COLORADO’S LTC PARTNERSHIP

National Association of Insurance Commissioners (NAIC) Long-Term Care and Partnership Training Manual

COLORADO'S LTC PARTNERSHIP - PART I (GENERAL)

Larry Larsen's Eagle Educational Systems, LLC

Due to the changing nature of the insurance industry, the information contained in this manual may be subject to change.

This publication is designed as an instructional tool and not a source of legal reference.

National Association of Insurance Commissioners (NAIC) Long-Term Care and Partnership Training Manual, 1^st Editon, �On Demand Writing & Photography, Linda Hobbs: (719-382-0527)

Chapter One - Overview of Long-Term Care

What is long-term care?

Most people think long-term care means putting someone in a nursing home, however just as there are a wide range of disabilities, so too there are a wide range of long-term care services. In fact, over 50% of nursing home patients stay less than three months in a nursing home, and the majority of long-term care is provided in private households.

Long-term care is care provided over a prolonged period of time when someone needs assistance with daily living due to an accident, illness, cognitive impairment or advancing age. Care is provided either in a facility or at home. Long-term care may include a range of formal and informal services for health, personal care and social needs. Often thought of only as nursing home institutionalization, long-term care can be provided both formally, by medical and health professionals, and informally, by personal, unskilled caregivers.

Long-term care covers a range of services to provide health or personal care to help people function.The goal is to help people achieve as much independence as possible for as long as possible.

Long-term care is an issue everybody must eventually confront, if not for their own care, then for the care of a loved one.Two out of every five people receiving long-term care are under the age of 65. For those who are 65 or older, 43% will need some form of long-term care, and by the year 2030, one out of every five people in the United States will be over 65.

The nature of long-term care depends on the nature of the impairment.

Definition of LTC by impairment

The nature of impairment can be broken down into two major categories, Activities of Daily Living (ADLs) and Instrumental Activities of Daily Living (IADL's).Long-term care provides services to help people perform ADL's or IADLs.�

Activities of living (ADLs) & Instrumental Activities of Daily Living (IADL's)

Activities of living (ADLs) are everyday functions and activities individuals usually do without help. Many insurance policies use the inability to do a certain number of ADLs (such as 2 of 6) to decide when to pay benefits.

Activities of living (ADLs) include:

Instrumental Activities of Daily Living (IADL's) are things people usually do that make independent living possible, like driving.

Instrumental Activities of Daily Living (IADL's) include:

Cognitive impairment

Cognitive impairment is one of the primary long-term care disabilities. It is a deficiency in a person's short or long-term memory, orientation as to person, place and time, deductive or abstract reasoning, or judgment as it relates to safety awareness. Symptoms include memory loss, confusion or disorientation, such as we associate with Alzheimer's Disease, brain trauma or dementia.These conditions rob people of their short or long-term memory, the capacity to reason or make good judgment decisions, resulting in the need for supervision or assistance.

Levels of long-term care

Long-term care may be broken down into three levels: Skilled nursing care, Custodial (personal) care and supervisory care.

Skilled nursing care

Commonly referred to as nursing care, this is the highest level of care an individual can receive without being confined to a hospital. It is almost always based in an institution. Skilled nursing care is the only type of care Medicare covers (but on a very limited basis).Care must be available on a 24-hour basis. Skilled rehabilitation services, such as physical, occupational and speech therapy are generally included in this definition. The Medicare definition of skilled care requires daily care by a physician.

Custodial (personal) care

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

Supervisory care

Most often associated with cognitive impairment, supervisory care involves providing a safe, controlled environment to ensure a person does not harm themselves or others, and may include ADL assistance as well.�

Risk of needing LTC

When one considers the range of services and situations included under long-term care, the risk of needing long-term care is obvious. Traffic and sports accidents, strokes, brain tumors, MS, Parkinson's or other disabling events can strike at any time. 40% of people receiving long-term care are working-age adults, between 18 and 64.

In fact, 60% of all Americans will need some form of long-term care at some point in their lives, and 43% will need nursing home care.

Who needs long-term care?

The need for long-term care touches all lives at some point, whether personally or for a loved one.The population of Americans between 65 and 84 will increase by 31 million between 2010 and 2040. The need for long-term care increases with age, and therefore the need nationally will only increase with time. Over two out of five people over 65 experience some form of functional limitation, physically or mentally, which impairs their ability to perform activities of daily living. ��

Risk factors for needing long-term care

While age is the greatest predictor for needing long-term care, there are a variety of contributing factors, which may increase the risk of needing long-term care, including:

Marital status: Single people are more likely to need long-term care, simply because there is no one else available when the time comes.
Gender: women tend to live longer.
Lifestyle: Lack of exercise, poor diet, smoking or engaging in other unhealthy activities increases the risk of needing long-term care.
Health: Chronic illnesses such as MS, Parkinson's, diabetes, dementia or other debilitating conditions may eventually result in the need for long-term care.
Family history: a family history of physical or mental illness are contributing risk factors.

The need for long-term care

There is a constant need for long-term care in all demographic ranges. Other affected groups are:

Those who live alone
Those at or below the poverty level
Those with lower education
Those who don't own their own homes
Those without transportation

How much care will be needed

According to the Scripps Gerontology Center Technical Report, 2001, 43% of every 100 people over 65 will need long-term care.� Of those, 36% will need care for more than four months, 31% will need long-term care for four months to five years, and 5% will need long-term care for more than five years.��

Women tend to need care for longer periods of time than men (3.7 vs. 2.2 years). Of today's 65 year-olds, 20% will need care for more than five years, and 1/3 won't need any form of care.

Length of stay in a nursing home

Most people stay in a nursing home over two years.

50% stay less than three months

21% stay three months to a year

33% stay more than five years

Care needs change over time - the LTC continuum

For some, the need for long-term care increases over time, as their ability to perform Activities of Daily Living decreases.� With a progressive diseases such as Alzheimer's, at first the patient may simply need help with medications and preparing meals. Over time, as their condition deteriorates, they may require constant supervision and other necessities.

For others, the need for long-term care will decrease over time, as their ability to perform Activities of Daily Living increases. With injuries, such as head trauma, or for those recovering from an illness, as they recuperate they need less help.

For others, the need for long-term care remains stable over time, such as for stroke victims or those permanently disabled by a major injury.

Providers of long-term care

Long-term care can be provided in a variety of ways.� It is important to be familiar with the range of options, in order to provide the best opportunities for those in need. These options include:

Caregiver workforce issues

There is an increasing discrepancy between the number of people in need of long-term care and the caregiver workforce available to provide those services.

The majority of baby boomers are expected to reach the age of 75 after the year 2021, at which time the need for LTC in some form will be greater than ever.However, as the need for LTC workers increases, the number available has been dropping over time.

Traditionally, extended families lived in the same area for life, and long-term care was a natural part of inter-generational support.� Now however, the population is far more mobile. Informal personal care is often unavailable. There is a high turn-over rate among LTC workers due to stress and low wages.

Where long-term care is provided

The majority of LTC is provided by home and community-based services. It is important for anyone offering LTC coverage to be familiar with the various options available, in order to adequately help clients make informed decisions. People in need of LTC can fulfill that need either at home, in a facility or in some mix of the two. Home and community based services (HCBS) offer a wide range of possible arrangements to meet the specific need of each individual case.

Home and community-based services (HCBS)

A general overview of the types of home and community-based services includes:

Adult Day Service (ADS)
Case managers or geriatric care managers
Emergency response systems
Friendly visitor / companion services (usually volunteers who stop in for visits)
Home health care / home care (usually ADL services)
Homemaker services
Meal programs
Respite care (to give caregivers some time off)
Senior centers
Transportation services

Impact of LTC on employers

As the need for LTC grows, so too does the expense to employers. In a 2006 study, the MetLife Mature Market Institute found the cost to employers of full-time intensive caregivers to be anywhere from $17 billion to $33 billion in replacing employees ($2.8 b), absenteeism ($3.4 b), workday interruptions ($2.8 b), crisis eldercare ($1.6 b), supervisor time ($780 m) and unpaid leave ($14 b). The intangible toll on caregivers of stress, health problems and burn-out also plays a roll with a financial impact employers may end up absorbing.

Facility-based long-term care

LTC services available in a facility-based setting include:

Adult foster care
Whether provided in group-settings or on an individual basis, services may range from simply ADL assistance to more skilled care and supervision.
Board and Care Homes
Residential care facilities are like group homes with a handful of residents.Beds may be provided with several to a room or with individual rooms available. While meals and supervision are provided, medical care is usually provided by outside resources.
Assisted Living communities
Also called "residential care facilities," assisted living communities offer as much independence as possible to residents in need of greater intervention, including meals, supervision (for dementia-related conditions), assistance with ADL, help with medications and household maintenance.
Continuing care retirement communities (CCRCs)
CCRCs offer every range and type of residential care combined in one campus, including individual cottages, independent living, assisted living, or skilled nursing care.There are generally initial fees as well as monthly fees.�
Nursing Homes
Nursing homes are not only for the elderly. They provide service for anyone in need of LTC, including those recovering from an injury, disease, suffering cognitive impairment or undergoing other forms of long-term service. A nursing home is a facility that provides skilled, intermediate or custodial nursing care which must be state-licensed.

Payment of LTC - Long-term care financing; Who pays for long-term care?

Whether provided at home or in a facility, there are always expenses associated with LTC that must be dealt with.� Additionally, there are the costs impacting employers of caregivers and the danger of a caregiver losing their job due to the burden of LTC. Facilities themselves vary in cost, depending on the location and level of care available.�

According to the 2008 Genworth Cost of Care Survey the average cost of LTC breaks down as follows:

Assisted Living: A private one-bedroom unit in an assisted living facility in the U.S. has an average cost of $36,090 per year, $40,703 in Denver and $37,261 in other areas of Colorado.
Home Care:Nationally, the average rate for a licensed home health aide is $19.18 per hour, or $43,884 per year full-time, $21.27 in Denver, $48,666 per year full-time, or $42,420 per year in other areas of Colorado.
Adult Day Health Care: The average annual cost for five days a week in an adult day health care facility is $15,236 nationally, $13,005 in Denver $16,289 in other areas of Colorado.

According to the Health Policy Institute, Georgetown University, National Spending for Long-Term Care by Payer (2005) LTC expenses broke down as follows:

Medicaid
$101.1 billion
(48.9%)
Other Public aid
$5.3 billion
(2.6%)
Private Health & Long-Term Care Insurance
$14.9 billion
(7.2%)
Out-of-Pocket
$37.4 billion
(18.1%)
Medicare
$42.2 billion
(20.4%)
Other Private
$5.6 billion
(2.7%)
Total=$206.6 billion

The reality is 28% of people receiving LTC care are forced to pay out of their own resources, private insurance or with the financial help of family members. ��

While most Americans have some sense of how expensive LTC is, and believe that Medicare or Medicaid will help them when the time comes, Medicaid is a federal program to provide a safety net for low-income people. These programs are available only to those who qualify as being financially indigent, which means they must qualify for:

Aid for Families with Dependent Children (AFDC or welfare)
Supplemental Security Income (SSI) for those indigent applicants who are over 65, blind or disabled.

Medicaid pays for low-income older or disabled people and pays for 48.9% of all LTC services nationally. Eligibility for Medicaid must be based on income and assets. Medicaid covers nursing home care, custodial and skilled care without any time-limit.

Medicare is the national health insurance program for Social Security recipients who are over 65 or permanently disabled, and only covers 20.4% of all nursing care services nationally.Medicare only covers home health care if the patient is homebound and needs skilled nursing or therapy services.

Applicants for Medicare assistance do not need to meet low-income requirements. Like private insurance, Medicare pays for part of the medical care and the patient pays a deductible and co-payments.

Payment for nursing home care

According to the Centers for Medicare & Medicaid Services (CMS), the distribution of national spending on nursing homes is covered largely by Medicaid:

Home Care Source of Payment for 2003:

Medicaid 46.0%
Out of Pocket 27.9%
Other Private and Public Sources 6.1%
Private Insurance 7.7%
Medicare 12.4%

Chapter Two - Long-Term Care Planning

People need to plan for LTC

Long-term care is an issue everyone must face, whether as a caregiver or as a recipient of adult day care, home care, nursing home care or other options. The cost of LTC increases with every passing year. Knowledge and planning ahead are the best ways to meet these financial challenges without being caught off-guard. Hoping that government assistance will be enough is an unnecessary gamble on future times of crisis.��

Baby-boomers overwhelmingly deny it could happen to them

The 2008 Lincoln RetirementSM Institute (LRI) survey (2008 Lincoln National Corporation; Long-Term Care May Be a Road Block for Many Baby Boomers on the Road to Retirement; http://www.lincolnfinancial.com/) found that baby boomers are ignoring the inevitable expenses of long-term care. The online survey of more than 1,000 adults 50-70 years of age, with household incomes of $75,000 or more, described the "Overconfidence Effect" of the baby boomer generation in refusing to recognize or plan for the emotional and financial challenges of long-term care.

While 85% of respondents said they believed that purchasing long-term care insurance was a wise thing to do, only 35%said they actually had LTC insurance.

Aging populations & projections

According to the U.S. Census Bureau, the elderly population is projected to double over the next 25 years in several mountain-west states including Montana, Idaho, Wyoming, Colorado, New Mexico, Arizona, Utah, and Nevada, as well as the pacific coast states of Washington, Oregon, and Alaska, and in the southern states of the Carolinas and Texas.

