Long Term Care

Front 1

Which of the following provisions gives a long-term care policyowner the option to purchase additional insurance amounts within specified parameters regardless of insurability?

* A) Guaranteed coverage.
* B) Guarantee of benefits.
* C) Guarantee of insurability.
* D) Guaranteed renewability.

Back 1

c

A guarantee of insurability provides a long-term care insurance policyowner with the option to purchase additional insurance amounts within specified parameters regardless of insurability, claims history, or existing conditions. This is an optional benefit available to policyowners.

Front 2

If a long-term care policy is considered tax qualified:

* A) it must conform to certain standards established by the individual state in which it is offered.
* B) it must base premiums solely on the insureds' age, health, and benefits provided.
* C) it can be offered as an employee benefit by an employer.
* D) its benefits will qualify for tax-exempt treatment.

Back 2

d

Benefits payable under long-term care policies are not taxable to the insured, provided the policy is considered tax qualified. This means that the policy's provisions must conform to certain standards and guidelines set forth by the Internal Revenue Code and the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

Front 3

Which of the following statements about long-term care insurance is most CORRECT?

* A) A long-term care policy's benefits will be triggered only if the policyowner receives a diagnosis of a terminal illness.
* B) Insurers may cancel or refuse to renew long-term care policies solely because of the insured's age or health.
* C) All long-term care policies require prior hospitalization before the policyowner qualifies for benefits.
* D) All long-term care policies must be guaranteed renewable.

Back 3

D

All long-term care policies sold today must be guaranteed renewable. This means that the insurer cannot cancel the policy and must renew coverage each year, as long as premiums are paid. While at one time many nursing home policies required a hospital stay before confinement to a nursing home in order for benefits to be paid, this is no longer the case.

Front 4

For a long-term care insurance policy to begin paying benefits, the insured must:

* A) be hospitalized for at least 3 days.
* B) receive skilled nursing care for at least 3 days.
* C) be diagnosed as chronically ill.
* D) be diagnosed as terminally ill.

Back 4

C

As a result of the Health Insurance Portability and Accountability Act of 1996, prior hospitalization can no longer be used as a benefit trigger for long-term care policies. Instead, the individual must be diagnosed as chronically ill. A diagnosis of chronic illness can be made on 2 levels: physical and cognitive.

Front 5

Which of the following is a common benefit trigger for a long-term care policy?

* A) Inability to operate a motor vehicle.
* B) Prior hospitalization.
* C) Cognitive or mental impairment.
* D) Retirement.

Back 5

C

A benefit trigger is an event or condition that must occur before policy benefits become payable. Under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the individual must be diagnosed as chronically ill to trigger benefits. Prior hospitalization can no longer be used as a trigger. Diagnosis of chronic illness can be based on two conditions: physical or cognitive illness. The physical diagnosis of a chronically ill individual is one who has been certified as being unable to perform at least two activities of daily living (ADLs), which are defined as eating, toileting, transferring (getting out of bed), bathing, dressing, and continence. A long-term care policy must take into account at least five of these ADLs. An individual would also be considered chronically ill if he requires substantial supervision to protect his health or safety because of severe cognitive impairment, and if the condition was certified within the previous 12 months.

Front 6

Which of the following statements regarding the respite care provision under a long-term care policy is CORRECT?

* A) It pays a benefit for the insured to take a break at an approved day spa or adult day care.
* B) It pays a benefit for the insured to return home for short visits.
* C) It pays a benefit for a family caregiver to get away from her duties for a short period of time.
* D) It pays a benefit to reimburse other family members who provide care for the insured.

Back 6

C

The respite care provision pays the cost of either bringing in a substitute provider to the insured's home or moving the insured to a care facility for a period of time. Its purpose is to give an unpaid caregiver (such as spouse or other family member) relief from her daily duties.

Front 7

Which of the following statements about long-term care insurance policies is NOT correct?

* A) Most begin to pay benefits when an insured becomes cognitively impaired or needs ongoing assistance in two or more activities of daily living.
* B) Most offer unlimited lifetime coverage rather than set, maximum coverage periods.
* C) They sometimes offer inflation riders to help keep pace with increases in long-term care costs.
* D) Most are indemnity plans.

Back 7

B

Most long-term care policies do not offer unlimited lifetime coverage; rather, they provide maximum coverage periods that generally extend from two to six years.

Front 8

All of the following statements characterize long-term care insurance EXCEPT:

* A) it may be issued as a group policy or as individual policies.
* B) it provides coverage for at least 12 consecutive months.
* C) it must provide for an automatic adjustment to correspond to changes in Medicare's long-term care coverage.
* D) it provides coverage for care provided in a setting other than an acute care unit of a hospital.

Back 8

C

Long-term care insurance provides coverage for care provided in a setting other than a hospital acute care unit for at least 12 consecutive months. It may be issued as a group policy or as individual policies.

Front 9

MAG Trading Co. established a tax-qualified, long-term care insurance plan for its employees. Which of the following statements is NOT correct?

* A) Premiums paid by MAG Trading are considered a necessary business expense for tax purposes.
* B) MAG Trading can take a deduction for the premiums it pays.
* C) MAG Trading's employees can exclude from income any employer-paid premium contributions.
* D) Benefits received from the plan are subject to income tax.

Back 9

D

If MAG Trading Co. establishes a tax-qualified, long-term care insurance plan for its employees, any premiums it pays are excludable from the employees' incomes. In addition, MAG Trading can take a tax deduction for the premiums paid, which are considered a necessary business expense for tax purposes. Amounts received under the plan are excluded from income as amounts received for personal injuries and sickness.

Front 10

Long-term care insurance policies must be:

* A) guaranteed renewable.
* B) noncancelable.
* C) nonreplaceable.
* D) cancelable.

Back 10

A

As a result of the 1996 Health Insurance Portability and Accountability Act (HIPAA), all long-term care policies sold today must be guaranteed renewable. This means the insurer company cannot cancel the policy and must renew coverage each year, as long as premiums are paid.

Front 11

Of the following, which statement regarding home health care is NOT correct?

* A) Most long-term care policies do not provide coverage for home health care.
* B) Home health care is an extension of intermediate custodial care.
* C) The services provided under home health care include items such as physical therapy and certain types of custodial care.
* D) The care needed is able to be provided without the insured having to be confined to a nursing home.

Back 11

A

As an alternative to nursing home care, most long-term care policies now provide coverage for home health care. Home health care is an extension of intermediate custodial care and provides coverage for those insureds who need some type of health care, but are generally able to function without the need to be confined to a nursing home. Physical therapy and some custodial care, such as meal preparation, are services that home health care might provide.