Long-Term Care Insurance-Important Terms

Important Terms
The following terms are often used in connection with LTC
insurance.  Many are also used in this Guide.
ATTAINED AGE RATING – Premiums are based on the covered individual’s
age at the time of application of the policy or certificate.  Premiums  will
increase as the individual ages regardless of his or her age when first enrolled.
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 judgement as it relates to safety awareness.  Long-term policies
must provide coverage of Alzheimer’s disease, senile dementia, organic brain
disorder or other similar diagnoses.
COMBINATION POLICY – A long-term care policy that includes benefits for
nursing home care and home health care.
DUPLICATE COVERAGE – Do not buy more than one policy.  Consider
increasing current coverage instead.  If you replace a policy with another new
policy, regulations in Virginia require agents or insurance companies to a) offer
to check on all your other policies for possible duplicate coverage, b) warn you
in writing not to cancel any policy until the “free-look” period is over and you are
satisfied with the new one and c) give credit for time spent under your previous
policy toward satisfying pre-existing condition waiting periods.
ELIMINATION PERIOD –  The length of time the individual must receive
covered services before the insurance company will begin to make payments.
The longer the elimination period in a policy, the lower the premium.
The benefit is paid when an expense is incurred for an eligible service.  The
amount paid is the lesser of the expense incurred or the dollar limit of the
FREE-LOOK – All long-term care policies must provide a “free-look” period of
at least 30 days that will allow you to review your purchase.  For a full refund
of any premium paid, return the policy before the end of the 30 day period.
GUARANTEED RENEWABLE – Long-term care insurance policies issued in
Virginia must be at least guaranteed renewable.  Under a guaranteed
renewable policy, the insured is the only one who voluntarily can cancel the
policy.  The easiest and most common way the insured does that is to simply
stop paying the premiums.  The company may not change policy provisions or
refuse to renew your coverage.  Premiums, however, may be raised for an
entire class of policyholders.
HOME HEALTH CARE POLICY – A policy that pays for skilled care or personal
assistance in the home.  Do not confuse at home recovery benefits with more
extensive home health care benefits.  Recovery benefits often are limited to
short periods, usually no longer than your hospital or nursing home stay.
INDEMNITY DISBURSEMENT METHOD – The benefit is a set dollar amount
paid after a determination of eligibility and is not based on the specific service
received or on the expenses incurred.
INFLATION PROTECTION – In Virginia, companies must offer at least one of
three methods of increasing the daily benefit amount to offset the effect of
inflation.  You may reject or accept the offer.  The three methods available are
a) benefit level increases compounded annually of at least 5%,  b) the
guarantee of periodic opportunities to increase benefit levels without providing
evidence of insurability or health status, or c) coverage of a specific percentage
of actual reasonable charges without a specific maximum indemnity amount.  If
you reject the inflation protection, it MUST be in writing. Refer to the section
entitled, “Virginia Long-Term Care Partnership,” for Partnership policy
NONCANCELABLE – A long-term care policy that cannot be cancelled by the
insurance company and for which the rates cannot be changed by the
insurance company.
NONFORFEITURE BENEFITS – A nonforfeiture benefit provides that after a
policyholder has paid into a policy for a specified period of time, the
policyholder continues to have some benefits even if he/she is unable to
continue paying premiums.  Those benefits take different forms and affect
the policy price.

NURSING HOME POLICY – A policy that pays for care in a licensed nursing facility.
PRE-EXISTING CONDITION – A pre-existing condition is an illness or disability for
which you received medical advice or treatment during a period of time before you
applied for insurance.  Most policies do not pay for pre-existing conditions during the
waiting period after you become insured.  State law limits the long-term care pre-existing
policy waiting period to six months.
SKILLED CARE – Daily nursing and rehabilitative care that can be performed only by,
or under the supervision of, skilled medical personnel.  Usually this care must be
ordered by a physician and required 24 hours a day.