Planning for LTC

There is more than money to think about when planning for LTC. Each individual has to consider:

Care options
Lifestyle and living arrangements
Home modifications
Legal issues

Once the decision to plan ahead is made, there are certain advantages to be gained, including:

Conserving assets and income for other uses besides LTC
Having greater control in choosing care options
Improving, not just maintaining one's quality of life
Easing the burden on caregivers
Maintaining as much independence as possible for as long as possible

Planning ahead for LTC can make the difference in the life of the person receiving care, their loved ones and society as a whole.�

As an agent, it is important to educate clients about key issues and concerns:

Explain the risk of not planning ahead, that LTC doesn't just mean elderly care in nursing homes and may be needed at any age, what those expenses may be and who ends up footing the bill.
Explain the advantages that can be gained by planning ahead.
Help clients list what their priorities are, and what they would prefer in LTC, whether in terms of injury, illness or aging.
Remind clients that there is no "right or wrong" in planning for LTC. It all depends on the individual and what they envision for themselves.
Provide resources for information, including the internet, media and written materials.

Components of planning for LTC; how to plan together

When sitting down with a client, it is important to arm them with knowledge, so they can make informed decisions about what is right for them. There are a few important things to keep in mind when discussing all the components involved.

Discuss why it is important to plan ahead, including preparing for the financial burden, having control over one's life and being able to make appropriate choices based on knowing what options are available.

People don't plan ahead because it seems too complicated and they worry they won't understand how LTC insurance works.This is why it is important to explain the benefits of planning ahead. They don't have to get their PhD in insurance to be able to prepare for their future, and they'll be glad they took the time to take control of their lives.

Explain why people don't plan ahead, including:

Not being aware of the risk of needing LTC
Lack of awareness of how expensive LTC is and the limitations of Medicare and Medicaid
Simply preferring not to think about the possibility of Alzheimer�s, injuries or other illnesses
Being too busy to plan ahead or feeling guilty about planning for parents or other loved ones.

Other things to consider are:

Where they want to receive care
Family members becoming caregivers and what's involved in being a caregiver
Reviewing current insurance coverage
Investigating what they might qualify for
Going over possible resources to pay for LTC
Discussing home modifications to prolong independence
Considering moving, and what they need or want in a home
Going over legal documents or preparing new ones, including a Health Care Proxy or, Advance Directive, a Living Will or Medical Power of Attorney.

Role of LTC agent in planning for long-term care

The LTC agent is there to act as the client's guide and facilitator in choosing the right care plan for them.To do this, the agent must be educated, informed, objective and able explain options to help the client make the best choice possible.� LTC coverage rules and regulations change every year, and the amount of information can appear overwhelming.� However, while LTC insurance may seem complicated due to the wide range of choices, they can be narrowed down to five key elements:

How much do they want to pay and receive?
For how long do they want to pay?
How long before they can use their benefits?
How much will it grow?
What kind of care do they want and where?

To narrow things down and answer these questions effectively, there are a few things to focus on.

Understand your client

It is important to know a few details about your client. Take some time to determine your client's specific needs.� Protecting the client's money is the main purpose of long-term care insurance. It is important to learn about their financial situation.

What are their assets? What is their current income, and do they expect it to increase or decrease in the future? Are they on a fixed income will they be? Are they expecting any additional sources of income such as an inheritance?What do they intend to pay out-of-pocket for long-term care?

Once you have a sense about your client's finances, you can tailor their policy with sufficient benefit levels and premiums based on what they can afford.

It is helpful to get some idea of the client's health. If an agent sets them up with a policy, only to find out their premiums are much higher than what they were originally quoted, it doesn't help the client or agent.

It helps to know a few details, including:

The clients' lifestyle may influence what plan is best for them. What are their hobbies and interests?Do they smoke, exercise, over-eat, drink to excess, ride horses or go four-wheeling? Are they a master gardener, a social butterfly or bookish hermit? This will influence what type of care or facility they may want to be placed in, should the need arise.

How important is their independence to them, or would they prefer an environment with more amenities?Do they prefer a house or an apartment?

This is not a one-way street either.The agent needs to determine what information the client lacks and fill them in on what they need to know about long-term care.� No two people are the same, and it is important to listen as well as talk, and respect the client's right to decide what they prefer, even if the agent finds they have their own strong feelings about what would be best. Ultimately, it is the agent's job to provide information, and leave the final decision to the person making the investment: the client.

Common barriers to planning

There are many reasons why people don't plan ahead for long-term care.

They may not know the risk of needing LTC, or they think government programs will handle the details.Others think "long-term care" only refers to putting the elderly in nursing homes.This is referred to as a "knowledge barrier" and it is exactly why it is important to be aware of the facts, in order to share that information with the client, including the reality that the government may not be there when they need help, that long-term care can be needed at any point in a person's life, and there are a range of services designed to meet a variety of needs.

People with low incomes assume they can't afford LTC insurance, and don't bother to look into it.This is referred to as a "structural barrier." However, there are options for everyone, including those without a lot of money.� Also under the category of a "structural barrier" is the sheer volume of information about LTCI, which seems so overwhelming, the client gives up before they begin.This is why it is important to take the time to explain the basics, so they'll be ready to jump in and explore their options with interest, not intimidation.

Most people would rather avoid thinking about losing their independence, their cognitive ability, becoming sick or severely injured or simply growing old.Other people don't know how much LTC will cost and worry it's simply not for them. These are called "perception barriers" or mental blocks to planning ahead for long-term care.

The reality is there is a 70% risk people will need some form of long-term care by the time they turn 65.

People don't know how expensive long-term care is or how to pay for it. They don't know that health insurance, Medicare, and disability coverage do not pay for most long-term care services. Medicaid pays for some long-term care services, but only if they meet the criteria for the program by qualifying as low-income.

Some people find it uncomfortable to talk about the issue with loved ones. They worry what their parents will think of them for bringing it up. Older parents don't want to burden their adult children with financial issues.

The best approach to perception barriers is to talk about it. The important thing to explain to clients is LTC is about keeping as much independence as possible, not giving it up because they didn't know all the options. Many people don't think about LTC until they absolutely need it, which is stressful and they haven't set aside the finances necessary to pick and choose what they want.� LTC planning spares them that difficulty.

Planning information and resources

Colorado State Resources:

The following state and national resources will help consumers make informed decisions about planning for long-term care.�

Colorado Gerontological Society and Senior Answers and Services
http://www.senioranswers.org
Eileen Doherty M.S., Executive Director
3006 East Colfax
Denver, CO 80206
303.333.3482
Colorado Long-Term Care Partnership
The Colorado Long-Term Care Partnership is a public/private arrangement between long-term care insurers, Colorado's Medicaid program, the Division of Insurance, the Department of Human Services and the citizens of Colorado. Colorado's Long-Term Care (LTC) Partnership is an alliance between the private insurance industry and the state government to help Colorado residents plan for future long-term needs without depleting all of their assets to pay for care.It is designed to encourage and reward Colorado residents for planning ahead for future LTC needs.Participants include:
- Colorado Division of Insurance
  1560 Broadway, Suite 850
  Denver, CO 80202
  - Tom Abel: Manager of Producer Licensing
    303-894-7547 �� Tom.abel@dora.state.co.us
  - Linda Whittington: SHIP Assistant Administrator
    303-894-7553 �� Linda.whittington@dora.state.co.us
- Colorado Department of Human Services, Division of Aging and Adult Services
  1575 Sherman Street, 10th floor
  Denver, CO 80203
  - Jeanette Hensley: Division Director
    303-866-2636 �� Jeanette.hensley@state.co.us
  - Todd Coffey: Manager of the State Unit on Aging
    303-866-2750 �� Todd.coffey@state.co.us
- Colorado Department of Health Care Policy and Financing (Medicaid)
  1570 Grant Street
  Denver, CO 80203
  - Gary Ashby: Manager of Benefits Coordination
    303-866-3947 �� Gary.ashby@state.co.us
  - Pete Garcia: Third Party Insurance Specialist
    303-866-5701 �� Pete.garcia@state.co.us

National Resources:

Long-term care clearinghouse

The National Clearinghouse for Long-Term Care Information is an information and planning resource for individuals who don't yet need long-term care. The clearinghouse provides a wealth of information on services and financing options for caregivers and those in need of long-term care.

Administration on Aging (AoA) (U.S. Department of Health and Human Services) is the Administrator of the National Clearinghouse for Long-Term Care Information.

AoA provides funds and community-based services for programs that serve older adults.

Phone: 202-619-0724
Website: www.aoa.gov

Own Your Future long-term care awareness campaign

The Own Your Future Campaign is a project, started in January 2005, to increase consumer knowledge and planning for long-term care. The project's core activities are state-based, targeted to households with members between the ages of 45 to 70.

Campaign materials include a Long-Term Care Planning Kit and state specific information and resources.

The Own Your Future Campaign is a collaboration of the Centers for Medicare & Medicaid Services (CMS), the Office of the Assistant Secretary for Planning & Evaluation (ASPE), and the Administration on Aging (AoA), and has support from the National Governors Association (NGA).

The "Own Your Future" Long-Term Care Awareness Campaign is a joint federal-state initiative to increase awareness among the American public about the importance of planning for future long-term care needs.

As of April 2008, 18 states have participated in the Own Your Future Campaign to increase the awareness of the need to plan for future long-term care services.

The campaign encourages partners and agents to participate in Own Your Future Awareness Campaigns in their states. Campaign materials are available. Participants can bulk order the campaign brochure, or download the campaign flyer.

For information about the Own Your Future campaign, contact the AoA:

Administration on Aging
Washington, DC 20201
Phone: (202) 619-0724
Website: http://www.longtermcare.gov

SHIPs

State Health Insurance Assistance Programs (SHIPs) provide volunteer counselors to answer consumer questions about health care choices on a variety of issues:

buying a Medigap policy or long-term care insurance
dealing with payment denials or appeals
Medicare rights and protections
choosing a Medicare plan
selecting a Medicare Part D Prescription Drug Coverage plan
deciding whether to suspend a Medigap policy
questions about Medicare bills

Funded by federal grants, SHIPs provide free counseling and assistance in all 50 states plus Washington, D.C., Puerto Rico and the Virgin Islands.

For information on the Colorado State Health Insurance Assistance Program:

1-888-696-7213
1-303-894-7552
1-303-894-7455 (TTY)

Chapter Three - Overview of Long-Term Care Insurance

The origins of Long-term Care Insurance

In the 1700's, long-term care meant relatives. If an individual did not have relatives with enough money to care for them, it was not uncommon to put the elderly in poor houses. Poorhouse residents were expected to work at such tasks as farming or sewing to make up for the cost of caring for them.

Since the 1900's with the advent of improved medical care, life expectancy has increased, with male life expectancy increasing from 47 years in 1900 to 75 in 2000, and female life expectancy increasing from 49 years in 1900 to 80 in 2000. With that, long-term care has become an increasing concern from decade to decade.

Also in the early 1900's, the tuberculosis epidemic prompted the establishment of large long-term care public institutions, as victims were highly contagious and had to be isolated from the population.

The Great Depression caused a dramatic shift in how and where indigent elderly were cared for.Prior to the Depression, over 50% of the elderly were cared for by friends or relatives, 2.5% were in poorhouses and only 1 to 2%� were in homes for the elderly. The Depression not only wiped out the finances of friends and family, it also erased any finances the elderly might have had.

Families were dispersed by crushing poverty.� Populations migrated in search of work, men abandoned their families, children were put in orphanages and the elderly were put in poorhouses. Eventually the strain on orphanages and other public service organizations became too great to meet the demand as the numbers of poor overwhelmed the meager welfare services available. States turned to the federal government for help.

In 1935, the "Old Age Insurance Program" (OAI), which would eventually become "Social Security", was created to issue cash payments to workers after retirement, in an effort to help keep the elderly out of poorhouses. The only problem was, the money had to be pooled from employees paying into the system, so those who were already retired did not quality.

A special program was created to meet that need in Title 1, the Old Age Assistance (OAA) program helped the elderly poor regardless of their work history. There were no provisions for those elderly who needed full-time skilled nursing care, because the elderly were housed in poorhouses, and the OAA was designed to discourage putting the elderly in poorhouses. In fact, going to a poorhouse would result in the loss of benefits. While the intention was a good one, it ignored an essential need for care and services. Many elderly needed care that friends and family simply could not provide.

The only other option was the rising cottage industry of for-profit care in private homes, often by nurses, hence the term "nursing homes." The elderly made cash payments from their OAA benefits to these private enterprises in exchange for care, and the industry expanded rapidly.

With the advent of World War II, the need to care for returning veterans lead to the Veterans Administration creating new LTC benefits for disabled veterans and their families.

After the 1940's, the need for a formal national health insurance program could no longer be ignored.

In 1948, the Social Security Advisory Council recommended making payments directly to healthcare providers, rather than the patients. Nursing homes were able to work directly with the state to receive payment.The Social Security program gained widespread acceptance, increasing benefits in 1950, 1952, 1954, 1956, and 1958.

