Basic Activities of Daily Living

  • Bathing
  • Dressing and undressing
  • Eating
  • Transferring from bed to chair, and back
  • Voluntarily controlling urinary and fecal discharge
  • Using the toilet
  • Walking (as opposed to being bedridden)


Tips to compare Long-Term Care Insurance Policies

Much of the information for this summary was obtained from A Shopper’s Guide to Long-Term Care Insurance prepared by the National Association of Insurance Commissioners.

Selecting a Reliable Insurance Company:

  1. Select an insurance company that has a strong history of offering, underwriting and issuing policies, and paying claims on its long-term care insurance (LTCI) book of business.
  2. Select insurers with very good to excellent financial ratings among the several rating companies (A. M. Best Company; Fitch IBCA, Duff & Phelps; Moody’s Investor Service; Standard & Poor’s Insurance Rating Service and Weiss Ratings).
  3. Generally a federally Tax-Qualified LTCI Policy can be more desirable because a portion of the premium may be tax deductible and the benefits paid on an LTCI policy are ordinarily not taxable as income. Consult with your tax advisor to get more details.
  4. Examine policies with several companies to compare benefits, “triggers” that determine eligibility for benefits, types of health care services covered, limits of the coverage, what is excluded, optional coverages or riders, the premium and payment modes.
  5. Check with the Vermont’s Department of Banking, Insurance, Securities and Heath Care Administration, Insurance Division consumer assistance line (802-828-3302) to locate licensed carriers and agents in Vermont or contact the comparable state agency where you reside.
  6. Take advantage of the 30 day free-look period to make sure the terms of the contract you purchased are the same as what was represented at the time of sale. If you are not satisfied with the policy you received, you have 30 days in Vermont from the date of delivery to cancel it in writing and get your money back. Have the agent give you a signed delivery receipt or if received by mail, keep the envelope it was mailed in.

Selecting the Right LTCI Policy For You:

  1. First and foremost, in order to qualify for a LTCI policy, the applicant must be reasonably healthy both physically and mentally at the time of application. The rate an agent quotes you may not be the rate you ultimately receive because the insurance company will medically underwrite your application and may find some adverse information in your medical records that cause the carrier to consider you a higher risk.
  2. Even though you may have been turned down by one LTC insurer, another company offering similar coverage may approve your application because it has more lenient underwriting guidelines that will make you an acceptable risk.
  3. Carefully study the policy’s criteria for determining when a policyholder becomes eligible for benefits (often referred to as benefit triggers) after satisfying the waiting (elimination) period. More liberal benefit triggers can be an advantage to the consumer.
  4. The better LTCI policies offer greater flexibility as to where and what kind of care is provided and therefore cover more options:
    • Assisted Living Facilities
    • Durable Medical Equipment
    • Nursing Home Facility
    • Home Modifications
    • Adult Day CareHospice Services (not covered by Medicare)
    • Respite Care while a caregiver (including a spouse or relative) takes a vacation.
    • Home Health and Personal Care including meal preparation, chore services, light housekeeping, medicine monitoring, assistance with Activities of Daily Living.
  5. Have a clear understanding of how the insurance company credits days toward satisfying the policy's elimination period, the time between the qualifying event and when benefits actually commence. Under the Calendar Days Method, every day of the week counts toward the elimination period even though no services are provided on some days. With the Days of Service Method, only days you actually receive covered services are counted toward this waiting period.
  6. Even though the Compounded Inflation Rider (usually 5%) can significantly increase the premium, it is strongly recommended that this option be selected, especially for younger applicants (say under 65 or 70), as opposed to no adjustment for inflation or the less expensive Simple Inflation Rider. On average, long-term care services are escalating at a rate of 5% compounded per year.
  7. Consider a policy that has a longer Elimination Period to help lower premiums. One suggestion might be a waiting period of between 45 to100 days since there is a possibility that Medicare (for those age 65 and over) may cover some portion of this waiting period for medically-necessary services performed at home or in a rehabilitation or nursing facility.
  8. Consider a LTCI policy with a 3 to 5 year benefit period since the premiums are less than policies with 7 year or lifetime benefit periods. The average length of stay in a nursing home for persons 65 and older is about 3 years.
  9. Benefits are usually paid out under one of three different approaches:
    • Expense-Incurred Method – the most common payment arrangement; benefits are paid to either the policyholder or the provider when a covered expense for an eligible service is incurred once the elimination period has been satisfied.
    • Indemnity Method – Once the insurance company has determined you are eligible for benefits and the elimination period has been satisfied, benefits are paid to the policy-holder on a daily, weekly or monthly basis while receiving long-term care services regardless of the actual cost of those specific services rendered until the up lifetime limit has been met.
    • Disability Method – The policyholder is only required to meet the benefit eligibility criteria; once satisfied, you receive the full daily benefit even if you are not receiving any services on a particular day.
  10. The better policies often include:
    • Guaranteed Renewable provision so long as payments are made within the grace period.
    • A Bed Reservation Benefit to set aside your bed in a nursing home or other facility while you are being treated in a hospital or rehabilitation unit.
    • A generous (60 days +) Grace Period if premiums are late and written notification to alert your designated next-of-kin or friend of the delinquency.
    • A Respite Period of up to 14 or 21 days (consecutive or non-consecutive) to enable your care-giver (even a family member) time off for a vacation.
    • Payment for services to an Independent Care-Giver who is not associated with a private or public homecare agency.
    • Care-Giver Training to instruct a family member or friend to provide long-term care assistance to the policyholder living at home or returning from a care facility.
    • A substantial (up to 30% or even 40%) discount on each policy when two applicants living together (husband/wife, domestic partners, siblings) apply to the same insurer and are approved at the same time. Some companies give a lesser discount to the approved policyholder even though the spouse/partner who applied at the same time is turned down.
    • International Coverage if residing or traveling in a foreign country, usually with limits on the amount or length of benefits to encourage return to the U.S.
  11. If financially feasible, the policyholder is well advised to pay the premium on an annual basis to realize greater premium savings. Insurance companies often charge a significant interest surcharge for monthly and quarterly modal payments.
  12. Marketed under different names, a Share(d) Care, Shared Benefit or Joint Benefit Coverage Rider for couples (spouses, two partners or related adults) may give a couple/partners piece of mind in knowing that if one partner uses up all of his/her benefits, that infirmed policyholder has access to the benefits of the healthy partner. Were the second set of benefits to also be exhausted, the policy usually allows the healthy partner to have his/her original benefits reinstated.

* The Activities of Daily Living criteria used as a measure to determine one’s need for long-term care services are: eating, dressing, toileting, transferring from lying to sitting and sitting to standing position, continence, and bathing. Cognitive impairment is another criterion that can trigger eligibility for benefits. Policies may require hand-on assistance, making it harder to qualify for benefits when compared to the less-restrictive stand-by assistance or verbal coaching.