Expand your long-term care vocabulary
Keep this quick-reference guide readily available. Use it to expand your understanding of key long-term care (LTC) vocabulary and explain planning options to clients, simply and clearly.
Terms from A-E
Activities of Daily Living (ADLs) – Activities for which an individual may require assistance, such as bathing, continence, dressing, eating, toileting, and transferring (walking). In some LTC insurance policies, needing help with at least two ADLs is a benefit trigger.
Accelerated Death Benefit – An option or right to receive part of the death benefit payable under a life insurance contract prior to death, due to a triggering event such as terminal illness or an extended nursing home stay.
Acute Care – Active short-term care for an illness or injury or while recovering from surgery. The care typically does not last more than a week or two and is delivered in hospitals or urgent care centers.
Adult Day Care – Care delivered in a center to which an individual is transported during the day, to participate in social services, supervised activities, and a lunchtime meal. Most adult day care centers are not residences and do not have beds for overnight accommodations. Their medical services may be very limited.
Advanced Directive – A legal document that specifies an individual’s preferences and wishes for healthcare, if he/she is unable to make decisions due to incapacity or illness. Living wills and health care proxies are two types of advanced directive.
Alzheimer’s Disease – The most common form of dementia, indicated initially by symptoms of absent-mindedness and memory loss. The disease is progressive, worsening over time and gradually leading to loss of motivation and inability to perform daily tasks. There are no known cures, and complications resulting from the disease often are listed as a cause of death.
Assisted Living Facility (ALF) – Residential facilities that include prepared meals, nursing services and help with Activities of Daily Living. ALFs offer a higher level of supervision than independent living facilities. ALFs that are state-licensed are called Residential Care Facilities.
Benefit Trigger – Requirements or conditions that must be satisfied to begin receiving benefits from long-term care coverage. Common triggers include: 1) a doctor’s certification of a cognitive impairment; or 2) needing help with at least two Activities of Daily Living.
Caregiver – A generic term describing anyone who provides regular assistance to an individual needing long-term care. Caregivers include spouses and family members as well as nurses and nursing home employees.
Chronic Illness – An illness, injury or disease that can’t be cured quickly but rather has lasting effects on health and activities.
Cognitive Impairment – A loss of brain functions and intellectual capability that negatively affects memory, language, personality and the ability to comprehend and communicate. Cognitive impairment is a symptom of dementia.
Co-insurance – Out-of-pocket payments to meet costs of long-term care. Co-insurance amounts are generally not covered by a long-term care daily benefit.
Continuing Care Retirement Community (CCRC) – A facility or community that is capable of providing lifetime care for an elderly person through all stages and care levels including independent living, assisted living and nursing home care. Typically, seniors pay a lump-sum to buy into CCRCs and that way they have assurance that they will not need to move again.
Custodial Care – Non-medical personal care and supervision to help an individual perform one or more activities of daily living. In general, neither private health insurance plans nor Medicare cover most types of custodial care. Long-term care coverage was specifically designed for this level of care.
Daily Benefit – The maximum reimbursement that long-term care coverage will pay for covered services on a daily basis. The higher the daily benefit, the more valuable and costly coverage will be.
Dementia – A generic term covering a variety of brain diseases that cause memory loss, confusion, and lack of motivation. Alzheimer’s disease is the most common form of dementia. Many types of dementia are progressive and cumulative, with symptoms getting worse over time.
Elimination Period – A period of time that must elapse after a long-term care benefit trigger, before benefits begin to be paid. It is specified in the coverage and is typically measured in days, from 30 to 90. During the elimination period, long-term care costs must be paid out of pocket. In general, the shorter the period, the more valuable and costly the coverage.
Terms from F-M
Guaranteed Renewable – Long-term care coverage that can’t be cancelled unless the policyholder stops paying premiums. The premium may be increased for a given class of policyholders, but not for individuals.
Health Insurance Portability and Accountability Act (HIPAA) – A federal law enacted in 1996. The act established a patient’s right to privacy in medical care and records, including long-term care. HIPAA also set requirements for the tax deductions that individuals and business may claim on premium payments for tax-qualified long-term care coverage. The tax-deductible limits increase with taxpayer age, and they are adjusted annually for inflation.
Home Care Aide – A person who provides hands-on care in an individual’s home or in a residential community such as independent or assisted living. Aides often help with activities of daily living. In many jurisdictions, they must meet minimum training and licensing requirements.
Hospice Care – End-of-life care designed to provide comfort, counseling, medication and pain relief but not life-prolonging surgery or hospital care. Most hospice care is delivered by qualified agencies in the patient’s home, and it is typically paid for by Medicare.