The concept of a national health insurance program limited strictly to the elderly, rather than all of the population, became a matter of serious debate in 1952.Interestingly, the concept of a long-term care partnership program was proposed at that time, but was narrowly voted down in 1962. A partnership program is a partnership between the government and private insurance companies to assist individuals in planning for their potential long-term care needs.�(Medicare and Medicaid: The Past as Prologue by Edward Berkowitz, 2005)

In 1964 Senator Jacob Javits (R-NY) proposed including a provision for "complementary private health insurance" for the elderly, in which private insurance providers would be reimbursed by Medicare for covering benefits.This was deleted from the bill in 1965.

Medicaid was treated more as an afterthought in the process of approving Medicare.

According to Berkowitz, In March 1965, Wilbur Mills (head of the Ways and Means Committee), recommended that "...a supplemental and expanded program along the lines of the Administration's Child Health and Medical Assistance Act be included in the package. In creating what would become Medicaid, he managed to incorporate elements that had been pushed by the AMA, known as Eldercare, into the overall legislation. The AMA wanted to expand the program as a means of providing medical care to the elderly. The administration agreed to this request, but thought of a program like Eldercare as a supplement to Medicare rather than as a separate program. In this way, Medicaid made it into the 1965 law as a supplement, but one that would play a key role in the future of health care financing.

As healthcare has expanded in service options, not covered by Medicare or Medicaid, so has the interest in insurance options. With the increasing average life span as well as rising cost of health care, long-term health care insurance has gained in popularity as an additional option.

Long-term care insurance, in particular with government partnership incentives, is a significant means of protecting people, whether due to injury, disease or advancing years. As health care has evolved, so too has long-term care coverage.A consumer can pick and choose what kind of care they want tailored to their specific situation, to be included in their insurance contract.

What is an insurance contract?

The insurance contract is the legally binding offer and acceptance of an insurance agreement between the client and the insurance company. It is the agent's job to know and explain what the insurance contract is in a manner that makes sense.

Essentials of a Valid Insurance Contract; The basic elements of a contract

The contract, the policy and the application

An insurance contract differs from an insurance policy in that a contract is the legally binding agreement, whereas the policy describes what is covered and what is not.

The application is the information provided by the client to allow the insurance company to underwrite the agreement.Underwriting is the process of accepting or rejecting insurance risks and classifying those selected, in order to charge the proper premium for each.

LONG-TERM CARE INSURANCE

As the need for long-term care affects every demographic at some level, whether for one's self or for friends or family, long-term care insurance has never been as important an issue as it is now.��

Long-term care insurance is insurance that will help pay for care a person receives when they need help either at home or in a facility with their activities of daily living (eating, bathing, dressing, toileting, transferring, and maintaining continence) due to an accident, illness or advancing age.

What are benefits of having long-term care insurance?

LTCI preserves the client's estate.
LTCI allows a greater choice of facilities and flexibility in types of care than may be covered by Medicare or Medicaid.
As baby boomers age, Medicaid may be forced to reduce coverage.
LTCI can help reduce the stress on friends and family trying to assist the person in need of care.

Potential drawbacks

There is always the chance that premiums will go up.Some premium increases may force clients to give up their LTCI after years of payments.
A client may need skilled nursing home care but still not meet the company's criteria for not performing 2 out of 6 Activities of Daily Living.
The average stay in a nursing home is 2.6 years.However, some policies only provide a one-year length of claim payment.� Securing a four-year benefit plan will prevent this from happening. Most people stay less than five years in a nursing home.

In addition to purchasing sufficient coverage, recent federal legislation is helping to solve the problem of policies running out. The Partnership for Long-Term Care, a cooperative government-private LTCI program is now operating in most states.

With the Partnership program, if a client's benefits run out, they can then apply for Medicaid to help cover remaining costs. For example, if they bought a policy with $100,000 in benefits and exhausted those benefits, they may keep $100,000 in personal assets and still qualify for Medicaid coverage. Without a partnership policy, the state Medicaid department could require the applicant to "spend down" their assets before qualifying.

According to the U.S. Department of Health and Human Services ( ) a Partnership qualified policy provides the client with the right to apply for Medicaid under modified eligibility rules that include a special feature called an "asset disregard." This allows the client to keep assets that would otherwise not be allowed, in order to receive additional long-term care services from Medicaid.

The amount of assets Medicaid will disregard is equal to the amount of benefits the consumer actually received under their long-term care Partnership qualified policy.

Since these policies must include inflation protection, the amount of the benefits they receive can be higher than the amount of insurance protection they originally purchased.

Example of how a Partnership Qualified policy works:

John, a single man, purchased a Partnership policy with a value of $100,000. Some years later he received benefits under that policy up to the policy's lifetime maximum coverage (adjusted for inflation) equaling $150,000.

John needed more long-term care services, and applied for Medicaid. If John's policy had not been a Partnership-qualified policy, in order to qualify for Medicaid, he could only keep $2,000 in assets.He would have to spend down any assets over and above $2,000.

However, because John bought a Partnership-qualified policy he was allowed to keep $152,000 in assets and the State will not try to recover those funds after his death.

Any assets John had over and above the $152,000 must be spent in order for him to qualify for Medicaid. He must also satisfy the income, general eligibility and functional eligibility requirements for Medicaid.

Partnership programs help both individuals and the state. For individuals, it allows them to get and pay for services they need without having to wipe-out all of their assets. For the state, it can decrease the amount of Medicaid dollars used for long-term care services, conserving funds for the growing population of baby boomers.

Some Important Considerations for Consumers

It is important to know if the long-term care insurance policy is a Partnership qualified policy or not, since they can be the same as non-Partnership policies. A Partnership qualified policy is one that is certified by the State, and it must include the level of inflation protection coverage set by the State. Only if the client has a Partnership policy will they be eligible for an asset disregard if and when they apply for Medicaid.
Policies issued prior to a state Partnership Program's effective date will not be considered Partnership-qualified.However, there are circumstances under which the client may be able to exchange their policy for a Partnership qualified one.
It is important to buy a Partnership qualified policy from an agent who is specially trained to sell that type of coverage. States with Partnership Programs have additional educational requirements for agents who wish to sell Partnership policies.
Eligibility for Medicaid is not automatic. The client must apply and meet the income, functional and general eligibility requirements of the Medicaid program in their state. The long-term care services provided by Medicaid vary by state and may not be the same as the services the client was eligible to receive under their private insurance policy.
States that have Partnership programs are automatically considered to have "reciprocity" with each other and honor the asset disregard the client earned under a Partnership policy purchased in a different state. However, States can "opt out" of this requirement at any time.

With and without a policy

There are a number of factors involved when considering long-term care insurance.
With A Plan	Without A Plan
Professional planning for a variety of services the client may not have been aware of.	Friends and family must navigate the field of options at a time of crisis.
Friends and family can offer support, without having to make difficult choices for the client.	Friends and family must find assistance and make difficult choices for the person in need of care.
Long-term care financing protects the client�s estate and also the finances of friends and family.	Savings and assets may be wiped out in paying for long-term care.
The person in need of care does not have to feel like a burden to others.	The person in need of care may feel like a burden to those trying to provide care.
Friends and family don�t feel tied down or obligated to provide care.	Friends and family may feel trapped by a lack of options.
Choices can be tailored to individual preferences, whether to stay at home, move into assisted living, receive skilled nursing care in a facility or a wide range of other possible care options.	Choices may be limited by finances, or what is available from government programs.
Independence is maintained for as long as possible.	Independence may be sacrificed due to lack of finances.

To buy or not to buy?

Each individual has unique circumstances, so there are no rules of buying or not buying LTCI. Guidelines, such as level of income, assets, age, overall health and personal lifestyle preferences are all important to arriving at the best decision for each individual.

Generally, individuals should consider buying LTCI if they:

Have assets they want to protect. A basic rule-of-thumb is if one has $50,000 or more in non-housing assets, LTCI may be a good option.
Are ineligible for Medicaid.
Can afford to pay the premium. This sounds simplistic, but the reality is not everyone can afford regular premium payments and need to be cautious about additional expenses.Overall, LTCI premiums should not exceed 7% of client income. If the client's income is expected to change in the future, it is important to weigh the potential hardship.
Are healthy enough to qualify for the insurance.
Have a family or personal health history that raises the odds of needing LTC in the future.

% of Income Used to Buy LTCI

Income Category	% of Income Used
Under $20,000	4% to 12%
$20,000 to $35,000	2% to 7%
$35,000 to $50,000	1% to 4%
Greater than $50,000	1% to 3%

Suitability - personal worksheet

Insurance agents must provide a copy of the 'Shoppers Guide to Long-term Care Insurance' from the National Association of Insurance Commissioners. The guide includes a 'suitability worksheet' to help consumers decide if long-term care insurance is right for them.

Things you should know before you buy long-term care insurance

A long-term care insurance policy can pay most of the costs for a nursing home. Many policies also pay for care at home or other community settings. Since policies can vary in coverage, clients should read their policy and make sure they understand what is covered before making a commitment.

No client should be encouraged to purchase LTCI if they cannot afford the premiums, including possible premium increases.

Medicare

Medicare is designed to supplement the income of the elderly population and does not pay for most types of long-term care.

Medicaid

Medicaid is designed to help the poor who are in need of health care or long-term care. If a person is so poor that they qualify for Medicaid, they are probably unable to afford the premiums for LTCI. However, people become eligible for Medicaid after they have used up their own financial resources by paying for long-term care services.With the Partnership Program, they don't have to exhaust all their financial resources to qualify.

Shopper's Guide

The agent is required to give each client a copy of the National Association of Insurance Commissioners' (NAIC) "Shopper's Guide to Long-Term Care Insurance."

Counseling

Free counseling and additional information about long-term care insurance are available through state insurance counseling programs. Contact information for each state is available online.

The long-term care insurance market

According to Kalorama publishes in their second edition report on the long-term care industry, the demand for nursing homes, home care, hospices and other long-term care options continues to rise. The long care industry has grown from 2002 through 2007 on the U.S. market.This growth is expected to continue as the population ages. (http://www.marketresearch.com/ , 7/1/2008)

While over 100 companies offer long-term care insurance nationally, 15 to 20 major insurance companies sell the majority of policies currently on the market today .(Own Your Future, U.S. DHHS, www.longtermcare.gov/LTC/Main_Site/index.aspx )

In 1998, 10 companies took in 70% of the yearly market premiums for LTCI. By 2000, 10 companies took in 84% of the LTCI market.

In 2000, G.E. Capital managed 29% of the market share and the Conseco group of companies took in 17% of overall premiums. This represented 46% of the market.

Also in 2000, about 6 million LTCI policies existed in the U.S., representing about $4.8 billion in annual premiums.

80% were individual policies
20% were employer group plans

Over 2,500 employers in the U.S. offer LTCI group plans. (Long-term Care Insurance, Thomas Daym, the National Care Planning Council, www.longtermcarelink.net/index.html)

In 2002, the market share of the top six LTCI companies, based on premiums totaled 71% of the market:

GE = 26%
John Hancock = 13%
CAN = 8%
Bankers Life and Casualty = 8%
Conseco = 8%
Aegon = 8%
Penn Treaty + Unum + IDS + Met Life + Allianz Life = 21%

In other words, the LTCI market has continued to grow and mature as policies are tailored to meet the demands of the population.� (Long-Term Care Insurance, By Alfred C. Clapp, Jr., The CPA Journal, 4/16/2008, www.cpajournal.com //)

Market segments by types of LTC insurance policies

The majority of long-term care insurance policies are individual and empoyer-sponsored group policies. 80% of the 8.26 million LTCI policies had been sold through the individual and employer-sponsored group markets as of 2002.

1/3 of the 2001 of LTCI companies sold policies in either the employer-sponsored or life insurance markets, compared to 14% in 1988. These also represent 21% of all long-term care policies sold as of 1999, compared to less than 3% in 1988

The basic policies offered are:

Individual (80% of all policies)
Association-sponsored group (rarely used)
Employer-sponsored group (15% of all policies)
Sponsored by Continuing Care Retirement Community (rarely used)

�

Individual vs. group long-term care insurance

A group plan is LTCI provided through an employer, if the applicant is not yet retired. Individual plans can be purchased directly from a private insurance company.��

Overall, individual plans tend to cost more, but they can provide more coverage and options. Potential clients must have their general health assessed to qualify, but they may get lower rates if they are in excellent health. ��

Group plans tend to cost less, and usually don't require a medical assessment. Coverage and options are usually less generous than individual plans. Some policies will continue even after the client is employed.

A group plan may be best if the applicant has serious health problems, especially if the employer offers guaranteed coverage. Individual policies allow greater freedom of choice for the client.

To buy or not to buy; Buyers vs. non-buyers (Why people buy long-term care insurance):

In 2005, the average LTCI client was 61 years-old. They were in a good financial situation, with 49% having incomes over $75k, and 76% having over $100,000 in liquid assets.

In 2006, Mutual of Omaha surveyed policy-holders, asking why they bought LTCI.The results found several key factors.The single most significant factor was family.

41% said their primary reason for purchasing LTCI was they didn't want to be a burden to their family. 65% discussed the issue of LTC with family members, and 53% included a family member in the decision process.

Surveys conducted by insurance companies to gauge why clients purchase LTCI tend to find the same five main reasons why.

