A “Need-to-Know” Glossary for all Medical Professionals
Staff Writers
Activities of daily living (ADLs): Those functions or activities normally associated with bodily hygiene, nutrition, elimination, rest, and ambulation. These are the minimal requirements of mobility, toileting, and dressing, eating, and maintaining continence. Performance of ADLs indicates a person’s degree of physical independence as part of a functional assessment. The most common long-term care insurance (LTCI)-defined ADLs, which require physical assistance to perform, are defined below in the usual order of their occurrence:
• Bathing—Included only in a few LTCI contracts; the least impaired ADL.
• Mobility (transferring)—The ability to move from bed to chair.
• Toileting—The ability to get to and from a toilet.
• Dressing—The ability to put on and take off clothes and/or to fasten shoes.
• Eating—The ability to feed yourself. (Food preparation is not an ADL.)
• Maintaining continence—The ability to maintain control of urine/bowel movements.
ADL impairment: A physical impairment that prevents an elder from performing certain physical activities.
Adult day-care centers: Such centers provide social, recreational, and rehabilitation for full-day or half-day programs for people who cannot care for themselves during the day but can live at home at night.
Adult congregate living: A group living environment that promotes independent living by supplying supportive medical and social services either directly or through referral to seniors who are in relatively good health, despite financial limitations or social impairments.
Alternate valuation: With certain exceptions, the value six months after the decedent’s date of death of all property includable in the decedent’s gross estate. If an asset is sold or distributed, then the sale price or the value on the date of distribution is the alternate value. In either case, however, the sale or distribution must occur within six months of death.
Alzheimer’s disease: A disease characterized by progressive dementia and diffuse cerebral cortical atrophy (an organic brain disease and is covered by most LTCI policies).
Alternate Valuation Date: Six months from date of death.
Assisted living facility: A residential facility for independent seniors with multiple needs, including slight to moderate physical disabilities and cognitive impairment. Residents receive 24-hour supervision and assistance in daily living, meals, housekeeping, transportation, and recreational programming. Minimum health or nursing assistance is provided on an as-needed intermittent basis. Residents have their own private spaces and they share public spaces with others. This type of facility is also referred to or related to adult congregate living facility, adult’s home, personal-care home, or residential-care facility, depending on local nomenclature and state regulations.
Attorney-in-fact, agent, or power-holder: The person who or institution that has been given the authority to act on behalf of a person under a power of attorney.
Balance billing: A charge of up to 15% in excess of approved Medicare fees by a physician.
Benefit eligibility: A prerequisite for receiving LTCI benefits, usually an inability to perform two ADL’s or serious cognitive impairment.
Benefit period: The maximum number of years that benefits will be paid for nursing-home and/or home care. This can range from one year to a lifetime of benefits.
Caregiver: A person who provides care to a resident or patient. Most long-term care (LTC) is less expensive custodial care, not expensive skilled medical or psychological care.
Charitable remainder annuity trust (CRAT): An irrevocable trust that pays not less than 5% of initial fair market value to a donor or designated person annually or more frequently, if desired. The remainder interest of the split interest passes to charity at the end of a designated time or the annuitant’s life. See the Personal Financial Planning Portfolio, titled “Charitable Giving.”
Cognitive impairment: The deterioration or loss of short- or long-term memory, orientation, or deductive or abstract reasoning.
Coinsurance (Co-payment): The portion of the medical-service bill that must be paid by the patient. (Coinsurance refers to a percentage; co-payments are stated as a fixed amount.)
Compound annual growth rate (CAGR): The rate of interest earned on principal plus interest that was earned earlier multiplied annually. With LTCI, the customary inflation rate is 5% for a CAGR inflation rider. For estimate purposes, premium costs may increase at a 3% CAGR.
Conservator ship: Similar to guardianship and committee ship except that a court showing of mental or legal incompetency is not required. What needs to be demonstrated in this instance is the inability to manage one’s personal financial affairs.
Consumer price index (CPI): One of the broadest measures of prices using a market basket of goods. Changes in the CPI are used to measure the annual rate of inflation.
Contestability period: The time period from a policy issue date during which a policy is contestable.
