Long-term care
The minimum benefit period for a long-term care insurance policy is
24 months 18 months 12 months 36 months Explanation Long-term care insurance policies provide coverage for at least 12 months. Reference: 21.6.1 in the License Exam Manual
For long-term care policies to be considered qualified, a health professional must certify that a chronic illness will last for a minimum of
6 months 9 months 3 months 12 months Explanation A health professional must provide certification stating that an individual's chronic illness will last for a minimum of 90 days (3 months). This is one of the requirements that must be met in order of a long-term care policy to be considered qualified. Reference: 21.8 in the License Exam Manual
What is the definition of pre-existing condition in a long-term care policy?
A condition for which advice or treatment was received within 1 year before the effective date of coverage. A condition for which advice or treatment was received within 3 months before the effective date of coverage. A condition for which advice or treatment was received within 6 months before the effective date of coverage. Any health condition that existed before coverage was in force. Explanation A condition is considered to be pre-existing if advice or treatment was received from a health care provider within 6 months before the effective date of coverage. Reference: 21.12.2 in the License Exam Manual
In terms of long-term care, which of the following WOULD be covered by a Medicare supplement insurance plan?
Adult day care Custodial care Assisted living Hospice care Explanation Medicare supplement insurance will cover hospice care if the insured has a terminal illness and is not expected to live more than six months. Grief counseling would not be covered. Custodial care, assisted living and adult day care are benefits that may be covered under a long-term care insurance policy. Reference: 21.3.1 in the License Exam Manual
Which of the following statements regarding the required provisions in a long-term care policy is NOT true?
Benefit amounts are expressed as dollars per day. The elimination period is considered a time deductible. Prior hospitalization is required for payment of benefits. Policies must provide coverage for a minimum of 12 months. Explanation Long-term insurance policies do not require prior hospitalization as a condition to pay benefits. Reference: 21.6 in the License Exam Manual
Which of the following statements regarding long-term care insurance is NOT true?
Care for physical safety and mental cognition is provided by long-term care insurance policies. The amount and type of policy benefits are chosen by the individual. Long-term care insurance assists individuals in planning for future needs. Long-term care insurance requires a prior 3-day hospital stay in order to receive skilled care in a nursing home. Explanation Medicare, not long-term care, requires a prior 3-day stay in a hospital in order to receive skilled care in a nursing home. Reference: 21.3.1 in the License Exam Manual
Which of the following may be used as a reason to cancel a long-term care policy?
Deterioration of the insured's health Age of the insured Deterioration of the insured's mental health Nonpayment of premiums Explanation Except for nonpayment of premiums, no long-term care contracts can be canceled. Furthermore, an insured's age or the deterioration of the insured's mental or physical health cannot be the basis for an insurer's refusal to renew a longterm care contract. Reference: 21.12 in the License Exam Manual
Which of the following sets the requirements that must be met for long-term care insurance policies to be considered "Qualified"?
ERISA HIPAA PPACA FCRA Explanation The Health Insurance Portability and Accountability Act of 1996 (HIPAA) spells out specific requirements that must be met in order to be considered "Qualified" and take advantage of income tax benefits. Reference: 21.8 in the License Exam Manual
Which of the following statements regarding group long-term care insurance is NOT true?
Employers choose plan coverage for participants. Group rates are lower. Plans are tailored to meet individual needs. Evidence of insurability is not required. Explanation Group long-term care policies have lower rates, and evidence of insurability is not required. However, plans are not tailored to the individual; the employer chooses coverage for all employees who are participating in the plan. Reference: 21.10 in the License Exam Manual
Which of the following provisions gives a long-term care policyowner the option to purchase additional insurance amounts within specified parameters regardless of insurability?
Guarantee of benefits Guarantee of insurability Guaranteed renewability Guaranteed coverage Explanation A guarantee of insurability provision 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. Reference: 21.6.4 in the License Exam Manual
Becky wants to make sure that she has insurance to protect herself if she eventually needs long-term custodial or nursing home care. Which type of policy will cover these types of care?
