Activities of Daily
Living (ADL's)
Daily activities used to
measure functional disability. In
long term care insurance policies, the five or six ADLs used are
bathing,
dressing, toileting, continence, transferring or mobility, and eating
or
feeding. Bathing is usually the first functional loss. The ease of
access to
policy benefits is determined by how the above activities of daily
living are
defined and what level of personal assistance is required in order for
one to
be deemed to fail an activity of daily living. Is hands-on assistance
required,
or will stand-by or directional assistance (cueing) satisfy the
requirement?
Access to Policy Benefits
(Benefit Triggers)
There are 2 ways to
access long term care insurance policy
benefits. It is important to read the specific definitions in the
policy to
understand the criteria for qualifying for policy benefits.
Activities of daily living
The insured requires
personal assistance with 2 or 3 activities
of daily living. Each policy will define 5 or 6 ADLs. Personal
assistance may
be defined in different ways in each policy, but generally refer to
either
hands-on assistance, stand-by assistance (for the safety of the
insured), or
directional assistance (cueing) to help the insured by reminding them.
Cognitive Impairment
The deterioration or loss
of
intellectual capacity such as dementia, Alzheimer's disease, or
Parkinson's
disease.
The
eligibility for benefits under a long term care insurance policy is
determined
by clinical evidence or standardized tests which judge the areas of
memory,
orientation, and reasoning. It is important to have a separate trigger
or means
of access to a long term care policy for
cognitive
impairment. Some long term care insurance policies permit access to
benefits
only if the insured requires directional assistance or cueing in two or
more
ADLs.
Adult
Day Care
A community-based group
program that provides health,
social, and related support services in a facility which is licensed or
certified by the state as an Adult Day Care Center to impaired adults.
It does
not mean 24-hour care.
Alternate Care Facility
A hospice,
or a facility that is
engaged primarily in providing ongoing care and related services to
inpatients in
one location and meets all of the following criteria:
1.
Provides 24-hour a day
care and services sufficient to
support needs resulting from inability to perform Activities of Daily
Living or
Cognitive Impairment;
2.
Has a trained and ready
to respond employee no duty at all
times to provide that care
3.
Provides 3 meals a day
and accommodates special dietary
needs
4.
Is licensed or accredited
by the appropriate agency to
provide such care
5.
Has formal arrangements
for the services of a physician or
nurse to furnish medical care in case of emergency
6.
Has appropriate methods
and procedures for handling and
administering drugs and biologicals
Alternate Plan of Care
If the insured would
otherwise require confinement in a long
term care facility, the insurance company, the insured and the
insured's
physician may agree that an alternate plan of treatment or alternate
site of
care such as an assisted living facility would be appropriate and the
insurance
policy would pay for this care. Some policies will also pay for durable
medical
equipment if, as an alternative to nursing home care, a person would
then be
able to receive care in his or her own home. Modifications to the
insured's
home may also be included under this policy provision. It should be
noted that
the definition of the alternate plan of care may vary from one
insurance policy
to the next. (Not available in all states.)
Benefit Increase Option
(BIO), Automatic Inflation Benefit (AIB), Inflation
Option
Inflation provisions
included in a long term care insurance
policy will usually take one of three forms:
CPI Option
Periodic offer (usually
every one,
two, or three years) to purchase additional insurance without regard to
any
changes in one's health. An additional premium
charged based on the amount of the increase and
the age of the insured at the time the additional insurance is
purchased. The
additional premium is level and charged for the remaining life of the
policy.
This offer is generally not made after any claim has been made against
the
policy.
5% Simple Inflation Option
The daily benefit will
automatically increase on each policy
anniversary date by 5% of the original daily benefit amount selected.
An
additional premium is charged for this option and the premium is
scheduled to
remain level for the life of the policy. Some policies will limit the
amount of
increase permitted under this option by either a defined number of
years (i.e.,
20 years), by age (i.e,. no increases permitted after age 85), or by a
defined
cap in dollars (i.e., an initial benefit of $100 per day will increase
until a
benefit of $200 per day is reached).
5% Compound Inflation
Option
The daily benefit will
automatically increase on each policy
anniversary date by 5% of the prior year's daily benefit amount
selected. An
additional premium is charged for this option and the premium is
scheduled to
remain level for the life of the policy. Some policies will limit the
amount of
increase permitted under this option by either a defined number of
years, by
age, or a defined cap in dollars.