Continuing care retirement community (CCRC): A residential, life care community for elders. The community includes a nursing-home facility. In a CCRC, a senior makes a substantial payment for lifetime housing in a home, condominium, or cooperative. In addition, the senior often pays a monthly maintenance charge. The senior holds title to his living unit and shares ownership of the common areas with other owners in the development.
Cost shifting: The practice that forces a healthcare provider, such as a hospital, to charge private-pay customers more. This also applies to sellers who provide services to those who cannot pay, such as the uninsured poor.
Custodial care (personal care): General assistance with activities of daily living, as well as household chores, provided by those who are not medical professionals.
Daily benefit: The maximum reimbursement for daily, long-term care expenses per a LTCI policy. This may range from $75 to $500 daily.
Deductible: The amount a patient must pay directly (usually each year) to a provider before the insurance plan begins paying the benefits. An example is the annual deductible for a doctor’s services under Medicare.
Diagnostic related groups (DRG): A payment system for hospital care based on patient diagnosis, which limits reimbursement of most medical treatments.
Disclaimant: The person who makes a disclaimer.
Durable medical equipment: Medical equipment designed and intended for the regular use of a LTC recipient for medical treatment or possibly safety.
Durable power of attorney: Enables one to appoint someone to act as his or her surrogate decision maker. The appointed person can make health decisions and/or administer financial or other personal affairs. If the authority granted in the power of attorney commences only upon the occurrence of a specific event or contingency, the power of attorney is known as a “springing power of attorney.”
Exclusions: LTCI policies exclude coverage for mental illness (other than Alzheimer’s and related dementia), alcohol or drug abuse, confinement in a hospital, care outside the United States, and services paid for by the government.
Family limited partnership: A partnership among members of a family that owns properties. It is used for estate-planning purposes to reduce the value of an asset or business. Such an estate plan may include an arrangement to purchase a business in the event of the principal owner’s incapacity.
Family and Medical Leave of Absence Act: This act permits an employee (after a year of employment) to take up to 12 weeks of unpaid leave to take care of his own health problem or the health problem of the employee’s family, including his children, spouse, or parents.
Full recovery: This occurs when an insured is no longer disabled and no longer requires substantial human assistance or supervision with two or more ADLs or a cognitive impairment.
Geriatric care manager (GCM) or case manager (CM): A person who coordinates, oversees, or arranges the care of an elderly or disabled person.
Grantor retained annuity trust (GRAT): A trust in which the grantor retains the right to a fixed dollar amount (the annuity) for a fixed term. If the grantor survives until the end of the annuity term, all of the trust principal will pass to others and escape the grantor’s estate for death tax purposes.
Grantor retained income trust (GRIT): A trust in which the grantor retains the right to receive the income. To satisfy all gift and estate tax law requirements; a GRIT must be either a GRAT or a GRUT (grantor retained uni-trust).
Grantor retained uni-trust (GRUT): A GRUT is similar to a GRAT, except that with a GRUT the grantor retains the right to receive a fixed percentage of the value of the trust annually. Thus, the total annual payments will fluctuate in direct proportion to the value of the trust.
Guardianships and conservatorships: Depending on the state of jurisdiction, a court-created vehicle in which a guardian or conservator is appointed the legal representative of a person who is an adjudicated mental incompetent. This guardian or conservator then acts on behalf of the incompetent.
Guarantee renewable: An LTCI contract provision precluding cancellation of a policy, or a change of any of its terms, as long as the premiums are paid on time. Insurers can increase premiums after receiving approval from a state insurance department.
Guardian: A person named by a court to represent the interest of minors or incapacitated elders. The appointed person is lawfully invested by a court with the power of, and charged with the duty of, taking care of a person who is considered incapable of administering his or her affairs. The guardian also is responsible for managing the property and rights of the person.
Healthcare Finance Administration (HCFA): The federal agency [part of the Department of Health and Human Services (HHS)] responsible for Medicare and Medicaid rulemaking and administration.
Healthcare proxy: A document that a person uses to appoint someone to make all his healthcare decisions in the event that he becomes unable to make his own.
Home health aide: A person who performs custodial LTC services under professional supervision.
