The Two Primary Benefit Triggers
To receive benefits from a long-term care (LTC) insurance policy, you must first be certified as chronically ill. Federal guidelines for tax-qualified policies specify two primary triggers for a chronic illness: a severe cognitive impairment or the inability to perform a certain number of Activities of Daily Living (ADLs). Both of these must be certified by a licensed health care practitioner.
1. Inability to Perform Activities of Daily Living (ADLs) ADLs are the basic self-care tasks that individuals must be able to perform to live independently. For tax-qualified policies, the trigger is typically the inability to perform at least two of the six standard ADLs without “substantial assistance” for at least 90 days. Substantial assistance can be either "hands-on" help or "standby" assistance, where a caregiver must be present to prevent harm.
The six standard ADLs are:
- Bathing: The ability to get in and out of the bath or shower and wash oneself.
- Dressing: The ability to put on, take off, and manage clothing.
- Transferring: The ability to move in and out of a bed, chair, or wheelchair.
- Toileting: The ability to get on and off the toilet and maintain hygiene.
- Continence: The ability to maintain control of bowel and bladder function.
- Eating: The ability to feed oneself, with a focus on bringing food to the mouth.
2. Severe Cognitive Impairment This trigger covers a severe mental deterioration, such as that caused by Alzheimer’s disease or other forms of dementia, which requires substantial supervision to protect the individual or others from harm. The impairment must be severe enough that it affects the policyholder's ability to live safely and independently. A doctor's diagnosis, often supported by clinical evidence like a mini-mental state exam or a neuropsychological evaluation, is required to trigger this benefit.
The Importance of the Elimination Period
Even after a benefit trigger is met, there is a waiting period, known as the elimination period, before your policy starts paying for services. This is similar to a deductible but is measured in time, not a dollar amount. During this period, the policyholder is responsible for covering their own care costs.
The length of the elimination period varies by policy, with common options being 30, 60, or 90 days. The type of elimination period is also crucial:
- Calendar Day: The waiting period starts from the day the triggering event occurs and runs consecutively.
- Service Day: The waiting period only counts days on which you actually receive covered care services. A 90-day service period would take longer to complete if you only receive care a few days a week.
Choosing a longer elimination period can result in lower premiums, but requires a greater financial buffer to cover initial care expenses.
Comparison of LTC Triggers
| Feature | ADL Trigger | Cognitive Impairment Trigger |
|---|---|---|
| Condition | Physical limitation leading to inability to perform basic tasks. | Mental deterioration affecting memory, reasoning, and judgment. |
| Required Inability | At least two out of the six standard ADLs. | Severe impairment requiring substantial supervision for safety. |
| Duration Requirement | Must be expected to last at least 90 days (for tax-qualified policies). | Varies, but must be severe enough to compromise safety. |
| Verification Method | Certification by a licensed health care practitioner, assessing ability to perform ADLs. | Doctor's diagnosis, often supported by clinical or neuropsychological testing. |
| Type of Assistance | Hands-on or standby assistance. | Substantial supervision to prevent harm to self or others. |
| Examples | Recovering from a stroke, advanced frailty, injury. | Alzheimer's, other forms of dementia. |
The Role of the Doctor's Certification
For a claim to be paid, a licensed health care practitioner must not only certify the qualifying condition but also prescribe a plan of care. The certification documents the policyholder's physical or cognitive decline and confirms the need for long-term care services. This provides the insurance company with the necessary medical evidence to process the claim. The plan of care outlines the specific services required, which can include skilled nursing, home health care, or assisted living.
The Claims Process
Once a trigger is met and certified, the claims process begins. The insurance company will typically review the medical records, practitioner's certification, and care plan to verify the claim. Once approved and the elimination period is satisfied, benefits can be paid. Benefits are often provided as either a reimbursement for covered expenses or a cash indemnity payment. Understanding this process in advance helps ensure a smoother transition to receiving care when the need arises. For a comprehensive overview of long-term care insurance and related topics, the National Council on Aging (NCOA) provides valuable resources.
Conclusion
Activating a long-term care policy is not automatic and requires a series of steps. The process begins when a specific health event, known as a trigger, occurs. For most policies, this means being certified by a health care practitioner as needing assistance with at least two out of six ADLs for 90 days or longer, or having a severe cognitive impairment that requires substantial supervision. After this certification, the policyholder must satisfy the elimination period—a waiting period determined at the time of purchase. By understanding these triggers and the claims process, policyholders and their families can be better prepared to navigate the transition to receiving necessary care.
