Long-Term Care Insurance Terminology

By Compuquotes Team on August 12th, 2009

Long Term Care

Though it has gained popularity in recent years, few Americans know as much about long-term care insurance as other types of insurance. Long-term care is insurance that covers the costs of care given to the infirmed or elderly. Most people use these plans to pay for private nurses or caregivers, assisted-living facilities, or nursing home care.

These plans can be extensive and complicated. When shopping for a long-term care insurance plan, it is best to be familiar with common terms that may come up during the search.

Glossary of Long-Term Care Insurance Terms
Activities of daily living- any vital task that an individual performs on a daily basis. These activities include eating, breathing, dressing, and using the bathroom. The inability to undertake these activities is a significant indicator of a need for care.

Adult day care- a care program for adults. These programs usually consist of group supervision of elderly adults that includes social and recreational activities. They also often have trained medical staff on site.

Benefit Trigger- the terms under which the policy benefits begin to take effect. These may be agreed upon in the policy contract or determined by a doctor. Not being able to perform activities of daily living unassisted is one of the most common triggers. Others include extended hospital stays and the hiring of a private nurse.

Custodial care- non-medical assistance. This may include help eating or taking medication. This care can be provided by anyone. In home care of this type is not covered under all policies.

Daily benefit amount- the amount paid to the policyholder daily. A majority of long-term care insurance plans pay out a fixed amount of cash for each day of required care. Some choose to evaluate the cost of daily care and pay a percentage.

Home care coverage- benefits for services rendered in private homes. Some companies offer extra home-care coverage that pays for a caretaker to come into the policyholder's home. These benefits also extend to physical therapists and other medical professionals that make house calls.

Inflation Protection Benefit- variable increases in policy benefits. This coverage is meant to circumvent the problem of inflation and rising health costs. Under this kind of protection, daily benefit amounts and maximum policy benefit raises with the rate of inflation to assure the policyholder can still afford their care.

Maximum Policy Benefit- the amount the policy is worth. This is the limit on the amount of funds the insurance company must pay to the insured.

Non-tax qualified- benefits subject to taxes. Some payouts from the insurance plan may be subject to taxes depending on how the benefit trigger is structured.

Respite care- temporary professional care meant to relieve the family. This is a special circumstance under which an outside party is brought in to care for the infirmed while the family is unable to do so.

Tax qualified- tax-exempt benefits. Tax law will vary between policies based on terms like the benefits trigger. Often, fixed trigger definitions not subject to a doctor's approval deem benefits tax qualified.

Staying Informed
Many insurance contracts also use common terms not listed above. Understand and consider a contract before signing. An insurance agent or broker should be able to answer any questions about long-term care insurance.

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