Home health agency: A licensed public or private organization that provides home health aid custodial services, skilled nursing services, or other therapeutic services.
Home healthcare plan: A home-care program prepared by a physician, a registered nurse, or a care manager without which the patient’s physical condition could be adversely affected.
Home healthcare services: These may include the following services performed either daily or at least weekly:
• Full or part-time, home health aide services helping with ADLs or Alzheimer’s disease.
• Physical, respiratory, occupational, or speech therapy provided by a licensed therapist.
• Nutrition counseling under the supervision of a registered dietitian.
• The development of a home-care plan by a registered nurse, a licensed practical nurse, a physician’s assistant, or medical social worker and approved by the attending physician.
Hospice care: A program for terminally ill people who are expected to die within six months. It is primarily concerned with pain and symptom control. Hospice provides medical, nursing, and other health services through home or inpatient care. Medicare usually pays for hospice care.
Inflation benefit rider: A provision for a periodic increase of benefit coverage to reflect the increasing costs of care based on the CPI or other economic indicators. Most LTC policies offer either a simple 5% annual increase or a more expensive 5% growth, which is compounded annually. Some policies offer an option to increase benefits for an additional premium without any additional medical examinations.
Informal caregivers: Family members, friends, or caregivers who are not employed by established home-care agencies, who provide care without pay and are not under the supervision of a licensed agency and, thus, not reimbursable according to most LTCI contracts.
Instrumental activities of daily living (IADL): Actions performed by a person that are above and beyond the most basic ADLs. IADLs include shopping, driving, cooking, cleaning, and taking care of personal finances.
Insured event: Events determined by the LTCI policy to be covered by the insurance and that entitle a policyholder to benefits.
Interrupted care requirements: A period of time after which benefits will be resumed without a new, start-up, waiting period.
Irrevocable living trust: A trust established during a grantor’s lifetime whose terms cannot be changed.
Joint tenancy with rights of survivorship: The holding of title to property by two or more people so that upon the death of one joint owner, the survivor or survivors take title to the property; to be distinguished from tenancy in common.
Level premium: The premium (paid annually or more frequently) that is fixed unless, on a class basis, an insurance company obtains approval from the state to increase premiums. An increase is more likely to occur over a long time as claims’ experience increases and more likely will apply to younger policyholders.
Life insurance living benefit rider: A rider that is available on some permanent life insurance policies. In the event of a terminal illness and a life expectancy of less than one year, the policyholder may receive an advance discounted payment on the face value of his policy after deducting any policy loans. The rider is usually available without any extra premium as a free upgrade feature to a policy. The amount of the payout will vary by policy.
Limited partnerships: Unincorporated associations with one or more general partners who are personally liable and one or more limited partners who contribute capital and share in profits but incur no liability with respect to partnership obligations beyond their capital investment. These partnership interests may be gifted for estate-planning purposes.
Living trust: A trust established by a grantor, donor, or settlor who is living at the time he creates the trust; also known as an “inter vivos trust.”
Living will: A person’s written directive to his family, physician, and medical facility to be followed if he becomes unable to participate in decisions regarding his medical care. The person’s instructions usually reflect his wish to decline medical treatment in prescribed circumstances and his wish that his living not be artificially prolonged.
Long-term care (LTC): Assistance provided over a period of time to those unable to care for themselves. LTC includes a wide variety of services from skilled nursing to custodial care, including personal, medical, social, and financial care. Such services are generally required by older people as a result of diminishing health, disabling illness, disability, or Alzheimer’s disease.
Long-term care insurance (LTCI): Private insurance that helps pay primarily for custodial care over an extended period of time in a nursing home or at home. There are many different types of LTCI policies.
Managed care: General term for any system of healthcare delivery, such as an HMO, organized to enhance cost-effectiveness. Managed care networks are different types of healthcare providers that agree to provide services to those covered under the plan. They are usually organized by insurance carriers, but also can be organized by employers, hospitals, or hospital chains. Payment is made on a fixed basis, which provides incentives to control costs.
Medicaid: The joint federal and state program that provides a wide spectrum of medical services (including LTC) to the indigent as authorized in Title XIX of the Social Security Act. At the Federal government level, Medicaid is administered by the HCFA.
