Insurance

These are the basic activities that enable you to take care of yourself. Each policy will include what that insurance company defines as activities of daily living (ADL's), and the list will include some or all of the following: bathing, dressing, transferring, eating, toileting, continence and mobility.

People who need help from someone else in doing one or more of these are said to have an "ADL limitation" or "ADL's" for short. Insurance policies usually specify how many "ADL's" you must have before they pay benefits.

A facility that is

1. licensed by the state in which it is located
2. has a full time director and a nurse present at least four hours per day
3. is not an overnight facility
4. maintains a written record of services rendered
5. is open a minimum number of hours per day at least five days per week
6. has established procedures for handling medical emergencies

It does not include care received at home or in a hospital or a convalescent care facility. Not all policies cover adult day care, and those that do cover it pay for the service at different rates.

The benefit period begins on the first day the insurance company begins to pay for your care and ends when you no longer require care or have reached the maximum benefits allowed by your policy. A new benefit period begins after you have been carefree for a set period of time, usually 180 days.

Any waiting period required by your insurance policy will have to be satisfied for each new benefit period, unless the policy has a specific provision to credit you for previous waiting periods.

These are the conditions you must meet before the policy pays benefits. The three most common triggers are the following:

1. a specified number of ADL limitations
2. cognitive impairment
3. needing medically necessary care

It is best to have a policy that pays when ANY ONE of these three conditions is met. Policies requiring ADL limitations AND medical necessity are less likely to pay claims.

The deterioration or loss of your mental capacity which requires continual supervision to protect yourself and/or others. It refers to your impairment in the following areas:

1. your short-term or long-term memory
2. your orientation as to person (who you are), place (where you are), time (day, date and year) and
3. your deductive or abstract reasoning

Tax-qualified policies must specify "severe cognitive impairment" as a benefit trigger.

If your policy has coordination of benefits, then it will pay benefits only after any other insurance policy or government agency has made payment. It will not make payments in addition to other benefits you receive.

Copayment or coinsurance is a percentage of the cost of care that you pay. Some LTC policies pay a percentage of charges up to a daily maximum. A typical percentage is 80%, meaning that your copayment is 20% of charges.

Custodial care helps you with the activities of daily living. It is administered by people without medical training. Custodial care may involve preparation of meals, help with taking medicines and other routine activities. Custodial care can be given in nursing homes, adult day centers or at home.

Most LTC policies pay for custodial care in an approved nursing home, and those with home care benefits pay for custodial care at home. Usually, you must meet the policy's disability conditions (such as 2 out of 5 ADL limitations) to get paid custodial care.

Policies do not usually cover custodial care given in rest homes, residence homes or similar living arrangements. Custodial care is usually the most costly LTC because it is required for longer periods of time.

The amount a policy will pay for a day of care. Usually, the daily benefit is higher for nursing home care than for home care.

An amount not paid by insurance, usually specified as a dollar amount. It is the amount you pay out of pocket before the insurer begins payment of an insurance claim.

For LTC insurance, the deductible is usually the number of days of care you pay for before the insurer begins paying.

The time between when you begin receiving care and the policy begins paying benefits. Most policies give you a choice of periods, such as 20, 60 or 100 days.

The shorter the elimination period, the sooner the policy begins paying benefits, and the more expensive the policy. The period may be different for nursing home care and home care.

An elimination or waiting period is like a "deductible" in health or car insurance; it's the part you pay before the insurer starts to pay.

If you change your mind after buying it, most states allow you to return a policy within 30 days and still get your money back. The process for doing this is described in the policy.

To make sure you have this option, get written evidence of when you received the policy. If you decide not to keep the policy, send it back to the insurer with a letter asking for a refund by certified mail. Keep the mailing receipt.

You are considered functionally disabled when you have cognitive impairment or are unable to perform a prescribed number of the activities of daily living (ADL) outlined in your insurance policy.

For example, your policy may require that you be unable to perform two of these five ADL's to receive benefits: eating, transferring, toileting, bathing and dressing.

Some insurance policies require that your treatment must also be medically necessary before they will pay any benefits when you are functionally disabled.

This refers to how many days after your premium remains unpaid that the policy will remain in effect. The standard grace period is 31 days. This means that you have 31 days after your premium due date to make the payment without any lapse of coverage.

The insurance company cannot cancel your policy for any reason unless you're not paying the premiums. If a policy is guaranteed renewable, it will say so in those exact words.

Almost all LTC policies are now guaranteed renewable. If not, the company is not obligated to continue insuring you.

This is the physical assistance of another person, without which the disabled individual would be unable to perform an ADL.

The Health Insurance Portability and Accountability Act of 1996 became law on January 1, 1997.

The Act specifies requirements that a long-term care insurance policy must meet in order that premiums paid may be deducted as medical expenses and benefits paid not be considered taxable income.

A health worker employed by a Home Health Agency, other than a doctor, nurse or therapist, who provides help at home with the activities of daily living and in some cases homemaker or companion services.

This is care provided by a state-licensed agency and includes services provided by a nurse, home health aide, nutritionist or occupational, speech, respiratory or physical therapist. It does not usually cover services provided by members of your family, special companions or homemakers.

Home health care is not covered by all insurance companies. When it is offered, the services may be covered as part of the long-term care policy, an option or rider available with the policy, or a separate policy.

A program providing care for those who are terminally ill. Treatment must be administered under the direction of a doctor and be provided by a hospice care organization that is state licensed or Medicare approved.

Hospice care is covered by some but not all policies, usually as part of the home health care benefits.

