Long-term care insurance policies come with a lot of industry jargon, insurance terms, and claim requirements that can be confusing. This glossary explains common long-term care insurance terms in plain English so you can better understand your policy, benefits, and the claims process.
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What Is Long-Term Care Insurance?
Long-term care insurance helps pay for services such as home care, assisted living, memory care, and nursing home care when assistance is needed because of age, illness, disability, or cognitive impairment.
Many policies require help with at least two Activities of Daily Living (ADLs) or the presence of a qualifying cognitive impairment before benefits become payable.
- Accelerated Death Benefit
A benefit that can be added to a life insurance policy, allowing a policyholder diagnosed with a terminal illness to receive cash advances against his or her death benefit.
- Activities of Daily Living
Activities of Daily Living (ADLs) are the basic tasks people perform every day to care for themselves. Most long-term care insurance policies require assistance with at least two ADLs or a qualifying cognitive impairment before benefits become payable.
The six standard ADLs are:
- Bathing
- Dressing
- Toileting
- Transferring (getting in and out of a bed or chair)
- Continence
- Eating
It’s important to understand that meal preparation is not considered an ADL. Preparing meals, grocery shopping, and cooking are classified as Instrumental Activities of Daily Living (IADLs). The ADL of eating refers to physically eating food, such as using utensils, bringing food to the mouth, chewing, or swallowing.
- Acute Care
Short-term care required for recovery from an incident such as an accident, injury, fall, or surgical procedure.
- Adult Day Services
Care during part of a day in a professional setting, particularly for those with dementia or other chronic condition.
- Advance Directive
Legal documentation that directs medical professionals that an individual either accepts or refuses medical care in the event that the individual is unable to communicate his or her wishes.
- Alternate Plan of Care
A provision to one’s insurance policy that provides for benefits that are not provided in the policy.
- Annuity
A contract that specifies a policyholder will provide funds to an insurance company to be distributed back to the individual at a later time.
- Assignment of Benefits (AOB)
An Assignment of Benefits allows the insurance company to pay the home care agency directly instead of reimbursing the policyholder. Not all insurance companies allow Assignment of Benefits.
- Benefit Amount
The maximum amount the insurance company will pay for covered care services. Benefits may be expressed as a daily, weekly, or monthly amount.
- Benefit Triggers
Criteria used to determine when a policyholder is eligible for benefits, such as requiring assistance with activities of daily living, or being diagnosed with dementia.
- Calendar Day Elimination Period
A waiting period measured by calendar days. Once qualifying care begins, the elimination period counts down regardless of how often care is received.
- Care Plan
A written plan outlining the services needed, frequency of care, and areas where assistance is required.
- Chronically Ill Individual
Someone who has received a diagnosis of a progressive, recurring, or long-lasting condition, anticipated to last for at least 90 consecutive days.
- Claim Denial
A claim denial occurs when the insurance company determines that policy requirements have not been met or required documentation is missing. The denial letter should explain the reason for the decision and any available appeal rights.
If you believe a claim has been improperly denied or delayed, the California Department of Insurance provides consumer resources and information about insurance complaints and policyholder rights.
- Cognitive Impairment
A decline in memory, judgment, reasoning, or decision-making abilities that affects a person’s ability to safely live independently. Alzheimer’s disease and other forms of dementia are common examples.
Many long-term care insurance policies allow benefits to be used when a qualifying cognitive impairment is present, even if assistance with two Activities of Daily Living (ADLs) is not required. Learn more about our dementia care at home services and support for individuals living with Alzheimer’s disease and other forms of dementia.
- Cueing or Reminders
Cueing or reminders means providing verbal instructions, prompts, or encouragement to help someone complete a task. This is common for individuals with memory loss, dementia, or cognitive impairment who may forget the steps involved in an activity
- Durable Power of Attorney
Legal documentation that allows someone to act on another’s behalf if that person should become incapacitated.
- Elimination Period
A statement sent by the insurance company explaining what was paid, denied, reduced, or held for review.
- Hands-On Assistance
Physically assisting someone with activities of daily living that he or she is unable to accomplish independently.
- Health Care Proxy
Legal documentation that allows someone to make medical decisions on behalf of a person who is unable to make or communicate his or her own decisions.
- Home Care
Services that might prevent one from having to move into a nursing home, such as meal preparation, companionship, errand-running and transportation, light housekeeping and laundry, and assistance with personal care needs.
- Inflation Protection
A policy feature that increases available benefits over time (annually) to help keep pace with rising care costs.
- Informal Care
Unpaid care provided by family members, friends, or neighbors.
- Instrumental Activities of Daily Living
Instrumental Activities of Daily Living (IADLs) are tasks that help a person live independently but are not considered basic self-care activities.
Examples include:
- Preparing meals
- Grocery shopping
- Housekeeping
- Laundry
- Managing medications
- Transportation
- Managing finances
- Using the telephone
While IADLs are important, most long-term care insurance policies do not use them alone to determine benefit eligibility.
- Lifetime Maximum Benefit
The maximum amount of funds an insurance policy will pay over a person’s lifetime.
- Long-Term Care
Care delivered over an extended period of time to meet an individual’s personal needs.
- Maximum Benefit Period
The period of time during which an individual can receive benefits.
- Maximum Daily Benefit
The maximum amount of funds available each day to a policyholder.
- Partnership Policy
A stipulation in a long-term care insurance policy that allows an individual to maintain certain assets when the policy’s benefits have been exhausted and the individual has applied for Medicaid.
- Personal Care
Assistance with activities of daily living, such as bathing, dressing, using the toilet, etc.
- Policyholder
The person who owns the long-term care insurance policy.
- Provider Statement
A form completed by the home care agency that verifies services provided and may be required for claim approval.
- Respite Care
Short-term, temporary relief that allows family caregivers the opportunity to take a break from providing care for a loved one.
- Service Day Elimination Period
A waiting period measured by the number of days qualifying care services are actually received.
- Reverse Mortgage
A loan that allows individuals who are at least 62 years old to borrow against the equity in their home, tax-free, which does not need to be repaid until the individual dies or is no longer residing in the home.
- Skilled Nursing Facility & Rehab/Nursing Home
A group living facility in which 24-hour nursing care is available, maintaining an RN or LPN around the clock as well as an on-call physician.
- Stand-By Assistance
Standby assistance means another person must be nearby and ready to help if needed, even if no physical assistance is provided. For example, someone may be able to shower independently but needs a caregiver standing nearby in case they lose their balance.
- Substantial Assistance
Substantial assistance is a term used by many long-term care insurance companies to describe the level of help needed with an Activity of Daily Living. It may include hands-on assistance, standby assistance, or frequent cueing and supervision, depending on the policy’s definition and eligibility requirements.
- Toileting
Being physically present to assist if needed with activities of daily living.
- Transfer of Assets
The practice of giving away property in order to qualify for Medicaid benefits, resulting in Medicaid disqualification.
- Transferring
Transferring is the ability to move from one position to another, such as getting out of bed, standing up from a chair, or getting on and off a toilet. It does not refer to transportation or driving.
- Waiver of Elimination Period
A policy provision that may reduce or eliminate the waiting period when specific conditions are met, such as certain cognitive impairments or qualifying care settings. Policy provisions vary.