Medicaid “community spouse”: The “healthy” spouse who is not on Medicaid while an ill spouse who is in a nursing home is on Medicaid. The income and assets of both spouses are pooled. The community spouse may receive a limited, possibly negotiable resource allowance (as determined by each state), but otherwise Medicaid has the first claim to income and assets to pay expenses for an ill spouse.
Medicaid trust: A trust established by a Medicaid applicant whose purpose is to protect the trust assets from nursing home claims or from claims of the supervising state agency.
Medicare: The federal government medical insurance program that pays for those over 65 years old and some medical and hospital expenses for disabled people as authorized in Title XVIII. Medicare Part A benefits cover inpatient hospital care, skilled nursing facility care, home healthcare, and hospice care. Medicare Part B benefits provide coverage for physician services, outpatient hospital services, diagnostic tests, various therapies, durable medical equipment, medical supplies, and prosthetic devices. Normally, Medicare pays for skilled care. Limited custodial care may be approved and may accompany skilled care.
Medicare supplementary insurance (Medigap): Private insurance used to supplement Medicare. Medigap can be used to cover co-payments and deductibles, but it usually does not cover LTC services.
National Association of Insurance Commissioners (NAIC): A non-profit association of state insurance commissioners who are the chief regulatory officials in all 50 states, the District of Columbia, and U.S. territories. These officials, often with the concurrence of private insurance companies, issue overall U.S. insurance guidelines. States may or may not adopt these guidelines; however, there is pressure on the states to adopt them as there is almost no other federal regulation or coordination among different states.
Nonforfeiture of benefits: A provision, relatively expensive and usually optional, that may guarantee access to partial benefits after participating in a plan for a specified period of time.
Nursing homes: Licensed facilities with licensed personnel that provide typically 95% custodial care; the remainder is intermediate and skilled care. Nursing home charges include custodial or skilled care, room, and board. Nursing homes may be used for respite care or post-hospital treatment.
Omnibus Budget Reconciliation Act (OBRA) 1990: Federal legislation that approved standardization of Medigap policies.
OBRA ’93: Federal legislation that extended the lookback period for Medicaid qualifying purposes from 30 to 36 months and 60 months for certain trusts in order to require a longer wait time before receiving benefits.
Policy limit: The maximum total benefit, which equals the daily benefit multiplied by the number of days of benefit selected. For example, if the daily benefit is $100 and three years are selected, then the policy limit is the $100 daily benefit × 3 years × 365 days, or $109,500.
Pre-existing conditions: A bodily injury or sickness that a physician has treated or has advised treatment or that would have caused a prudent person to seek medical treatment within a specified period of time before the date that the insurance policy was issued. A condition that was fully disclosed on the application, and not excluded from coverage, will not cause denial of benefits.
Qualified disclaimer: A written refusal to accept property from a decedent (by will, by the laws of descent and distribution, by contractual provision, or by beneficiary designation), made within nine months of the decedent’s date of death and delivered to the holder of legal title in such property. This is a common way to transfer property without paying a gift tax.
Qualified terminable interest property (QTIP): Property that, were it not “qualified,” would not qualify for the marital deduction in the decedent’s estate because the interest left to the surviving spouse terminates at his or her death (and there are no other rights that would result in inclusion of that property in the surviving spouse’s gross estate). QTIP does qualify for the marital deduction in the decedent’s estate and will be included in the surviving spouse’s gross estate, provided the proper election is made by the decedent’s personal representative.
Recoupment: The seizure of assets that are considered to be illegally transferred by the client and are subject to being recouped by Medicaid.
Respite care: A temporary arrangement or facility for a LTC patient or other chronically dependent person so that family or other caregivers can have a respite from their duties.
Retirement community: Privately built, usually self-contained housing facilities for those who are over a stated age, usually 55. Housing options include the lease or purchase of a single or multi-family house or townhouse, or an apartment, sometimes even in a high-rise building. Residents are usually of middle- to upper-class economic backgrounds. Costs can cover building maintenance and/or a variety of other services, including healthcare.
Return of premium option: An expensive, optional LTCI feature in which the total premium paid may be returned if an insured dies before a certain age, such as 70. This option generally is not available.
