Long Term Care Glossary of Terms

Activities of Daily Living (ADL):

ADLs are eating, walking, transferring from a bed to a chair, dressing, bathing, using a toilet, and remaining continent. Most policies use the inability to perform ADLs to determine eligibility (see Benefit Trigger). These are ADL standards:

Hands-On Assistance: A measure used by some private policies that means an individual cannot perform ADLs without actual assistance. This is a less generous benefit trigger feature than the standby assistance definition.
Standby Assistance: An individual may be able to perform the ADLs but would need someone standing next to them, ready to provide assistance if needed. This is a more generous benefit trigger feature than the hands-on assistance definition.

Adult Day Care: This is care during the day for adults, usually at senior or community centers.

Assisted Living Facility: A residential living arrangement that provides individualized personal care and health care services for people who require assistance with ADLs.

Benefit Trigger: After an insured person’s coverage becomes effective, he or she is eligible for benefits when certain conditions are met. Benefits will begin under the Federal Long Term Care Insurance Program (FLTCIP) and other tax-qualified plans when an insured person cannot perform two or more ADLs or if he or she has a severe cognitive impairment like Alzheimer’s disease.

Binding Third-Party Dispute Resolution: This allows individuals to appeal disputes with an insurance carrier about benefits eligibility or claim decisions to a third party. The third party’s decision is binding on the insurance carrier.

Care Coordinators: Licensed health care practitioners who assess, plan, and approve an insured person’s need for long term care services. They provide information about long term care and provider discounts.

Cognitive Impairment: A deficiency in a person’s short- or long-term memory; orientation as to person, place, and time; deductive or abstract reasoning; or judgment as it relates to safety awareness (see benefit trigger).

Elimination Period: The period of time when an insured person qualifies for benefits under the policy’s benefit trigger and when the policy begins paying for long term care. During this period, insured person pays out-of-pocket for his or her own care or, under certain circumstances, Medicare pays for a short-term skilled nursing facility or home care. These are elimination period conditions:

Consecutive Days: Days applied to the elimination period must be consecutive. If care is suspended or changes to another venue (i.e. from home care to a nursing home) -- the original elimination period requirement may restart.
Cumulative Days: Days applied to the elimination period need not be consecutive, nor associated with the same episode of care.

Eligible Persons or Individuals: People eligible to apply for long term care insurance under FLTCIP, including federal employees, annuitants and deferred annuitants, active duty uniformed service personnel and retirees, as well as spouses and children 18 or older. Parents, stepparents, and parents-in-law of federal employees and active duty uniformed service personnel also are eligible. Federal employees who retired with an immediate annuity are eligible for the new program regardless of their Federal Employees Health Benefits Program (FEHBP) eligibility in retirement.

FLTCIP: Federal Long Term Care Insurance Program.

Future Purchase Option: Under FLTCIP, this option increases the maximum daily benefit amount every other year based on the CPI for medical costs or other measure agreed to by Long-Term Care Partners and the Office of Personnel Management (OPM). This feature usually provides insured people the option to add (through a premium increase) inflation protection. However, insured people who repeatedly reject this offer sometimes are subjected to underwriting if they decide later to add inflation protection. Such subsequent underwriting does not endanger coverage the insured person originally selected.

Home Health Care: Occupational, physical, respiratory, speech therapy, or nursing care services provided in an individual’s home. Also included are medical, social worker, and home health aide and homemaker services.

Homemaker Services: Maintenance and personal care provided to help individuals stay at home, which include light housekeeping, meal preparation, and shopping for items needed to provide maintenance and personal care.

Hospice Care: Care and/or management of a terminal illness that may be provided in a facility or in the patient’s home.

Inflation Protection: A policy option that provides for increases in benefit levels to help pay for expected increases in the costs of long term care. Inflation protection options, including the following, will result in higher premiums:

Compound: An option that can be added to some policies (including FLTICP) that increases the benefit amount by a dollar amount that increases each year. For example, a $100 benefit that increases by a compound 5 percent each year would equal $265 a day in 20 years.
Simple: An option that can be added to some policies that increases the benefit amount by the same dollar amount each year. For example, a $100 benefit that increases by a simple 5 percent each year would equal $200 a day in 20 years.

Informal Care: A person providing maintenance and personal care who is not a formal caregiver. The federal plan allows an insured person’s child or housekeeper to be paid by FLTCIP for informal care if he or she did not live with the insured individual at the time they become eligible for benefits.

Long-Term Care Partners: The Metropolitan and John Hancock life insurance companies’ consortium selected by OPM as the official federal long term care insurance program vendor.

Maximum Daily Benefit: The largest dollar amount that can be spent on long term care per day.

Maximum Lifetime Benefit: The total dollar amount that an insurance carrier will pay for charges the insured person incurs on covered services. In the FLTCIP, this amount is calculated my multiplying the maximum daily benefit by 365 days by the length of the benefit period (number of years).

Medical Necessity: A benefit trigger sometimes used in older non-tax qualified policies that enables insured people to receive benefits if they have a medical condition like congestive heart failure or coronary-artery disease that makes them too frail to care for themselves even though they can perform all ADLs.

Nonforfeiture Benefit: The following policy features return some value to the insured person if they cancel the policy or stop paying premiums:

Contingent Nonforfeiture: Provides a reduced benefit in the event a premium increase made the policy unaffordable. When this is included with coverage, this feature usually does not result in higher premiums.
Policy downgrades: Allows insured persons to pay lower premiums in exchange for reduced coverage or benefit amounts. For instance, a downgraded policy might only cover nursing home costs in lieu of comprehensive long term care coverage the plan originally provided. Policy downgrades are included in FLTCIP at no additional cost to insured people.
Return of Premium: A feature added to some older non-tax qualified policies, which returns part, or all of the premiums paid by the insured person if he or she cancels the policy or stops paying premiums after a certain number of years. Adding this feature results in higher premiums.

Pre-Existing Condition Clause: Older policies sometime exclude nursing home payments for six months for conditions an insured person has when the policy is written.

Respite Care: Provides your primary caregiver with temporary relief from his or her caregiving responsibilities.

Tax Qualified Policy: A policy that conforms to standards in the Health Insurance Portability and Accountability Act of 1996 and offers certain federal tax advantages.

Underwriting: Underwriting is the process of reviewing medical and health related information furnished in an insurance application process to determine if the applicant presents an acceptable level of risk and is insurable. Persons with an immediate or probable need for long term care are unlikely to meet the underwriting standards. Without some medical underwriting, individuals with an immediate or likely need for long term care could buy such insurance with the intention of collecting benefits shortly after becoming a policyholder. As a result, premiums could become too expensive for the majority of potential subscribers.

Waiver of Premium: A provision in an insurance policy (including FLTCIP) that relives the insured person of paying the premium while receiving benefits.