Benefit Period
The time during which the
policy
will pay benefits.
There are three different approaches to defining the benefit period.
Time Frame
The benefit period is
described in years (i.e., 2 years, 5
years, lifetime). Once a period of care
begins, the
policy will cover all of the eligible care received for as long as the
policy
is in force (until the benefit period limit is reached). Generally,
this type
of policy will have a restoration of benefit feature included.
Pool of Days
The benefit period may be
stated in years but it is also
stated in days (i.e., 3 years would also be shown as 1095 days, 3 years
x 365
days). When the benefit period begins, only the days that you actually
receive
care are counted and deducted from the policy. You may have a policy
that has a
stated benefit of $100 per day, but if the actual costs are $60, the
policy
would reimburse $60 and one day would be charged against the policy.
Pool of Funds
The pool of funds is
established by multiplying the number
of years (or days) in the policy benefit period by 365 days times the
daily
benefit selected. For example, a 5 year policy with a $100 per day
benefit
would provide a pool of funds of $182,500 (5 x 365 x $100 per day). The
policy
lasts as long as money remains in the pool of funds. Only those dollars
that
are actually paid out by the policy are charged against the pool of
funds.
Instrumental Activities
of Daily Living (IADLs)
In addition to the
Activities of Daily Living (ADLs), IADLs
identify the full range of activities necessary for independent living
in the
community. IADLs include meal preparation, handling personal finances,
shopping, traveling, doing housework, using the telephone, and taking
medications.
Home Health Care (HHC)
Care received in one's
home generally provided by family
members, friends, licensed health care professionals (registered nurse,
licensed practical nurse, physical therapist, or occupational
therapist) or
certified health care professionals such as nurse's aide or home health
aide,
homemakers, or providers of chore services. Long term care insurance
policies
with generally only reimburse for services provided by licensed health
care
professionals or certified health care professionals provided through a
state-licensed home health care agency.
Indemnity Benefit vs.
Cost Incurred Benefit
An indemnity benefit is
paid to the insured regardless of
the actual costs of care. The stated daily benefit amount is paid in
full in
some long term care insurance policies even if Medicare payments are
being
received for the same care. A cost incurred benefit reimburses for
actual costs
up to the stated daily benefit amount. Policies will generally provide
for
either reimbursement of 80% or 100% of costs incurred up to the daily
benefit
amount.
Levels of Care
Skilled Care
Care provided by a
Registered Nurse (RN), Licensed Practical
Nurse (LPN), Licensed Vocational Nurse (LVN), Physical Therapist (PT),
or
Occupational Therapist (OT). When the assistance of these care
providers are required every day, the level
of care is called skilled
care.
Intermediate Care
Care provided by the
above licensed professionals less than
every day.
Custodial Care
Assistance with
activities of daily living provided by a
family member, friend, companion, or certified professionals such as a
nurse's
aide or home health aide. It may also include homemaker or chore
services.
Medical Help System
A communication system,
located in your home, used to summon
medical attention in case of medical emergency.
NAIC Model Regulations
The National Association
of Insurance Commissioners issues
and amends a body of model law and regulations governing long term care
insurance as a guide to state legislation and regulation of long term
care
insurance. Most states have adopted all or a portion of these
standards.
Pre-existing Conditions
This provision in a
policy states that no benefits will be
paid for nursing home or home health care confinement which begins
during the
first 6 months of the insurance policy if the care required is the
result of a
condition for which care or treatment was received during the 6 months
prior to
the effective date of start date of the policy. Some companies will
waive the
preexisting conditions clause if the conditions was
mentioned in the application. Some policies have no preexisting
condition
provisions.
Restoration of Benefits
If benefits are received
from the policy and the insured
does not require long term care assistance for a period of 180
consecutive
days, then any subsequent incident would be considered a new period of
care and
the full original benefit period for care would be available.
Waiting Period
(Elimination Period or Deductible)
The number of days the
insured must pay for care before the
policy starts paying benefits. After a period of 180 days of not
requiring
care, a subsequent period of care would require a new waiting period.
Some
policies have a one-time only waiting period.