Peace Of Mind - The peace of mind of having LTCI is a significant factor. Long-term Care Insurance creates a sense of protection and eases worry about the future.
Wealth and Asset Protection - The majority of those surveyed would rather remain in their home, keep their life savings, and have something to leave as an inheritance to survivors, rather than spending it all on a nursing home.
To reduce the burden to loved ones - One of the highest ranked reasons expressed for purchasing LTCI is the clients do not want to burden friends or family, whether financially, in terms of caregiving or emotionally. This also allows the client the chance to remain as independent as possible for as long as possible.
Quality Care - The quality of care under welfare or Medicaid plans may be less desirable than what can be offered by private facilities. Higher end nursing homes tend to prefer private LTCI patients, and this allows clients to shop for quality care.
Choice - With Medicaid, or any government program, choices are limited to what the program approves. With private coverage, clients have greater flexibility in deciding what suits their preferences.

Why people do not buy long-term care

A consumer survey conducted by Mintel International Group found that less than 60% of respondents were aware of LCCI. 74% were without any form of LTCI coverage. Almost one in five said they didn't know why they hadn't purchased LTCI. ("Education Needed for Long-term Care Insurance," Business Wire, June 9, 2008)

According to the survey, 42% of those surveyed said they didn't purchase LTCI because they worry it is too expensive.

Other reasons included:

They won't need long-term care (17%)
LTC will be covered by Medicare or Medicaid (15%)
They haven't gotten around to it yet (13%)

In other words, the main reason for the lack of consumer interest in LTCI was lack of education about what LTCI is, what is isn't, what Medicare and Medicaid will cover, and simply not understanding the risk of needing LTC sooner or later.

Demographic Difference between buyers & non-buyers:

In a study by the Health Insurance Association of America, (Who buys long-term care insurance in the workplace? A Study of Employer Long-Term Care Insurance Plans 2000-2001) the difference between buying and non-buying employees did not seem influenced by gender or marital status.� Significant factors were age, income and assets.

82% of group buyers had incomes over $50,000, which was much higher than the 42% of individual buyers.
35% of individual market buyers were employed. Individual clients had greater assets compared to the group market enrollees. The study speculated this was probably due to the working-age population still being in the process of accumulating assets, whereas retirees and older individual policyholders (and therefore not employed) were more likely to already have accumulated assets.

Attitudes of buyers vs. non-buyers

Enrolled employees and individual purchasers are more likely to agree it is important to plan now for future LTC.They are half as likely as non-buyers to believe the government will finance LTC.

Those who are enrolled in a plan report having greater peace of mind. While those not enrolled feel they face less risk, they also report a greater sense of worry about how they will pay for LTC in the future.��

Efforts to inform the public have paid off and the population is becoming more aware of LTC concerns.The study found that both buying and non-buying employees were well informed about LTC coverage from public programs. Less than one in five believed that they could rely on Medicare or Medicaid to pay for their LTC needs.

Benefit payment in long-term care insurance

Generally, policies pay benefits in one of two ways, either on an "expense incurred" basis or an "indemnity" basis.

An expense-incurred policy pays the actual cost, up to the policy's daily benefit amount. For example, if a client has a policy with a daily benefit of $ 200, and the nursing home charges $150 per day. An expense-incurred policy will pay $150 per day.

An indemnity policy pays the policy's daily benefit amount, regardless of the actual cost of the services provided. For example, if a policy has a $200 daily benefit and the nursing home charges $150 per day, the indemnity policy will pay $200 per day, even though the charges were less than the payment to the client.

Benefit payment method

Both expense incurred and indemnity policies pay benefits to the client, or the client may assign them to be paid directly to the service provider.

Tax-Qualified Long-Term Care Policies

Clients may be able to deduct part of the premium for a tax-qualified long-term care policy from taxes as a medical expense. Qualified long-term care policy benefits are usually not taxed as income.

Policies sold on or after January 1, 1997, may be either tax-qualified or non-tax-qualified. All policies sold before January 1, l997, are automatically tax-qualified.

Each policy should include a statement indicating whether it is tax qualified. The statements usually read as follows: "This policy is intended to be a qualified long-term care insurance contract as defined by the Internal Revenue Code of 1986, Section 7702B(b)."

Clients should check with an attorney, accountant, or tax advisor with any concerns about taxes on their policy.

Any tax deductions for long-term care premium payments or out-of-pocket medical expenses must be more than 7.5% of the client's adjusted gross income. The maximum amount of long-term care premium an individual can deduct depends on their age at the end of each tax year.

Maximum Long-Term Care Premium Deductions, 2007

Age	Maximum Allowable Deduction
40 or younger	$290
41 to 50	$550
51 to 60	$1,110
61 to 70	$2,950
71 or older	$3,680

(Maximum deduction amounts change annually)

A tax-qualified policy sold on or after January 1, 1997, must pay long-term care benefits if the client has a written plan of care from a licensed health care practitioner and meets one of the following conditions:

They are unable because of a loss of functional capacity to perform at least two of six ADLs without substantial help from another person for at least 90 days
They need substantial supervision to protect their health and safety, and the health and safety of others, because they have a severe cognitive impairment

Non-Tax-Qualified Long-Term Care Policies

Premiums for non-tax-qualified long-term care policies are not tax deductible. In addition, taxes must be paid on any benefits the policy pays above expenses incurred. Buying a non-tax-qualified policy could increase a client's tax liability and reduce the value of their benefits.

To receive benefits from a non-tax-qualified policy, the applicant must have a cognitive impairment, such as Alzheimer's or a similar disease, or be unable to perform two of six ADLs. However, some policies may offer more favorable benefit eligibility requirements. For example, a policy might require only an inability to perform one of six or two of seven ADLs.

Chapter Four - LTCI Features, Benefits and Provisions

Policy Improvements

The Deficit Reduction Act (DRA) of 2005 led to Long-Term Care Reforms, and each state was able to develop options to create programs more aligned with the realities of what government coverage provides and what consumers actually need. �

According to Department of Health and Human Services (http://www.hhs.gov/, Centers for Medicare & Medicaid Services Director Dennis Smith in a press release "The Future Of Long-Term Care And Medicaid," July 10, 2006):

"The DRA reflects a growing consensus on transforming the long-term supports provided under Medicaid - reforming State programs from being institutionally-based and provider-driven, to "person-centered" and consumer-controlled.

It recognizes the role of Medicaid in supporting individuals in their desire to attain and retain independence and self-care in their own homes and communities.�� It renews the promise of freedom for every individual with a disability or long-term illness.

The DRA is a long-awaited commitment to independence, choice, and dignity for countless Americans who want to have control of their lives, and gives States many of the tools they need to "rebalance" their long-term support programs."

Areas of improvement include:

Non-institutional care options
Assistance in finding appropriate LTC service options
Greater consumer protection
Coverage for the full time of care
Partnership programs to conserve savings

Features and benefits

There are a few things clients (and agents) should look for in the features and benefits of LTCI coverage.

Policy Types include:

Reimbursement of Actual Expenses up to the benefit amount
Indemnity (the policyholder receives the entire daily benefit, even if only a portion is spent on LTC assistance)
Disability or Cash Benefit (daily, weekly, or monthly benefits are paid, regardless of the expenses incurred)
Tax-qualified or non-tax qualified

��

Combination policies include:

insurance and LTCI combined into one policy (individual market only)
Annuity and LTC (individual market only)
Disability and LTC (group market only)
Inflation protection (simple or compound method)

Assistance coverage options:

Nursing home
Assisted living facilities
Home health care
Adult day care
Hospice facility

Payment Options:

Payroll deduction on group policies
Monthly
Quarterly
Annual
Limited payments for a specified period of time (For example, the policy is fully paid after ten years of payments.)

Affordability:

A LTC program should be a financial benefit, not hardship. Agents and clients need to talk about how much of a deductible the client can afford to pay. Talk about the waiting, or elimination period (more commonly known as the deductible). The elimination period is the number of days the client must pay for their long-term care costs before the LTCI policy will begin making payments.There should be a variety of elimination and benefit periods to choose from. Which one a client selects depends on their individual preferences and situation.

Triggers:

A LTCI policy should specify how many activities of daily living, if any, need to be identified to trigger benefits.

Availability to various age groups (for example, from 45 to 84)

While commonly associated with the aging process, the need for long-term care can arise at any time due to injury, illness or disease.

Eligible benefits:

LTCI may only cover nursing home care, or a combination of nursing home care and other types of community based and home care.

There should be a range of optional services and daily benefits available. How much is a good amount for the policy to pay out on a daily basis? For example, if an individual purchases a policy that pays $150/day, the policy will pay for long-term care costs up to $150/day. If the long-term care service costs more than $150/day, they will have to make up the difference from their personal resources.

If it is important to the client to protect their estate and rely on their insurance to pay for LTC, they may need to pay a higher premium to extend coverage. The amount of the lifetime benefit divided by the daily benefit gives an idea of how long the policy will pay for services. For example, if an individual purchases a policy that pays $150/day up to $150,000 in a lifetime benefits, the policy will pay out $150/day for 1,000 days or about 2 1/2 years. The higher the lifetime benefit, the longer the policy will pay for long-term care services and the less the client will need to pay out of pocket.

Inflation protection and premium waivers:

Long-term care costs increase over time. Without inflation protection, the daily benefit amount and the lifetime benefits of the policy remains the same while the cost of care continues to rise. This means out-of-pocket expenses for long-term care services increase over time. Inflation protection is an expensive feature, but it reduces the out-of-pocket expenses for long-term care services.

Partnership Qualified policies:

The Partnership Program requires that all benefits, whether daily, weekly, monthly or lifetime, automatically increase annually on a compounded basis for persons under 65. Those 65 and older may be offered the option to allow for inflation benefits on a compounded basis. This option may not be available from all insurance companies participating in the Partnership.

According to Long-Term Partnerships dot com (http://ltcipartnership.com/ ):

Partnership policies carry a special endorsement from the State for meeting additional consumer protection standards.These standards include many consumer safety features that provide assurance that covered individuals are purchasing a quality product.

Partnership policies allow individuals to protect assets equal to what their policy has paid in benefits. This feature is known as Medicaid Asset Protection. Only Partnership policies provide Medicaid Asset Protection.

Because of the Medicaid Asset Protection feature of Partnership policies, participants need only purchase an amount of insurance equal to the amount of assets they wish to protect. A one or two year policy may be all they need to protect their assets, rather than buying more insurance, which is more expensive. This means Partnership policies can be a more affordable option for some.

Partnership Special Guarantees

In addition to the standards that all long-term care insurance policies must meet, Partnership policies also provide the following consumer safety features. These features are mandatory, and therefore, are guaranteed to be included in all Partnership policies. Other long-term care insurance policies may or may not have these features.

Partnership policies must provide a minimum daily benefit to assure that the benefits are meaningful when needed.

Partnership policies offer a broad array of home and community-based services in addition to nursing facility care. In addition, all home care benefits include case management services to help coordinate, assess, and monitor client care.

Partnership policyholders in danger of having their policies lapse will be offered the option of shorter-term coverage.This feature allows members to decrease the amount of insurance coverage as a way to lower premiums. While the amount of coverage, along with the premium, is lowered with this option, it can be preferable to losing all the coverage by allowing the policy to lapse.

Covered services

The three basic types of policies either offer comprehensive care, facility care-only or home care-only.

Facility care

If a client cannot afford the premiums for a wide range of coverage, they may opt for facility care-only or home care-only policies. These options are anywhere from 20% to 40% cheaper than comprehensive plans. If the facility-only policy is a good fit, the client should check to see if assisted living facilities are included in the facility-only category.

Typical comprehensive long-term care insurance benefit

A quality comprehensive (or "integrated") plan will cover a wide variety of long-term care. Most comprehensive LTC policies cover nursing-home care, home-health care, Home and Community-Based Health Care (HCBS), assisted living care, adult-day care, respite care and hospice care. There is no way to predict the future, and comprehensive care covers most LTC bases.�

Home care

Home care-only policies pay for care at home.� Often they will include coverage for adult day care or adult day health care facilities. Each policy is different, and it is a good idea to double check to see what is included under a home care-only policy.

Long-term care insurance exclusions

Exclusions are services that will not be covered under a long-term care insurance policy. Before purchasing any insurance policy, consumers should check the exclusions list. Some of the more common exclusions are:

Intentionally self-inflicted injuries or attempted suicide.
Illness due to alcoholism or drug addiction.
Care in government nursing facilities unless a charge is made in which the consumer is obligated to pay.
Coverage while the insured is outside the United States and its possessions.
Injury or sickness for which benefits will be payable under any worker's compensation claim or occupational disease law.
Injury due to service in the armed forces.
Injury resulting from participation in a felony, riot, or insurrection.
Care that is already paid for by government programs, except Medicaid.
While polices may exclude mental illness, they are NOT permitted to exclude or limit benefits for Alzheimer's Disease, senile dementia, or demonstrable organic disease.

Other exclusions may apply depending on the policy. Exclusions may also vary between states and between different long-term care insurance companies.

Private health insurance does not cover LTC

LTCI is more like life insurance than health insurance. A consumer invests in a distant future need, with the intention of drawing on that investment when the time comes. Health insurance covers on-going health care needs, such as exams, immunizations, tests, surgery, medicines, doctor visits, etc.Most health insurance plans, including Medicare, Medigap and managed care will pay for a limited number of home care visits or a brief nursing home stay, but have no extended benefits. When an individual needs permanent help with everyday activities of living (such as bathing and dressing), health insurance plans are not set up to pay for those expenses.