An indemnity benefit is a fixed amount paid when care is received, regardless of the cost of care. A policy with a $100 nursing home indemnity benefit will pay $100 for each covered day in a nursing home, no matter what the nursing home charges.

Because long-term care costs can be expected to rise in the future, policies may provide for an annual increase in the maximum daily benefit. Usually, this is an option available at extra cost.

Sometimes the buyer can choose between simple and compound increases. Simple increases means the same dollar amount is added to the daily benefit each year, usually 5% of the original benefit.

Compound inflation protection increases the benefit by a percentage of the current benefit, again usually 5%. Because price inflation is a compound effect, only compound protection will keep up with inflation in the long run. However the difference between simple or constant dollar protection and compound inflation protection is usually not large for people already 65 or over.

This is care for stable conditions requiring daily but not 24-hour nursing supervision. The care is ordered by a doctor and supervised by registered nurses. Intermediate care is less intensive than skilled care and usually needed for a longer period of time than skilled care.

Virtually all LTC policies pay for intermediate care in an approved nursing home. Policies with home care or Alternative Plan of Care benefits will pay for intermediate care given at home.

The premium you pay when you buy a policy will not go up later because you get older or if your health changes. However, it can be raised by the insurer for an entire group of policy holders in a state.

Most insurance companies set a limit on the amount of benefits that a policy will pay. These limits are set in terms of either years or dollars, but not both. You will usually be given a choice of lifetime limits. For dollar limits, the higher the dollar amount that you choose, the more expensive the policy.

If the limit is given in terms of years, (for example 2,3,5 or lifetime) then you choose whether you want coverage for a set number of years or for your lifetime. The longer the period, the more expensive the policy.

LTC is care you may need due to illness or disability if you are unable to care for yourself and family or friends are not available to care for you. LTC can be given in a nursing home, at home, in an adult day-care center or elsewhere.

Not all LTC is long-term; some people may stay in a nursing home for only a month, or require home care for a few weeks while recovering from acute illness or surgery.

Medicaid is the joint federal and state government program to pay medical costs for the poor. Medicaid will pay nursing home and some home care costs if you are disabled, provided that your financial assets and monthly income are below certain allowed levels.

If your assets are above the allowed level you will have to "spend down" your assets to the allowed level before Medicaid will pay for your care.

The federal government program to provide health insurance for people over 65. While everyone over 65 is eligible for Medicare, it pays for very little long-term care. If you need daily skilled nursing or rehabilitative care in a nursing home after a hospitalization, Medicare will pay for up to 100 days, but you must pay $96 of the daily charge between days 21 and 100. Some private Medicare Supplement (Medigap) policies will pay the copayment for you.

Similarly, Medicare will pay for home health care if you are receiving skilled or rehabilitative care, but not for "maintenance" care or help with activities of daily living. Neither Medicare nor Medigap pays for this custodial care, the most common and costly form of long-term care.

Medigap or Medicare Supplement policies are private insurance policies that pay for care that is approved but not paid by Medicare. Typically, Medigap policies pay part or all of the coinsurance and deductibles associated with Medicare coverage.

Medigap policies will not pay for services not covered by Medicare.

Refers to a mental or emotional disease or disorder of any kind that does not have an organic origin.

Both Alzheimer's Disease and senile dementia are considered organic in origin; most insurance companies cover these and it should say clearly that "Alzheimer's Disease, senile dementia and other organic" brain disorders are covered by the policy.

Most insurance policies will not cover "nonorganic" mental and nervous disorders and disorders due to alcohol or drug related problems.

If you stop paying the premiums on a policy, it is cancelled. In this case, the insurer may give something back. It may be a fraction of the money you have paid in, called "return of premium" (see definition). It may be extra months of coverage at your regular daily benefit, or a paid-up policy at a reduced daily benefit.

The amount of non-forfeiture benefit depends on how long you have held and paid premiums on the policy. A benefit may also be paid if the policyholder dies while the policy is in force.

Non-forfeiture benefits may increase the cost of a policy by 30-50%.

Premiums are the cost of insurance. They are paid to the insurer annually, quarterly, monthly or at other intervals. Premiums depend on your age, the amount of coverage or benefits you choose, and for some policies they may depend on your current health.

Sometimes a couple applying together for LTC insurance will get a discount of 5-20% of the usual premium.

This is care provided by a paid caregiver as a replacement to care you usually receive at home from a relative or friend. Respite care is provided to give relief to the person who normally cares for you without charge at home.

This is for medical conditions requiring care by skilled medical personnel, such as registered nurses and professional therapists. The care must be available 24 hours a day and is ordered by a doctor, usually in accord with care plan.

Skilled care is often needed only for short periods, such as when recovering from acute illness or surgery. All LTC policies cover skilled care in an approved nursing home.

Beginning January 1, 1997, long-term care policies meeting certain requirements qualify for favorable tax treatment. Buyers of tax-qualified (TQ) plans can deduct the premiums if they itemize deductions on their federal tax return.

After you apply for an LTC policy, the insurer examines your application to decide whether it is willing to take the risk of insuring you. This process is called "underwriting."

Often the insurer provides a list of conditions that will disqualify you from receiving coverage from them. Those who are already disabled will usually not qualify for insurance.

A provision that you will not have to pay your insurance premiums after a prescribed number of days while you are receiving care. The waiting period for waiver of premium is often 90 days, but the insurer can start counting days with the day you first receive care or the day you first receive benefits.

For instance, if you have a 90-day waiver of premium that begins with payment of benefits and you have a 60-day elimination period before benefits are paid, then you will be receiving care for 150 days before the premium is waived.

Also, a policy may have different waiver of premiums rules for nursing home care and home care, or may waive the premium only for nursing home care.