Reverse mortgage: A home-mortgage arrangement whereby a purchaser or mortgagor agrees to purchase a home, but does not take possession until the death of the seller or whenever the seller decides to move. The seller receives a mortgage as security for the sales proceeds. The purchaser or mortgagor makes monthly payments to the seller and allows the seller to reside in the home for a lifetime or period certain. The seller loses ownership but obtains a stream of cash flow and taxable income. This income may permit the seller to remain at home, which otherwise might not be affordable. The purchaser’s debt is usually guaranteed by a Federal Housing Administration insurance policy. The market for these mortgages appears to be limited until larger uninsured mortgages become more available in the private sector.
Revocable living trust: A trust created by a donor, grantor, or settlor during his or her lifetime in a separate document in which the grantor reserves the power to revoke (or amend) the trust. This type of trust is often for the grantor’s benefit and is used as an estate planning and management vehicle.
Robert Wood Johnson Long Term Care Private Insurance State Partnership Programs: Programs in Connecticut, New York, California, Indiana, and Iowa that established plans to protect assets from Medicaid “spend down” requirements if LTCI is purchased that conforms to the state plan.
“Sandwich generation”: The generation of adults caring for children and elder parents simultaneously and therefore “sandwiched” between two generations.
Skilled nursing and intermediate care: Physician-ordered care provided by a registered nurse or therapist usually on a visit basis unless 24-hour intensive care is required. Skilled care may include such tasks as: tubal or intravenous feedings, intravenous injections, oxygen therapy, bowel or bladder retraining, catheterization, application of dressings involving prescription, and dialysis.
Skilled nursing facility: A facility that provides room, board, and 24-hour skilled nursing care.
Special-use valuation: Pursuant to Section 2032A, special-use valuation provides that the “highest and best use” value may be reduced in the gross estate by up to an amount based on special-use valuation for real property used in a farming operation or a trade or business that meets certain requirements, and where certain pre-death qualifications are met and post-death commitments are made.
Spending down: Depleting income and assets to meet eligibility requirements for Medicaid; also called impoverishment
Springing power of attorney: The authority of the holder of the power is not effective at the execution of the power, but instead goes into effect at some later time, usually when the client becomes incapacitated or incompetent.
Standby trust: A revocable trust that is to receive assets upon the incapacity of the grantor. Typically these trusts appoint a bank, family member, or other trustee to manage these assets and to pay bills that a prudent, reasonable, responsible person would. The assets usually are transferred to the trust by the holder of a power of attorney, often a family member.
Supplemental needs trust: A trust established by a third party that is specifically intended to supplement rather than supplant government benefits and that restricts the trustee from spending income or assets in a manner that can reduce government benefits. Also may be self-settled in unusual circumstances.
Supplementary security income: A federal program of cash assistance for the aged, blind, and disabled. It is a Social Security program.
Tenancy by the entirety: The commonly used equivalent of joint tenancy with rights of survivorship but restricted in use to husband and wife. However, due to the marital relationship, there are some minor differences.
Tenancy in common: The holding of property by two or more people so that each has an undivided interest that, upon death, passes to heirs or devisees and not to the survivor(s); to be distinguished from joint tenancy with rights of survivorship.
Trustee: The holder of a legal title to property held for the use and benefit of another.
Twisting: The inducement of a policy owner to drop or replace an existing policy due to misrepresentation or incomplete information on the part of the salesperson or insurance agent
Viatication: A loan made to a terminally ill insured in which the lender secures the loan with the discounted net death benefit from the insured’s life insurance policy.
Waiting period: The number of days a person with LTCI must receive nursing-home or home healthcare before LTCI benefits are paid. This is also referred to as a deductible or elimination period.
Waiver of premiums: A provision forgiving payment of future premiums once benefits have been paid for a specific period of time.
Will: A document in which a person makes a disposition of his property, to take effect after his death, after the will has been “proved” in court. It is revocable during one’s lifetime.
Related info: www.HealthDictionarySeries.com
Note: Feel free to send in your own related terms and definitions so that this section may be updated continually in modern Wiki-like fashion.
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