Daily, monthly and weekly benefits

A daily benefit amount (DBA) is the greatest amount a plan will pay toward the cost of care for one day. Plans offer various choices for DBAs, usually stating a minimum (such as $50) and a maximum (such as $400), and allowing individuals to choose one or the other amount, or an increment in between.

A $150 daily benefit amount will pay $150 toward covered nursing home services per day. If covered services cost $200 a day, it will still only pay $150, leaving the patient to pay the remaining $50 each day. (The Long-term Care Insurance Primer For the Federal Family, www.LTCFEDS.com 1-800-LTC-FEDS (1-800-582-3337) TTY :1-800-843-3557)

If the plan covers home-care, the most it will pay is usually stated as a percentage (e.g. 50%, 75%, 100%) of the nursing home daily benefit amount. With a daily benefit amount of $150 and a 75% home care benefit, the maximum available to pay for covered home care services is 75% of $150, or $112.50 per day.

Plans differ on whether the maximum benefit amount is paid on a daily, weekly or monthly basis. Some plans allow a choice.

While nursing homes usually bill by the day, consumers may prefer the greater flexibility of a weekly or monthly benefit. Weekly benefits are generally calculated by multiplying the daily benefit amount (for example, $100) by the number of days in the week (7) for a weekly total ($700).

This is beneficial if one day of home-care costs $50, and the next day it costs $150 due to, for example, a visit from a therapist. The weekly benefit amount covers both costs in full, because their combined total is $200, which is less than the $700 weekly benefit. The daily benefit only covers up to $100 a day, leaving the client to pay the $50 difference on the second day�s expense.

Monthly benefits are calculated by multiplying the daily benefit amount by either 30 days or the number of days in a month.

Example:
If a policy has a Daily Benefit amount of $150 and a 3 year Benefit Period

Actual Cost of Care (per day)	Maximum Lifetime Benefit	Benefits Will Last
$180	$ 164,250	3 years
$150	$ 164,250	3 years
$120	$ 164,250	3 years & 9 months

If the cost is $180 per day, but the insurance only pays up to $150 per day, the consumer is responsible for the additional $30 ($180-$150) a day not covered.
If the cost is $150, (the same as what the insurance covers), the client has no out-of-pocket expenses
If the cost is $120, and insurance pays up to $150 per day, the remaining $30 per day can be used at a later time. Therefore, benefits last longer.

Facility care and home care

It's important to consider the average daily cost for home care or facility care, as well as individual assets and income.� These amounts will impact which Daily Benefit Amount is best for each situation.

If informal care is provided by a non-family member, who does not normally live with the client, it is covered for the Benefit Period. If informal care is provided by family members, it is covered for up to 365 days. Care in a nursing home or assisted living facility, hospice care (inpatient or outpatient), and respite care are reimbursed up to 100% of the Daily Benefit Amount.

Daily benefit amounts

There's a wide range to choose from for a Daily Benefit Amount. The benefit period may be anywhere from 3 years, 5 years or unlimited.

Home-care (including care by informal caregivers and family members) and adult day care costs may be reimbursed up to the daily benefit amount, depending on the policy.

Choosing a daily benefit amount

Benefits may be reimbursed on a daily basis or on a weekly basis (7 times the DBA) for greater flexibility. It may be more convenient to consolidate expenses and receive reimbursement in lump sums, depending on the situation.

Lifetime maximum benefit

The Maximum Lifetime Benefit is the total amount of money that may be paid to the client. It is equal to the Benefit Period multiplied by the Daily Benefit Amount. The Maximum Lifetime Benefit is reduced by the amount of benefits paid by the insurer. If there is an Unlimited Benefit Period, the Maximum Lifetime Benefit is also unlimited.

Pool of dollars approach

The pool of dollars approach is a means to help prepare for long-term care in the event that care occurs in various situations. Some expense-incurred policies protect a covered person from situations where expenses exceed the daily limit on some days and are less than the daily limit on other days, by setting up a weekly "pool of benefits." For example, if the daily benefit is multiplied by 7, to establish a weekly pool of money for expenses, any unspent money is often added to the end of the policy to extent the period of coverage. (Some policies use a monthly pool of money.)

Lifetime/ unlimited coverage

Benefit periods are usually expressed in terms of years. They are the minimum amount of time an individual will receive benefits, and ranges from one to five years, or to as much as a lifetime as unlimited coverage. The longer the coverage, the higher the premium.

Inflation protection in long-term care insurance
(Riders)

Riders are additions to insurance policies that change the provisions of the policy.

There are three basic forms of inflation protection.� While all are optional, inflation protection is fundamental to maintaining adequate coverage in later years.�

Automatic Inflation Protection:

Compound: An option to increase the maximum daily and lifetime benefits each year, on an automatic basis, by a pre-set percentage on a compound basis. This option is available a higher premium.
Simple: This benefit allows an insured's long-term care maximum daily benefits and lifetime maximum benefits to increase each year, on an automatic basis, by a set amount. Increases are always based on the initial benefit. Rider is available at an additional premium.

Non-Automatic Inflation Protection:

Future Purchase Option: Guaranteed right to buy additional coverage without proving insurability. Also known as "guaranteed insurability option."

Types of Inflation Protection:

Compound Inflation Protection Under this provision, all coverage amounts automatically increase 5%, compounded annually, as long as the individual remains insured, even while receiving benefits. While the premium for this type of coverage is higher, it will not change over the life of the policy even as the coverage go up.
Simple Inflation Protection This approach is the same as compound inflation protection, except that the amount of the increase is the same each year, based on 5% of the initial coverage amounts.
Future Purchase Option (also called Benefit Increase Option, Guaranteed Purchase Option, or CPI Increase.) While the other two inflation protection options work automatically, this option is not automatic and allows consumers to buy additional coverage on a periodic basis, when the purchaser decided to keep benefits in step with the rising costs of care. Every two or three years, the insurance company will offer their policyholders an opportunity to purchase additional coverage at a higher cost without having to provide proof of insurability. With this approach, the consumer pays an additional premium cost based on their age at the time they decide to accept the offer of additional coverage.

Nonforfeiture Provisions

Nonforfeiture provisions provide protection in the event a consumer is unable to continue paying their premiums or who cancel their coverage.

Optional Nonforfeiture Provision:

Nonforfeiture (NFO) is a benefit which individuals can add to their LTC coverage for an additional premium cost. It provides a continuation of coverage, on a limited basis, in the event that an individual stops paying their premiums, causing their coverage to lapse. This limited amount of additional coverage might give time to make "transition plans" for how to pay for continued care needs if the coverage has lapsed due to non-payment of premium and if the individual does not want to reinstate their coverage.

Individual policies are required to offer NFO to each applicant and receive a rejection in writing from the applicant. Group policies can let the group policyholder (for example, the employer or association) decide whether and how to include NFO in the policy. Written rejection from the group policyholder is also required.

Most NFOs provide coverage equal to 30 times the nursing home daily benefit amount, or 100% of premiums paid to date (minus claims) at the time an individual stopped paying premiums and lapsed in coverage, whichever is greater. This would provide about one month's worth of continued coverage, or more, depending on the amount of premiums paid to date. Generally, a policy in force must be in-force for at least 3 years before the nonforfeiture provision applies.

Keep in mind that the coverage amounts available under both the contingent and the optional nonforfeiture provision are very limited - only about one month's worth of care. The best strategy is to help consumers select a policy that they can be confident they can continue to afford over time. If the policy has a "right to decrease" coverage in the event of a rate increase (or whenever the insured's preferences change) that often provides more protection than an additional cost provision such as the nonforfeiture option.

Contingent Nonforfeiture

Newer policies (sold after July 2002) automatically include, at no charge, a Contingent Nonforfeiture benefit. This provides the same protection as the nonforfeiture option described above, except that it is triggered by a "substantial increase" in premiums, which causes someone to stop paying premiums. There is generally a state-mandated schedule defining the amount of the premium increase that is considered "substantial" enough to trigger the contingent nonforfeiture benefit. The amount of benefit is the same as described above - the greater of 30 times the daily benefit amount or 100% of premiums, whichever is greater.

Elimination Period

Similar to other types of insurance, LTCI coverage includes an elimination period or "deductible." This refers to the initial time period or amount of expenses incurred before the policy begins to pay benefits. The purpose of an elimination period is to help keep coverage more affordable and focused on care needs.The elimination period in LTC insurance is the number of days after an individual is eligible for benefits (for example, needing help with ADLs or having a cognitive impairment), but before benefit payments begin. Unlike the deductible found in auto or home insurance, LTC policies specify a given number of days, not a dollar amount.

Health insurance usually has a deductible that must be met each calendar year. Many LTC policies today require that the elimination period be satisfied once in an individual's lifetime. Older policies and some others may require meeting the elimination period for each episode of care. For these, "per episode" policies, generally, if 180 days pass without needing any care, a "new" episode of care will begin.

Expense during the elimination period

The bills that must be taken on by the consumer during the elimination period may be covered by other types of insurance, including Medicare.This coverage will not be counted against the consumer�s elimination period.

Calendar Days or Service Days

Some policies count each day in which an individual receives services, for example, each day they receive care in a nursing home. This is referred to as a �service day elimination period.�

Other policies count each day someone is "disabled," whether or not they receive care or not. This is called a �calendar day elimination Period.� Consumers can generally choose the elimination period they prefer, including: 0, 30, 45, 60, 90, 100, 120, 180, or 365 days. Most people select a 60 or 90 day elimination period to help keep premiums affordable while keeping "out-of-pocket" expenses low.

Most policies don�t require satisfying the elimination period for receive respite care, hospice or care-coordination service. Some policies will waive the elimination period for hospice care.

Most people start out receiving care in their home, which is less expensive than a nursing home, but they expect to be paid the maximum amount, as if they were in a nursing home while meeting the elimination period. Having a calendar day elimination period can help consumers choose a more affordable elimination period for their needs, but receiving care in their home, and moving on to a nursing home when the insurance �kicks in.�

Waiver of Premium:

Generally, people stop paying their insurance premium once they receive benefits. This is known as the premium waiver. Some policies begin the premium waiver on the first day they receive benefits. Other policies begin the premium waiver after the client has received benefits for a certain number of days.

Care Coordination

Care coordination is designed to help consumers receive the most value from their coverage by helping them figure out the least expensive options and providing support for caregivers. Care coordination can help consumers find providers in their community that can meet their care needs.

A trained Care Advisor will sit down and gather information about the person�s physical, mental, social, and medical situation. The Care Advisor suggests a "plan of care" based on care needs each individual situation. The plan of care suggests services and providers, although these suggestions are only suggestions. Home or facility care options are discussed, depending on individual needs.

Different private insurance agencies may pay for and provide care coordination services, or they may just pay for these services and ask clients to find a care coordinator on their own. Many insurers that provide this service have a contract with the national network of care advisors, to make it easier to find a trained professional who knows what is available in each area.

Some insurers only have phone support, provided by a nurse or social workers on staff. This type of care coordination is more impersonal than face-to-face service, but may also be a quicker way to help the consumer.

Other Typical Coverage Features

There are other typical coverage features included in LTCI. �The following are the most common:

Bed Reservation: Pays expenses to reserve the nursing home or assisted living facility bed while an individual is temporarily absent for a hospital stay or other reason.
Caregiver Training: Pays expenses to train an informal caregiver (friend or family) to provide personal care or similar services.
Hospice Care: Short-term, supportive care for the terminally ill person with a life-expectancy of six months or less.
Respite Care: To provide time-off for those informal caregivers who usually provide care for the insured. 14 to 21 days per year is the average time allowed.
Caregiver Training (Family Care): To pay expenses incurred by family or friends that provide care. Some policies will issue cash payment each day an individual is disabled and receives care, even if there are no expenses incurred. Coverage is usually limited to a percentage of the total daily benefit and may have a lifetime limit.
International coverage: This may come in handy for those who travel or plan to travel and risk needing a portion of their LTC overseas, for a limited time until they can return to the States.

Other Coverage Options (Additional Premium Charge)

Some of the most common optional benefit riders are:

Refund of Premium Death Benefit This option is often for younger buyers or buyers in the employer market. It costs more, but it is appropriate for people worried about losing the value of all their premiums if they end up never needing LTC. Essentially, if death occurs before age 66, 100% of the premiums will be returned to the estate, less any benefits paid.After the age of 66, the benefit return drops by 10% per year, and if they are over 75, there is no premium return.
Dual Premium Waiver: This provision provides a waiver of premium for one spouse when the other spouse begins to receive benefits, after a specified period of time (for example, 10 years) during which coverage was maintained.
Spouse / Shared Care: Married couples (or domestic partners) may share either an additional coverage amount or the entire amount of coverage they each have. This helps a couple obtain coverage in light of the uncertainty about which of them will need care in the future, and for how long.
Surviving Spouse Premium Waiver: If an enrolled spouse dies, the surviving spouse will have a paid-up policy. This allows for surviving spouses to remain covered, despite the financial hardship of losing their husband or wife.

Consumer Protection Provisions

The following are required in any tax-qualified LTCI policy.

