impairment (which may include cueing by verbal prompting, gestures, or other demonstration) by another person that is necessary to protect you from the threats to your health or safety (such as may result from wandering).
This option, available for additional premium, varies from policy to policy. Generally, here is how it works: If both members of a married couple have coverage in force for at least 10 years and one of them dies, no additional premium payments will be required for the surviving spouse. Their coverage is fully paid-up. Typically, neither spouse can have filed a claim prior to the tenth year for this benefit to be applicable.
A policy that conforms to certain standards in federal law and offers certain federal tax advantages. If it conforms, proceeds may be income-tax-free and a portion of the premiums may be deductible as a medical expense.
A benefit that lets you name someone who the insurance company would notify if your coverage is about to lapse, or end, due to lack of premium payment. This can be a relative, friend, or professional, such as a lawyer or accountant.
The process of examining, accepting, or rejecting insurance risks. Also involves classifying those selected, in order to charge the proper premium for each.
A provision in an insurance policy that relieves the insured of paying the premiums while receiving benefits.