Skip to main content

11.14 Long-Term Care Coverages and Conditions

LTC Facilities and Levels of Care​

Skilled Nursing Care​

Skilled nursing care involves continuous, 24-hour medical supervision provided by, or under the direction of, a registered nurse.

This level of care includes specialized medical services, such as tube feeding, intravenous (IV) therapy, and wound care.

Services are delivered in a licensed healthcare facility, such as a nursing home, which operates in accordance with state regulations and requires oversight by a licensed physician responsible for patient care.

Intermediate Care​

Intermediate care involves daily, non–24-hour medical supervision provided by, or under the direction of, a licensed healthcare professional.

This level of care includes assistance with routine medical needs, such as administering medications.

It is considered a transitional level of care, designed to support individuals who do not require skilled nursing care but still need medical assistance to maintain independence and avoid unnecessary hospitalization.

Intermediate care is typically provided in a licensed facility, such as a nursing home, intermediate-care unit, or assisted living facility, with oversight by a licensed physician responsible for patient care.

Custodial (Non-skilled) Care​

Custodial care refers to nonmedical assistance provided to help individuals with activities of daily living (ADLs), such as bathing, toileting, eating, dressing, transferring, and maintaining continence.

This type of care does not require a licensed medical professional and focuses on supporting basic personal needs rather than medical treatment.

Custodial care may be provided in a licensed facility or in the individual’s home setting.

Comprehensive LTC Coverages​

Long-term care (LTC) insurance may be designed to cover institutional care (such as care provided in a facility) or home and community-based care. A comprehensive LTC policy includes coverage for both types of care.

The following represent the standard coverages included in all LTC policies:

Home Health Care: Noninstitutional care provided in the insured’s home or another residence, delivered under a physician-directed care plan.

Hospice Care: Provides pain management, comfort care, and counseling for individuals with terminal illnesses, and often includes support services for family members.

Assisted Living: A residential care setting that offers housing and limited assistance with daily activities for individuals who do not require full nursing home care.

Adult Day Care: Provides supervision and custodial care during the day for individuals who live at home but do not require continuous, 24-hour care.

Respite Care: Offers temporary relief for primary caregivers, which may include in-home assistance or short-term institutional care for the insured.

Policy Options​

Waiver of Premium: Most long-term care policies include a waiver of premium provision, under which premiums are waived after the elimination period has been satisfied and for as long as the disability continues. The elimination period in a long-term care policy is a one-time requirement.

Inflation Protection (Cost of Living): At the time of application, long-term care policies must offer the insured the option to purchase inflation protection, which increases the daily benefit amount over time; however, this option is not required to be selected. LTC policies typically offer both simple and compound inflation protection.

Guaranteed Insurability Option (Future Increase Option): Allows the insured to obtain periodic increases in coverage without providing proof of insurability, even if currently receiving benefits. Each accepted increase in the daily benefit will result in a corresponding increase in premium.

Return of Premium: This optional benefit provides for a refund of a portion of the premiums paid to a named beneficiary if the insured dies before all benefits have been paid. The refund is reduced by the amount of any claims paid prior to the insured’s death.

Nonforfeiture Options: This rider provides paid-up coverage if the insured cancels the policy or it lapses due to nonpayment of premium. The accumulated value of premiums paid is used to fund future benefits. Nonforfeiture options include:

  • Cash Surrender Value: Provides a lump-sum payment equal to the surrender value accumulated in the policy
  • Reduced Paid-Up: Reduces the daily benefit amount while maintaining coverage for the remainder of the benefit period after premiums have been discontinued
  • Extended Term: Continues the current daily benefit amount for a shortened benefit period based on the discontinuation of premium payments

Underwriting Considerations​

As with all health insurance products, underwriters evaluating long-term care (LTC) applications are primarily concerned with the risk of an immediate and substantial claim.

Note: In general, insurers will not issue a long-term care policy if the applicant is already unable to perform any one of the six Activities of Daily Living (ADLs) or is experiencing a cognitive impairment, as these conditions indicate a high likelihood of near-term claims.

Pre-existing Conditions​

A Long-Term Care (LTC) policy may not define a pre-existing condition more restrictively than a condition for which medical advice or treatment was recommended or received within the 6 months prior to the policy’s effective date.

Prohibited Provisions​

A Long-Term Care (LTC) policy may not include provisions that:

  • Cancel, nonrenew, or terminate coverage based on the insured’s age or decline in mental or physical health. Policies may only be canceled by the insurer for nonpayment of premium.
  • Impose a new waiting (elimination) period when existing coverage is converted or replaced, except when the insured voluntarily elects increased benefits.
  • Limit coverage exclusively to skilled nursing care, excluding lower levels of care such as intermediate or custodial care.

A Long-Term Care (LTC) policy may not base benefit payments on standards such as “usual and customary” or “reasonable and customary” charges. Instead, the policy must pay actual incurred expenses, subject to the specified dollar limits outlined in the contract.

A Long-Term Care (LTC) policy may not impose conditions on benefit eligibility that:

  • Require prior hospitalization as a prerequisite for coverage
  • Restrict institutional care benefits based on whether the insured previously received a higher level of care
  • Limit home health care benefits due to prior institutional care
  • Require a prior institutional stay exceeding 30 days to qualify for noninstitutional care (other than home health care)

Quiz​

1. Which level of care involves continuous 24-hour medical supervision by a registered nurse?

A. Custodial care

B. Intermediate care

C. Skilled nursing care

D. Adult day care

Correct Answer: C

Rationale: Skilled nursing care includes continuous 24-hour supervision by a registered nurse and specialized medical services.

2. Which type of care provides nonmedical assistance with activities of daily living (ADLs)?

A. Skilled nursing care

B. Intermediate care

C. Custodial care

D. Hospice care

Correct Answer: C

Rationale: Custodial care focuses on nonmedical assistance with ADLs such as bathing, dressing, and eating.

3. What does the waiver of premium provision in a long-term care policy do?

A. Refunds all premiums paid

B. Suspends premium payments after the elimination period while disability continues

C. Reduces premiums permanently

D. Increases benefits annually

Correct Answer: B

Rationale: The waiver of premium provision eliminates premium payments after the elimination period for as long as the insured remains disabled.

4. Which of the following best describes the inflation protection rider?

A. Decreases premiums over time

B. Guarantees acceptance without underwriting

C. Increases the daily benefit amount over time

D. Extends the elimination period

Correct Answer: C

Rationale: Inflation protection increases the daily benefit amount over time to keep pace with rising costs.

5. Which of the following is NOT allowed in a Long-Term Care policy?

A. Waiver of premium provision

B. Coverage for home health care

C. Cancellation based on the insured’s declining health

D. Nonforfeiture options

Correct Answer: C

Rationale: LTC policies cannot be canceled based on age or deterioration of the insured’s health; only nonpayment of premium is allowed.