Guaranteed Renewable Coverage can never be cancelled by the insurance company, nor can the company refuse renewal, as long as an individual continues to pay premiums and the maximum benefit under a policy has not been exhausted.
Free-Look Period. A policy provision allowing the policy owner to inspect the policy for a specified period of time, often 10, 15, 20 or 30 days, and to return the policy to the insurer, if desired, for a refund of the entire premium paid. 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.
Third-Party Designee. A client can name another person to receive notice of premiums due and payments missed, so premiums will not be accidentally missed if the insured is ill, traveling, or has for some other reason for an unpaid premium.
Grace Period. An individual has up to 65 days after the date that the premium payment is due to make that payment. Coverage cannot be cancelled for non-payment until after the grace period has expired and until after the "third party designee" has also been notified.
Added Protection against Lapse (Extended Reinstatement). If coverage lapses for non-payment of premium because the insured was disabled at the time (for example, due to a major illness), they can automatically restore coverage if done within 5 months of the missed premium due date).
Conversion for Group Coverage. Some policies allow a conversion of group coverage to the same coverage on an individual basis. If premiums were paid through a group membership (for example, payroll deduction), it can be changed to direct billing. A spouse insured through an employer group plan, maintains coverage even if there is a divorce and they are no longer married to the covered employee.

Right to decrease coverage:

Even if the policy does not mention the right to decrease, many insurers allow this anyway. If the premium has gone up, and the client can�t afford the increase, but wants to maintain their coverage, they may be able to keep the premium the same by making some small adjustments to existing coverage. For example, a 15% premium-increase can be offset by taking a 15% decrease in daily benefit amount.

Chapter Five - LTCI Premiums, Underwriting and Claims

Premiums - An Overview

Overall, insurance premiums of all types, including health and life insurance, increase as an individual gets older. However, LTCI premiums are based on the age of the buyer at the time of the purchase. Therefore, purchasing coverage at a younger age can be an advantage. When people buy many years in advance of when they will need the insurance, there is time for the premiums they pay in (which are set aside in "reserves") to build up with investment and inflation, allowing consumers to pay much less than if they began paying closer to the time care is needed.

Rate Increases -- History

Most insurance companies raise their rates.� Some companies have set premium increases, but the right of insurers to raise rates is somewhat limited, to prevent gouging.

Rates may be raised under certain circumstances, including:

The increase is actuarially justified based on claims experience for an entire class of insured individuals. A class refers to a group of individuals with the same characteristics, such as age, geographic location, and similar benefit classifications.
No one person is singled out for a rate increase based on age or health.

Rate increases in the early days of LTCI were the result of poor underwriting or deliberate under-pricing to sell policies. Insurance companies today understand the importance of rate stability and take the time and technology necessary to make accurate predictions. Recent studies indicate that insurers are pricing as correctly as possible with respect to mortality and morbidity experience. In fact, claims experienced by insurers have been generally better than expected.

Consumer Protection: Rate Stability Guidelines

Stable and consistent rates are important in LTC insurance. The information and technology available to price LTC insurance is not perfect, and the mortality and morbidity rates against which policies must be priced changes over time. Nonetheless, as a long-term product, insurers must make educated predictions for 20, 30 and even 40 years into the future about life expectancy, service use, the role of informal family care-giving, interest rates, and many other factors in determining the best price for a policy.

Overall, rate increases among the top eight insurers (representing about 80 %of those with coverage) have been mild and infrequent.

More recently, however, there has been increasing concern about policy lapse rates (the number of people who will keep or drop their policies over time) and interest rates. Even small differences between actual and expected rates on these estimates are important. With the current economic environment and interest rates, these concerns are more important than ever.

Coping with a Rate Increase

How should clients respond to premium rate increases? This depends on the insurance company and the policy provisions. Some policies go over options clients have in the event of a rate increase. Other policies may not specifically address the matter, but may offer alternatives at the time of the increase. The first thing consumers should do:

Check their policy
Call their insurer to ask about Contingent Nonforfeiture

Contingent Nonforfeiture: Policies sold after July,-1-2002, may offer a limited amount of coverage in the event of a rate increase, even if the client does not want to continue their coverage by paying the increase.

Factors Impacting Premiums

Long Term Care Insurance companies determine premium rates based on several factors including:

Clients need help deciding which coverage they can afford. To help, the agent needs to understand what types of coverage options are most appropriate for each client�s particular needs. While some consumers will want the most comprehensive coverage they can get, including lifetime coverage that pays for home care at 100 %of the nursing home daily amount, others prefer to pay some costs out of pocket. A 50% o r 75% home care benefit and a shorter lifetime coverage amount, such as 3 or 5 years of coverage may be best. Those who are certain to have friends and family available to provide some LTC may not need 100% coverage.

LTCI Premium Options

While some coverage features have a significant impact on premium costs, others do not. The features that drive costs up more than others should be pointed out and explained to allow each individual to make an informed decision. If a feature does not significantly change the cost of a premium, such as a restoration of benefits rider, then chances are it does not add much value to their coverage. It is important for clients to think twice about what they really need for quality coverage.

Coverage that includes both facility care and home care, as opposed to just facility care alone, significanlty impacts the cost of the premium. A 100% home care benefit, instead of a 50% home care benefit, raises the premium about 20%.

Choosing a $150/day nursing home benefit, instead of a $100/day benefit, raises the premium about 50%.

The difference between "lifetime/unlimited" coverage and a "3-year" benefit maximum is as much as 65%, depending on the client�s age.

Inflation protection riders are the biggest factor in raising the cost of a premium. If a client is 55, adding a 5% compound automatic inflation protection feature almost doubles the premium cost, compared to a plan with only periodic upgrades for inflation.For clients in advanced years over 70, including such protection doesn�t make a lot of sense, since they probably will use their coverage sooner than someone in their 40�s.

Changing the elimination period is a smart way to adjust the premium, with about a 20% difference for 30 days versus 90 days,. Spousal benefits, such as the surviving spouse premium waiver can save as much as 15%.

"Limited pay" options:

With this option, the policy is fully-paid by age 65. This option is not available to clients who are over 65 (or close to it).

Twenty (20) Pay.

A client pays premiums for the first 20 years of coverage. After that, they are fully paid-up and no longer need to pay premiums.

If a client begins to receive benefits before the �20-Pay Period� is reached, they also stop paying premiums for the time they receive benefits. However, if clients recover, they have to resume payments.

Ten (10) Pay.

Like the Twenty (20) Pay option, except clients only pay premiums for 10 years.

Five (5) Pay.

Also like the Twenty (20) Pay option, except clients pay premiums for 5 years.

Single Pay.

Single Pay is the most expensive option. Clients pay a single, large premium and are fully "paid-up." Clients never have to pay additional premiums to maintain coverage.

The disadvantage of limited pay policies is they are expensive. There are some concerns that the significantly higher sales commissions may cause agents to push these types of policies simply to increase commissions.

Agents should help clients evaluate the benefit of paying more up front, simply to avoid rate increases, as opposed to amount a premium will cost over an extended time-period.

Those who purchased a limited pay policy may switch to a lifetime pay policy, so that the premium they pay each year is reduced. However, clients might not receive any credit for the amount they paid on the limited pay portion. The convenience of being paid in full from the start may not be worth the investment, and each client needs to give this option careful consideration.��

Preferred Standard and Substandard Categories

The factors impacting a clients risk, including health, age, weight, tobacco use, etc., will determine which risk category a client falls into. Substandard LTC policies are marketed to higher-risk prospects with preexisting health conditions. If they are a low-risk applicant, who is in excellent health, they will most likely qualify for preferred standard rate, meaning a lower cost.

Preferred standard and Substandard Risks

Many companies, evaluate whether an applicant is a lower, or preferred standard risk and give them a lower premium. Other times, they may issue coverage to a higher, or substandard risk applicant, but charge them a higher premium with fewer options.

Some criteria generally include:

Use of mechanical devices
Use of instrumental activities of daily living
Medical conditions with probable deterioration
Tobacco use within the last 1 to 5 years
Height and weight within certain range limitations

Some companies will issue standard coverage to someone with a condition that another company classifies as substandard with a higher premium charge. Some possible conditions that might cause someone to be rated substandard include:

Congestive heart failure, stable and controlled with medication
Angina (post-heart attack but stable)
Fibromyalgia
Seizure disorder (well-controlled)
Lupus (in remission)
Cirrhosis (mild or moderate and controlled on medication)
Diabetes (onset less than 35 years or greater than 10 years from first diagnosis)
Malignant lymphoma (five years post-diagnosis)

Premium Rate Classes:

A premium rate is how much a client is charged to maintain their policy. Which rate class they fall into depends on their level of risk.�� font-family:"Times New Roman","serif"'>Companies can raise the premiums on policies that don�t have fixed rates, but only if they increase the premiums for everyone in that rate class, without singling any individual out for a rate increase.

While some insurers charge the same rate for all clients, regardless of their condition, others have different rate classes, depending on the client�s health or age. Others have one rate for everyone, except for those in "substandard" health. These policies may charge 20 to 100% more for people with specific high-risk health conditions.

There are insurance providers who cover high-risk applicants without charging a higher premium.Instead, they offer a higher deductible or reduced options (for example, a 90 day deductible instead of the 30 day deductible, etc).

Agents need to work with their clients to determine which rate category the applicant falls into.While a health condition may be considered substandard by one provider, it may be considered standard by another.It�s always a good idea to shop around and not pay the added cost of a substandard rate unless it is the only way to get coverage.

Clients should compare the rates of companies that have rate classes versus those that do not.Clients in good health may do well to take advantage of rate classes.

Right to Decrease Coverage (Step-Down Provision)

Some policies allow clients to cut back some elements of their coverage in to keep the premium at a level they can afford. They may ask to reduce the daily benefit amount or shorten their lifetime maximum coverage to lower the amount of the premium increase. Reducing the daily benefit by 10% may result in as much as a 10%premium reduction. It is important any decreased coverage will still provide meaningful protection. Some changes are better choices than others, depending on the client�s situation and preferences.

When an insurer raises the premium, it makes sense to find out whether they�ve imposed other rate increases and evaluate the size of the current increase compared to past increases. A current increase might be a one-time adjustment to avoid future rate increases, or it could be one of many small increases to avoid the burden of rare but high increases. Agents should advise their client to stay with their policy if the insurer has a good track record and is trying to mitigate the impact of the rate increase for clients by offering coverage decrease options.

If, however, the client insists they want to change providers, they should shop and compare.However, any client thinking of dropping their coverage should consider the following:

Whether they are still insurable
The cost of new coverage at their current age

It is important to advise the client to be sure they are approved and issued quality alternative coverage before dropping their coverage.

Premium Discounts:

What discounts are available depends on the insurer.� Examples of premium discounts include:

Couple's discounts, including the following features:
- Risk is less when the buyer is married
- 10% to 25% reduced rate or more
- Retain discount for life of policy
- Discounts when both have policies
- Domestic partners/household discount
- Group discount (5% to 15%)
Household discounts
Individual policies sold to groups

Underwriting

Underwriting is the process of examining, accepting or rejecting insurance risks and classifying those selected, in order to charge the proper premium for each.An underwriter assesses the current functional and cognitive abilities of applicants and their risk of future disability. Establishign premiums is based on whether the individual is currently functional, independent, and has reasonable prospects of remaining that way for several years. The goal is to approve as many applicants as possible, while managing the risk level so premiums are appropriate over time.

LTCI takes into account more than the presence or absence of illness. The underwriter focuses on a combination of medical, functional and cognitive conditions, which are known to represent a high-risk for eventually needing LTC.

These criteria can vary. While one insurer may decline someone with an illness or disability that actually could benefit from more investigation in order to determine the extent of the illness, another may take the additional time to look into the applicants specific circumstances. Usually, that extra effort leads to a greater likelihood of acceptance, if the applicant is otherwise stable with good health management.

Qualifying to Purchase LTCI

Some conditions will disqualify an applicant for LTCI. These conditions include:

Current or recent use of LTC services
Help required with ADLs
Height and weight outside "acceptable" ranges
Acquired Immune Deficiency Syndrome (AIDS) or AIDS Related Complex (ARC)
Alzheimer's type dementia, organic brain syndrome and all other forms of dementia and cognitive dysfunction;
Amyotrophic Lateral Sclerosis (i.e., Lou Gehrig disease or ALS)
Diabetes with complications such as renal failure, amputation, severe neuropathy, Transient Ischemic Attack (TIA) or stroke
Progressive neurological conditions such as Multiple Sclerosis, Muscular Dystrophy, Myasthenia Gravis or Parkinson's Disease
Stroke or TIA within the past 12 to 24 months or history of multiple strokes or TIAs
Metastatic cancer
Adaptive devices such as a wheelchair, walker, four-pronged or quad cane, motorized scooter, Hoyer lift or hospital bed

These conditions may or may not disqualify them, depending on other factors.

In these situations, information on medical treatment, physical functioning and cognition is often needed to make a final determination. Taking the time to obtain additional information often means that the insurance companies can accept someone that they might have otherwise declined. This additional underwriting information is important to benefit both the applicant and the provider.

Insurance companies have a list of uninsurable conditions, which are those conditions that limit the client�s ability to carry out activities of daily living (ADLs).

Combination medical conditions that present an increased risk of future disability, such as a history of poorly controlled diabetes, hypertension and stroke are also taken into consideration.The definition of what is uninsurable depends upon whether an insurer offers only one rate class, or a substandard risk category. A sub-standard risk category may allow an insurer to take applicants with conditions that another carrier might not.