Indemnity Benefit – Long-term care coverage that pays a daily benefit, regardless of the cost incurred. An indemnity is not a reimbursement of costs. Rather, it is a fixed amount paid per period (typically daily). Coverage that pays an indemnity benefit is generally more expensive than coverage that pays a reimbursement.
Independent Living Facility (ILF) – A facility that offers individuals and couples a personal residence, meals, activities and transportation with substantial personal freedom. ILFs are designed for active or semi-active seniors who can care for themselves.
Inflation Protection Benefit – An automatic annual increase in long-term care coverage’s daily indemnity benefit, designed to offset inflation. Typically, inflation protection benefits increase the daily indemnity by 2 percent to 4 percent per year.
Living Benefit – A rider attached to a life insurance policy that pays a benefit while the policyholder is alive. Long-term care coverage is one type of living benefit rider.
Living Will (Medical Directive) – A document in which the maker expresses his/her personal wishes for end-of-life care in the event of terminal illness or incapacitation. Living wills usually address circumstances under which life should be extended through artificial means. Each state’s laws address the legality of living wills and whether medical professionals should honor them.
Long-Term Care Partnership Program – A state-approved program that allows individuals with long-term care coverage to qualify for Medicaid, after exhausting benefits, without meeting standard asset spend-down requirements. The program creates an incentive to purchase qualifying long-term care coverage. The Deficit Reduction Act of 2005 made all states eligible to offer partnership programs.
Look-Back Period – A minimum period during which Medicaid long-term care eligibility may not begin, after transferring assets. Medicaid eligibility looks back for five years (60 months) after transfers. It pulls the transferred amounts into the formula for calculating Medicaid asset-spend down eligibility. As a result, Medicaid eligibility can be significantly delayed after asset transfers.
Medicaid Spend-Down – Requirements to spend down personal assets before an individual or a spouse may be eligible for Medicaid long-term care coverage. Spend-down rules vary by state, but they generally require an individual or couple to spend down virtually all personal assets (except a home and car) before eligibility can begin.
Medicare – The U.S. government-operated health insurance system for most Americans age 65 or older, and also some younger disabled people. Medicare makes health insurance accessible and affordable for virtually all elderly people in the U.S. It covers hospital bills, doctor bills, prescription drugs and medical procedures and equipment. It does not cover long-term care except in limited circumstances.
Medigap – Supplemental coverage designed to fill the gaps in Medicare Parts A and B including coinsurance, deductibles and excess charges. Medigap is sold in standard coverage packages identified by letters of the alphabet. Premiums are paid by policyholders and can vary widely by state, age and health. Coverage may not be denied during the initial open enrollment period, when most individuals turn age 65, and it is non-cancellable.
Terms from N-R
Nursing Home – A generic term that covers several types of facilities that provide licensed nursing care and services. Nursing homes assist with activities of daily living and medications, and they also offer some medical services. Nursing homes provide a level of care above and beyond services of assisted living facilities.
Power of Attorney - An authorization to act on behalf of a person after that person becomes incapacitated. The person who exercises this power can perform specified tasks such as writing or depositing checks, paying bills and managing assets for the person who grants the power.
Pre-existing Conditions – Medical conditions that have been diagnosed at the time long-term care coverage or health insurance is written. Limits may apply on the insurance company’s obligation to pay claims relating to these conditions. Cancer is a common pre-existing condition.
Reimbursement Benefit – A type of long-term care benefit that reimburses long-term care costs incurred, up to a daily limit specified in the coverage. Coverage with a $200 daily reimbursement limit will only pay out this amount if services cost $200 or more. Otherwise, it reimburses the billed cost of services.
Respite Care – Short-term or temporary relief for a family caregiver. Some long-term care policies provide a benefit for respite care delivered by a nursing facility, residential care facility, or adult day care facility.
Terms from S-Z
Skilled Nursing Care – A level of care that provides 'round-the-clock inpatient medical attention by physicians and skilled nurses. Individuals often need this level of care after a severe illness, injury or hospital stay, before transitioning into long-term care.
Terminal Illness – An illness diagnosed by a physician that is considered incurable and likely to result in death, usually within six months. A terminal illness diagnosis can trigger eligibility for Medicare coverage of hospice services. It also may trigger certain living benefits offered in life insurance policies, such as access to cash (advanced from the death benefit) to pay for long-term care.
Waiver of Premium – A feature in some long-term care policies under which premiums will not be owed for a period during which the insured is receiving benefits.