Long Term Care: A Glossary of Terms

Long term care is available in many forms – assisted living, in home care and nursing homes, to name a few. . (See our article on Long Term Care: What Are Your Options?) The concept, while it’s been around for approximately 25 years, has become the center of attention in recent years as baby boomers are slowly retiring and are in greater need for long term care than ever before.

Long term care policies and contracts for care often define terms related to the type of care available, coverages and other health care terms that many consumers might not know, but should become familiar with when deciding to purchase long term care insurance or sign a contract with a facility. (For a general discussion on long term care insurance, click here.) The following is a list of someof those terms.

Activities of Daily Living (ADLs).Functions and activities that are part of everyday life, such as dressing, bathing, eating and going to the bathroom.

Adult Day Care. Care provided during the day for adults, usually at a non- residential senior or community center.

Assessment. A determination of an individual's physical and mental health by a health care professional based on established medical guidelines. For qualified long-term care insurance policies, the assessment must be made by a licensed health care practitioner.

Assisted Living Facility. A facility that provides a wide range of care for those who only need assistance with daily activities.

Benefit Period. The maximum period that an individual can receive benefits for a qualified long-term care event.

Continuing Care Retirement Community. A residential retirement community where a variety of living and medical services are provided to residents who are in need of continuous care and/or supervision.

Custodial Care. Care to help individuals meet personal needs such as bathing, dressing and eating. Someone without professional training may provide care.

Elimination Period. A type of deductible; the length of time the individual must pay for covered services before the insurance company will begin making payments. The longer the elimination period in a policy, the lower the premium. Note: The elimination period may also be called the waiting period.

Exclusion. Any expense or condition that is not covered in the policy.

Free Look Provision. A policy provision allowing the policy owner to inspect the policy for a specified period of time and return it to the insurer for a refund of the entire premium paid if they choose not to go forward. Qualified long-term care policies are required by federal and state law to provide a free look period of 30 days. If the policy is returned within 30 days, the company must refund all of any premium(s) paid.

Guaranteed Renewable Policy.The company guarantees that the insured may renew the policy for life, as long as the insured pays the premiums.

In Home Health Care. Health care provided in the patient’s own home.

Hospice. A facility that provides care for individuals with terminal illnesses. In this type of facility, individuals are typically not receiving the type of care that will bring about recovery or improvement of their medical condition.

Lifetime Maximum Benefit. The maximum amount that a long-term care insurance company will pay for all covered expenses throughout the life of a policy.

Maximum Daily Benefit. The pre-set amount that a long-term care insurance policy will pay for each day during a claim period.

Maximum Benefit Period. The amount of time that a long-term care insurance policyholder will be able to collect benefits for a qualified long-term care event. The time period is usually specified in years.

Medicaid. 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.

Medicare. The federal program providing hospital and medical insurance to people age 65 and older and to certain ill or disabled persons. Benefits for nursing home and home health services are limited.

Medicare Supplement Policy (Medigap Policy). A private insurance policy that covers many of the gaps in Medicare.

Non-Forfeiture Benefit. A policy feature that provides (1) reduced paid-up insurance, or (2) extended term or (3) a shortened benefit period upon lapse of the policy due to non-payment of all or part of the premium after the policy has been in force for a specified period of time.

Premium. The typically periodic payment that the consumer must make to their insurance company to put a policy in force and to keep a policy in-force.

Riders. Additions to insurance policies that change the provisions of the policies.

Trigger of Benefits. A term used to describe an event that will determine when a policy will begin paying benefits. For example, when a policyholder can no longer perform certain activities of daily living (ADL).

Underwriting. The process of examining, accepting or rejecting insurance risks and classifying those selected, in order to charge the proper premium for each.