Insurers evaluate what medication the applicant is taking. Certain medications are commonly used to treat uninsurable conditions, while other medications may indicate how severe a disease is. The� medication history is factored in during the underwriting process, so it is important all medications be listed on the application.

Underwriting Tools

Insurers collect more information on older applicants, since they are likely to have more conditions that must be taken into account before accepting or declining the application. The tools that are used to collect underwriting information are:

The application
Medical Records (or Attending Physician Statement)
Phone History Interview (PHI)
Face-to-Face assessment (F2F)

While insurers don�t routinely require a medical exam for LTCI, if the applicant has no recent medical records and has not seen a doctor within two years, they may require the applicant to have an exam.

The Application

Most insurance offers a "one size fits all" application called a long form. This includes a section detailing the applicant�s medical conditions and health history.There is a shorter application for employees, under the employer-group policies, who are actively working and under 65 or 70.� Employee spouses may also have a short application form, but parents and retirees usually get a standard long form.

Attending Physician Statement (APS)

It is fairly standard for insurers to request medical records from the primary care physician and any specialists for the previous three to five years.If these records reveal a medical condition that was not disclosed on the application but affects insurability, the condition is investigated further before an underwriting decision is made.

Phone History Interview (PHI).

A telephone interview a convenient and efficient way to gather information. This method is most often used with a certain age group (for example, 65 to 74). The interview is conducted by a specially trained nurse and scheduled at a time convenient to the consumer. The nurse asks questions about medications, medical conditions and the beneficiary's ability to function independently in everyday tasks such as bathing and dressing.

Face-to-Face Assessment (F2F).

A face-to-face assessment is an in-person interview with a specially trained nurse, social worker, or paramedical worker. The F2F assessment underwriting tool is often most convenient for older applicants, and allows the interviewer to get a first-hand feel for the applicant�s cognitive abilities that are not as easily reflected in a written form.

pThe F2F assessment helps to improve the overall risk pool, while in fact raising the acceptance rate.

The assessment is usually done at the consumer�s home. This is simply a personal interview. The interviewer asks about specific medical conditions, medications, and the applicant�s ability to function independently in routine ADL�s, such as bathing, dressing, taking transportation, or meal preparation. There is usually a memory test, and possibly minor data such as blood pressure readings, weight and height, but no overall physical exam is conducted.

Acceptance and Decline Rates

Underwriting acceptance rates depend on the types of products available from an insurer, their target groups, and type of marketing, such as direct mail, group presentation or direct agent sales. All the factors that influence risk will impact how a provider evaluates the risk, thereby affecting and the acceptance and denial rates.

According to the Long Term Care Group (LTCG) Underwriting Analysis for 2002, acceptance rates averaged as follows:

Age	Acceptance rate
Less than 65	91 � 99%
65 � 74	79 � 95%
75 - 84	64 � 92%

Any declined applicants are entitled to know why they were declined. The insurance company may explain the reasons directly, or the company may provide the reasons to the applicant's doctor. Applicants may appeal or request reconsideration. The request needs to be in writing. Clients may ask for a letter from their doctor, clarifying their current condition or offering additional information. If the decision was based solely on the application, the client might ask for a telephone or in-person interview or provide a copy of medical records so that the insurer can get a better overall impression of th client's health.

Clients are, however, responsible for the costs associated with obtaining any additional medical information that they choose to provide to the insurance company to support the request for reconsideration.

CLAIMS

Type of impairment

People need LTC when they cannot perform everyday ADLs without the help of another person or when they suffer cognitive impairment. Therefore, all tax-qualified LTC policies use similar criteria for distributing benefits:

Long-term care benefit triggers

Benefit triggers are the criteria and methods used to determine whether an applicant is eligible to receive benefits.

The six ADLs are:

Severe Cognitive Impairment

This refers to problems with memory and orientation to person, place, or time. It is measured by objective testing methods. Alzheimer's disease is an example of severe cognitive impairment.

Tax Qualified (TQ) Policies

Tax-qualified policies pay benefits when the insured individual needs help with two or more ADLs for at least 90 days or has a severe cognitive impairment and a Plan of Care prescribed by a Licensed Health Care Practitioner.

Non-tax qualified policies

Non-tax qualified policies pay benefits when the client needs help with 2 or more ADLs or has a cognitive impairment.Some policies may include seven ADLs and some may also include medical necessity as an additional or alternative benefit criteria.

A "medical need" is a more generalized long-term care benefit trigger (for example, paralysis or severe movement restriction due to phlebitis or arthritis), implies a client is most likely unable to perform ADLs. Older policies or policies that are non tax-qualified may use medical necessity as a condition for benefits.

Degree of loss

Degree of loss refers to how many ADLs are impaired.� Most policies have a standard level for all benefit triggers, for example, loss in two or more of the six ADLs or severe cognitive impairment. Some may pay a higher amount for a higher degree of loss, which benefits such services as nursing home care (for example, unable to perform three of six ADLs).

Care needs differ greatly when a beneficiary has two versus three ADL limitations. The addition of the third ADL, such as the ability to get to and from and use the toilet on one's own, is critical to upgrading the type and frequency of care needs.

Imposing a higher benefit criteria doesn�t generally reduce acceptance rates for nursing home care, since most people in nursing homes already have at least three ADL losses or a cognitive impairment. The average number of ADL losses among nursing home residents is 3.3.

Processing Claims

Generally, a client simply needs to pick up the phone to begin the claims process. Customer service gathers basic information assess how to best meet the insured�s needs.

A claim form and an authorization to release medical records are sent out from the insurance provider. Some insurers will begin the process without requiring the form, reducing the burden of paperwork on the client. Other require a claim form to start the process.

The insurer gathers information to verify whether the policyholder is eligible for benefits. The insurer may perform an in-person interview better assess the client's needs. The person completing the assessment collects information and provides it to the insurer.They do not make a benefit underwriting decision.

It takes two to four weeks to obtain all the information needed to evaluate a claim. If approved, benefits may begin retroactively to the first day the client was eligible, depending on the policy.

Claim Denials

Generally, the most common reasons for a claim denial are:

The condition for which the claim was made does not meet the definition of ADL or cognitive loss
Policy coverage lapsed
The service was not covered
Duplicate claims for the same service
Claim amount exceed coverage amounts

If a claim is denied, the policyholder is entitled to know the reason for denial and has the right to an appeal or reconsideration. It is important for the policyholder to understand the reason for the denial. The policyholders should also be familiar with the language of the policy so that they are aware of the extent of their coverage under the policy.

Incontestability

The "Incontestable Clause" means if information in the application is inaccurate, the insurance policy cannot be contested after it has been in force for a specified period of time, usually two years.

However, if the provider finds out a client has an undisclosed condition within the first two years of the policy, they may either cancel the policy, adjust your rates to rate reflecting the new information, and/or require payment of the difference in rates going back to the inception date or start of the policy.

Exclusions and Limitations

A policy may not be issued based on the following criteria:

Preexisting conditions or diseases
Mental or nervous disorders - however, this shall not permit exclusion or limitation of benefits on the basis of Alzheimer's Disease
Alcoholism and drug addiction
Illness, treatment or medical condition arising out of:
- War or act of war (whether declared or undeclared)
- Participation in a felony, riot or insurrection
- Service in the armed forces or units auxiliary thereto
- Suicide (sane or insane), attempted suicide or intentionally self-inflictedinjury
Treatment provided in a government facility (unless otherwise required by law), services for which benefits are available under Medicare or other governmental program (except Medicaid), state or federal workers' compensation, employer's liability or occupational disease law, or any motor vehicle no-fault law, services provided by a member of the covered person's immediate family and services for which no charge is normally made in the absence of insurance
Expenses for services or items available or paid under another long-term care insurance or health insurance policy
In the case of a qualified long-term care insurance contract, expenses for services or items to the extent that the expenses are reimbursable under Title XVIII of the Social Security Act or would be so reimbursable but for the application of a deductible or coinsurance amount.
Neurosis, psychoneurosis, psychopathy, psychosis, or an emotional disease or disorder.� These should not be confused with cognitive impairments such as Alzheimer�s Disease, which are organic in nature.

Pre-Existing Condition Exclusion

A pre-existing condition is defined when medical advice was already given or treatment was recommended by, or received from, a physician within 6 months before the effective date of coverage. Sometimes people confuse "underwriting" with this exclusion.

Underwriting refers the process of examining, accepting or rejecting insurance risks and classifying those selected, in order to charge the proper premium for each. A pre-existing condition exclusion is a limit that may be put on coverage after it has been issued.

A pre-existing condition exclusions may postpone or delay coverage and not pay for care until after the first 6 months of coverage, if the need for care occurs within the first 6 months and is due to the pre-existing condition. The insured may have to wait for a prescribed time period before coverage can begin.��

Suitability: Is LTCI the Right Choice for your client?

Agents needs to keep several factors in mind.

Suitable candidates:
- Have assets to protect or leave to others, or that have sentimental value
- Are able to afford monthly premiums
- Are unable or unwilling to pay out-of-pocket for a long duration of LTC
- Are not currently disabled or seriously ill, has a family history of longevity, and do not have a health history/lifestyle suggesting increased risk for disabling disease or injury
- Want to ensure independence and control over money and assets
- Have an income level too high to qualify for Medicaid
Unsuitable candidates:
- Have few or no assets to protect
- Are unable to afford insurance premiums, now or in the future
- Are already disabled or have serious health problems
- Have an income level that meets Medicaid eligibility limits

When should someone apply for LTCI?

An agent should consider why a client is applying for LTC insurance. Clients should decide to purchase LTCI as a sound financial decision, and one they can afford. No client should be encouraged to make their purchase based on fear.

Those who purchase LTCI may have extensive assets, but may choose to buy a smaller policy and still benefit from coverage, however, buying too little coverage means the client is only slightly delaying the time when their own assets or income will be needed to pay for care. The client should think about how much care costs beyond the coverage period they want to pay out of pocket.

Each client should select the features appropriate for them. Long-term care costs increase annually. Clients should plan for charges besides room and board, such as supplies, prescriptions, bedding, and other expenses that may not be covered. It is important to check and see if the policy pays only for room and board, or if other expenses are covered. The client must ask, "Is the daily benefit adequate to include these extra costs?� If not, will they be able to pay out of pocket?��

The client should make sure LTC insurance fits their budget before purchasing a policy. The Suitability Personal Worksheet from the insurance company is a place to start, but ultimately the client must make their own decision about whether LTC coverage is affordable.

Outline of Coverage

The outline of coverage (OOC) is a general overview of benefits, exclusions, and other limitations. It is a crucial client disclosure document. Insurers are required to follow a state-mandated format and use specific language to explain coverage features in the OOC.� Essentially, the OOC breaks down what is and isn�t covered by the provider.

Insurers must give potential buyers the OOC before the agent can give the application to the client. This requirement is intended to inform consumers about what is covered and what is not covered before they buy a policy. It is also designed to help clients more easily compare the policies of different companies. This is why having a standardized approach to the information in the OOC is critical.

Key Elements are included n the Outline of Coverage

Key elements of an Outline of Coverage are:

Policy Designation
Purpose of Outline of Coverage
Terms Under Which The Policy Or Certificate May be Returned and Premium Refunded
Medicare Supplement Insurance Disclaimer
Long-Term Care Coverage
Benefits Provided by this Policy
Eligibility of Benefits
Limitations and Exclusions
Pre-existing conditions
Relationship of Cost of Care and Benefits
Terms Under Which the (Policy) (Certificate) May Be Continued In Force and Is Continued
Alzheimer's Disease, other Organic Brain Disorders
The Premium
Denial of Application
Offer of Inflation Protection
Offer of Nonforfeiture Benefit
Contingent Benefit
Disclosure Regarding Federal Tax Treatment of Long-Term Care Insurance

Comparing LTCI Policies

The agent is there to help the client make an informed buying decision. Agents should encourage clients to educate themselves as much as possible, in order to get the best LTCI for their needs.A few pointers that agents may wish to pass on to clients as they compare LTCI polices are:��

Selecting an Insurance Company

The consumer should choose an insurance provider with high ratings ( A or better) from rating companies. They need to ask a few other questions as well:

How thorough is the company's underwriting process? A detailed application with use of other information like an Attending Physician's Statement and face-to-face assessments are signs of careful underwriting, which is important to rate stability.
What is the insurer's history of rate increases? What were the reasons for the increases? How often and how much does the insurer raise rates?
Does the insurer offer a policy with options in the event of a rate increase, i.e. decrease in coverage to maintain current premium, or Contingent Non-forfeiture?
Will credit of the applicant's past insured status be given if the applicant decides to increase or decrease coverage in the future? Some insurers allow this, others make you drop the current coverage and buy the new coverage at the new age. This means paying higher premium amounts and the applicant may not pass underwriting.

Other resources available to help review insurance companies are:

Internet Resources:

Financial Security in Later Life - National Initiative:
http://www.ces.purdue.edu/financialsecurity/resources/index.html
This section identifies and provides a brief description of educational resources that target the content important for later life financial security.
Long-Term Care Insurance:
http://www.ext.colostate.edu/pubs/consumer/09152.html
Colorado State University Cooperative Extension Fact Sheet 9.152
Colorado State Division of Insurance:
http://www.dora.state.co.us/insurance/senior/ltc.htm
Information about:
- what companies market long-term care insurance in Colorado, their phone numbers, financial rating information, and number of policies in force in the United States
- Colorado's standardized long-term care insurance plan requirements
- Colorado's long-term care insurance income tax credit
Health Insurance Association of America:
http://membership.hiaa.org/pdfs/2002LTCGuide.pdf
Booklet: Guide to Long-Term Care Insurance (Available in either English or Spanish)

This site maintains a list of companies that sell long-term care insurance.
National Association of Insurance Commissioners:
http://www.naic.org/1pubcat/consumer.htm
NAIC represents state insurance regulators. They offer a "Shopper's Guide to Long-Term Care Insurance" for $.50. You can find ordering information on their Web site. This Guide is typically given to consumers by insurance agents promoting their long-term care policies.

Financial Stability Rating Companies:

A.M. Best
908-439-2200 X5742
http://www.ambest.com
Fitch Ratings
800-853-4824
http://www.fitchrating.com
Moody's
212-553-0377
http://www.moodys.com/cust
Standard & Poor
212-438-2400
http://www.standardandpoors.com
Weiss Research
800-289-9222
http://www.weissratings.com

Glossary of Terms

Accelerated Death Benefit (Living Benefits) Rider: A supplementary life insurance policy benefit rider that allows a policyholder to receive a specified portion of the policy's death benefit before the policyholder's death if certain conditions are met.

Activities of Daily Living (ADLs): Everyday functions and activities individuals usually do without help. ADL functions include bathing, continence, dressing, eating, toileting and transferring. Many policies use the inability to do a certain number of ADLs (such as 2 of 6) to decide when to pay benefits.

Adult Day Care: Licensed or state-certified, non-residential day care that provides 6 to 12 hours of care per day; maintains and monitors a written plan of care for each client, provides assistance with activities of daily living; and has a client to staff ratio of at least 1 staff member for every 8 clients.

Aging in Place: Occurs when an aged individual continues to live and receive care at home, instead of being institutionalized.

Alternate Plan of Care: Payment of benefits for appropriate long-term care services that are not specifically mentioned in the policy if the insured, the insured's doctor, and the insurance carrier agree to the care.

Alzheimer's Disease: A progressive, degenerative form of dementia that causes severe intellectual deterioration.

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 residential living arrangement that provides individualized personal care and health services for people who need help with their activities of daily living but who do not necessarily need the level of care provided by nursing homes.

Bathing: Washing either in a tub or shower, including the task of getting into or out of the tub or shower.

Bed Hold Benefit (Bed Reservation Feature): Will pay for the cost of reserving an insured's bed in a nursing home or assisted living facility while the individual temporarily leaves the facility up to a certain number of days, for example, for hospitalization.

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

Benefit Triggers: The criteria and methods used to determine whether an applicant is eligible to receive benefits.

Care Coordinator: A professional care manager, usually with a background in health care, provided by a long-term care insurance company. The Care Coordinator works with the insured and the insurance company to create a plan of care when a long-term care need arises.

Care Management Services: A professional nurse or social worker that may arrange, monitor, or coordinate long-term care services. Also referred to as coordination services.

Caregiver - Primary: The main person (usually a relative) who is managing and providing care for a person who is incapacitated.

Caregiver - Secondary: Others who help to provide care, usually on a part-time basis.

Caregiver Training: Training of a designated person, agreed to by the insurance company, in the proper use and care of supportive equipment, medical aids, assistance with activities of daily living or other supportive needs of the insured. It does not include informal care provided by a caregiver.

Chronically Ill Individual: An individual who has been certified by a licensed health care practitioner as: being unable to perform without substantial assistance from another individual at least 2 activities of daily living for a period of at least 90 days due to a loss of functional capacity; or requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment. (1) Substantial assistance includes hands-on assistance or standby assistance. (a) Hands-on assistance: the physical assistance of another person without which the individual would be unable to perform the ADL. (b) Standby assistance: the presence of another person within arm's reach of the chronically ill individual that is necessary to prevent, by physical intervention, injury to the individual while the individual is performing the ADL. (2) Substantial supervision: continual supervision (which may include cueing by verbal prompting, gestures, or other demonstrations) by another person that is necessary to protect the severely cognitively impaired individual from threats to his or her health or safety.

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 judgment as it relates to safety awareness.

Compound Inflation Protection: An option offered on some long-term care policies to increase the maximum daily and lifetime benefits each year by a pre-set percentage on a compound basis. It is available at an additional premium.

Continence: The ability to maintain control of bowel and bladder function; or, when unable to maintain control of bowel or bladder function, the ability to perform associated personal hygiene (including caring for catheter or colostomy bag).

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.

Dressing: Putting on and taking off clothing and any necessary braces, fasteners or artificial limbs.

Durable Medical Equipment: Is equipment such as hospital beds, crutches, wheelchairs, ramps and prosthetics used for in-home care.

Eating: Feeding oneself by getting food into the body from a receptacle (such as a plate, cup or table), by a feeding tube or intravenously.

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. The elimination period may also be called the waiting period.

Exclusions: Services that will not be covered under a long-term care insurance policy.

Facility Qualifications: Specific standards required by state or federal regulations and by the long-term care insurance company (in states where no licensing or certification is required by the state) for a particular type of facility, such as a nursing home or adult day care center, to operate in a state and provide care or services that will be covered by a long-term care policy. Standards may include such things as licensing requirements, type of care services that must be provided, hours of operation, training and experience of caregivers. Facility qualification standards may vary by state and insurance policy.

Formal Care: Formal care can be provided in-home, as a community-based service or in residential settings.Formal care implies some system of service. Home and community-based services may be provided by friends, family, home health aides, community organizations like adult day service (ADS), government agencies and skilled nursing facilities.��

Free Look Provision: A policy provision allowing the policy owner to inspect the policy for a specified period of time, often 10, 15, 20 days and to return the policy to the insurer, if desired, for a refund of the entire premium paid. 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.

Future Purchase Option: Life and health insurance provisions that guarantee the insured the right to buy additional coverage without proving insurability. Also known as "guaranteed insurability option."

Guaranteed Renewable Policy: The company guarantees that the insured may renew the policy for life, as long as the insured pays the premiums. The insurance company may increase the premiums on guaranteed renewable policies for all policies of that particular type, but may not increase the premium for an individual policy. A qualified long-term care insurance contract must be guaranteed renewable.

Home and Community-Based Health Care (HCBS): Includes nursing and related personal care provided to patients at home by a home health agency. Policies covering home and community-based care should describe the types of care and the types of agencies that are covered and should specify when and where this type of care can be provided. Home and Community-Based Health Care usually includes home health care, adult day care, and homemaker services.

Home Care Services: Medical and non-medical services provided to ill and disabled persons in the home. They include nursing services, physical, occupational, respiratory, and speech therapy services, homemaker services, assistance with activities of daily living, personal care services, and adult day care services. There may be licensing or certification restrictions on the agencies or individuals that provide these services.

Home Health Aide: A person who is providing home health care services at home under the supervision of a doctor, nurse, or physical, respiratory, speech or occupational therapist. An escort, companion or chore worker is usually not considered a home health aide.

Home Health Care: Services for occupational, physical, respiratory, speech therapy, or nursing care in the home. Also included are medical, social worker, home health aide, and homemaker services.

Home Modification and Supportive Equipment/Supportive Services Benefit: Home modification and rental, lease, purchase, and installation of supportive equipment that is used to provide covered long-term care services. It might include lifeline alerts, informal caregiver training, medical equipment or devices, medical transportation, "Meals-on Wheels," and other services or devices to support the needs of people living with disabilities at home.

Hospice: Skilled or unskilled care of a terminally ill patient through a home health or community hospice organization.

Hospice Facility: A facility that provides care for individuals with terminal illnesses. While individuals receive care, they are typically not receiving the type of care that will bring about recovery or can be expected to improve their medical condition. Hospice care is intended to provide comfort for the terminal patient and support for their families.

Inflation Protection: An option in long-term care insurance to increase benefit levels to keep up with expected increases in the costs of future care.

Informal Care: Care that is received at home, or at a relative's home, by family or friends. A care coordinator or medical professional may supervise the care.

Insurance contract: The legally binding offer and acceptance of an insurance agreement between the client and the insurance company.

Intermediate Care: Occasional nursing and rehabilitative care provided by a medical professional based on a doctor's orders. Care may be provided only by, or under the supervision of skilled medical personnel. Frequently, a licensed practical nurse or nurse's aide gives this type of care to an individual who has limited functional ability but does not require around-the-clock care. Often, the person needs help with key functions like managing medication. Care is provided on an intermittent rather than a continuous basis - for example physical therapy. Intermediate Care is excluded under Medicare.

Lifetime Home and Community-Based Care Maximum: The maximum amount that an insurance company will pay for covered expenses for home health care, adult day care and homemaker services.

Lifetime Maximum Benefit: The lifetime maximum benefit is the maximum amount that a long-term care insurance company will pay for all covered expenses throughout the life of a policy. The lifetime maximum benefit is often described as a pool of money that an insured can draw against. When the lifetime maximum benefit is exhausted, the pool is dry and the policy will not pay any more benefits.

Lifetime Therapeutic Devices Maximum: The maximum amount an insurance company will pay for covered lifetime therapeutic devices, sometimes called durable medical equipment.

Long-term Care: Care provided over a prolonged period of time when someone needs assistance with daily living due to an accident, illness, cognitive impairment or advancing age. Care is provided either in a facility or at home. Long-term care may include a range of formal and informal services for health, personal care and social needs. Often thought of only as nursing home institutionalization, long-term care can be provided both formally, by medical and health professionals, and informally, by personal, unskilled caregivers.

Long-Term Care Facility - See "Nursing Care Facility"

Long-term care insurance: Insurance that will help pay for care a person receives when they need help either at home or in a facility with their activities of daily living (eating, bathing, dressing, toileting, transferring, and maintaining continence) due to an accident, illness or advancing age.

Long-term care Partnership Program: A public-private partnership designed to encourage those with moderate income to purchase private LTCI to fund their LTC needs rather than relying on Medicaid

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. If an insured had a policy that specified a three-year Maximum Benefit Period but was in care for four years, only the first three years of care would be covered by his/her long-term care insurance.

Maximum Daily Benefit (MDB): The pre-set amount that a long-term care insurance policy will pay up to for each day during a claim period. The maximum daily benefit is specified in the original long-term care insurance policy, but may increase on an annual basis if the policyholder also purchased a benefit increase rider.

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: An optional feature intended to cut your losses with either reduced paid-up insurance, extended term or a shortened benefit period if you let your long-term care policy lapse. If your policy lapses within the grace period, after being in force for at least three years, it will remain in force with a reduced policy limit that is equal to the sum of the premiums you have paid.

Nursing Care Facility: A facility providing skilled, intermediate or custodial nursing care which must be state-licensed.

Personal Care: See "Custodial Care"

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.

Rate Class: A group of insureds with similar long-term care insurability levels. Extremely healthy people who are less likely to need long-term care are usually placed in healthy classes and receive a preferred rating (lower rates). For example, the price of a long-term care insurance policy typically increases as an individual's rate class decreases.

Respite Care: Care that is provided to long-term care patients, at home, by professionals or volunteers for a few hours or a few days while allowing typically informal caregivers some time away from providing care.

Restoration of Benefits: Occurs when an insurance provider adds benefit dollars back into a policyholder's lifetime maximum benefit after recovery from a long-term care need for which benefits were paid. This benefit restores the initial maximum policy benefits if after using long-term care benefits the member goes 180 days without needing or receiving long-term care.

Riders: Addition to an insurance policy that changes the provisions of the policy.

Sandwich Generation: A term used to describe individuals who find themselves in the unfortunate situation of caring for their children as well as aging parents.

Simple Inflation Protection: This benefit provides for an insured's long-term care maximum daily benefits and lifetime maximum benefits to increase each year by a set amount. Increases are always based on the initial benefit. Rider is available at an additional premium.

Skilled (nursing) care: Commonly referred to as nursing care, this is the highest level of care an individual can receive without being confined to a hospital. It is almost always based in an institution. Skilled nursing care is the only type of care Medicare covers (but on a very limited basis).Care must be available on a 24-hour basis. Skilled rehabilitation services, such as physical, occupational and speech therapy are generally included in this definition. The Medicare definition of skilled care requires daily care by a physician.

Stand-By Assistance: The need for someone to assist another individual performing activities that are basic to daily living. Unlike someone who needs continual supervision (i.e. all the time), a person who needs standby assistance has to have a caregiver within arm's reach of the individual at all times to prevent, by physical intervention as necessary, injury to the individual while the individual is performing the activity of daily living (ADL) (for example, being ready to catch the individual if the individual falls while getting into or out of the bathtub or shower as part of bathing).

Supervisory care: Most often associated with cognitive impairment, supervisory care involves providing a safe, controlled environment to ensure a person does not harm themselves or others, and may include ADL assistance as well.

Therapeutic Devices: Devices such as grab bars and ramps, which help an individual perform the basic activities of daily living without another person's assistance.

Toileting: Getting to and from the toilet, getting on and off the toilet and personal hygiene.

Transferring: Moving into or out of a bed, chair or wheelchair.

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