Medicare supplement insurance Medicaid Long-term care insurance Medicare Explanation Although Medicare and Medicare supplement insurance help protect the elderly against the costs of medical care, neither program covers long-term custodial or nursing home care. Medicaid covers some of the costs associated with long-term care, but it is available only to individuals without significant assets. Long-term care insurance is designed to cover the costs of long-term custodial or nursing home care. Reference: 21.5 in the License Exam Manual
All of the following conditions are typically covered in a long-term insurance policy EXCEPT
Parkinson's disease Alzheimer's disease senile dementia alcohol dependency Explanation Most LTC insurance policies exclude coverage for drug and alcohol dependency, acts of war, self-inflicted injuries, and nonorganic mental conditions. Organic cognitive disorders, such as Alzheimer's disease, senile dementia, and Parkinson's disease, are almost always included. Reference: 21.7 in the License Exam Manual
All of the following are types of care defined in long-term care insurance policies EXCEPT
adult day care respite care home day care home health care Explanation The types of care that are defined in long-term care insurance policies include home health care, adult day care, respite care, and assisted living facilities. Reference: 21.5 in the License Exam Manual
A deductible that is measured in time rather than dollars is called
an incorporation period a probationary period an exception period an elimination period Explanation A term used both in disability and long-term care insurance is elimination period. This is the period of time an insured must pay out-of-pocket for care before the policy will begin to pay benefits. An elimination period is considered a time deductible. Reference: 21.6.3 in the License Exam Manual
Skilled nursing long-term care is provided
around the clock only in hospitals intermittently only in assisted living facilities Explanation Skilled nursing care is provided on a 24-hour basis and may only be performed by licensed nurses under a doctor's orders. This is often referred to as facility-based care. Reference: 21.5 in the License Exam Manual
All of the following are activities of daily living EXCEPT
bathing eating dressing reading Explanation The activities of daily living include bathing, dressing, toileting, transferring, continence, and eating. Reading is not a measurement of a person's ability to live independently. Reference: 21.4.1 in the License Exam Manual
One of the requirements of a qualified long-term care policy is the inability of an insured to perform some number of the activities of daily living by themselves. Which is considered a measurement of the most impaired person?
continence eating bathing dressing Explanation The activity that provides a measure of the most impaired person is eating. Bathing is the measurement attributed to the least impaired person. The other activities are dressing, toileting, transferrin and continence. Reference: 21.4.1 in the License Exam Manual
Which of the following is NOT one of the six activities of daily living?
dressing shopping bathing eating Explanation The six activities of daily living are bathing, dressing, toileting, transferring, continence, and eating. Reference: 21.4.1 in the License Exam Manual
A long-term care policy will cover all of the following EXCEPT
home health care nursing care custodial care emergency hospital care Explanation Long-term care insurance covers skilled and intermediate nursing care, home health care, and custodial care. It does not cover benefits that would be paid by the following kinds of insurance: basic Medicare supplement; basic hospital expense; basic medical-surgical; hospital confinement indemnity; major medical expense; disability income protection; accident-only; and specified disease or accident. Treatment given in an emergency room setting would be covered by a hospital expense policy. Reference: 21.5 in the License Exam Manual
An optional benefit that allows an insured to buy additional coverage at certain times using their attained age is
inflation protection guaranteed benefits guaranteed insurability nonforfeiture benefits Explanation Guaranteed insurability is an option that allows an insured to purchase additional coverage at his attained age without having to provide evidence of insurability. Reference: 21.6.4 in the License Exam Manual
If a long-term care policy is considered tax qualified,
its benefits will qualify for tax-exempt treatment it must base premiums solely on the insured's age, health, and benefits it must conform to certain standards established by the individual state in which it is offered it can be offered as an employee benefit by an employer Explanation 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). Reference: 21.8 in the License Exam Manual
An insurance policy benefit that increases benefits to keep up with anticipated cost increases for long-term care services is said to have
loss of income protection guaranteed benefits Medicare supplemental protection inflation protection Explanation All insurers offering long-term care policies must offer policyholders the option to buy a policy with inflation protection. Reference: 21.6.4 in the License Exam Manual
A long-term care policy can be terminated because of the insured's
nonpayment of premiums age loss of physical capability deterioration of mental capacity Explanation Long-term care policies cannot be terminated on the grounds of the insured's age, deterioration of mental capacity, or loss of physical capability. Reference: 21.11 in the License Exam Manual
Skilled nursing care differs from intermediate care in which of the following ways?
Skilled care encompasses rehabilitation, while intermediate care is care given to meet daily personal needs, such as bathing and dressing. Skilled care must be available 24 hours a day, while intermediate care is daily, but not 24-hour, care. Skilled care must be performed by skilled medical professionals, whereas intermediate care does not require medical training. Skilled care is typically given in a nursing home, while intermediate care is usually given at home. Explanation Skilled care is daily nursing care ordered by a doctor and performed by skilled medical personnel. It is available 24 hours a day, and it is typically administered in nursing homes. Intermediate care is occasional or rehabilitative care ordered by a doctor and is also performed by skilled medical personnel, typically in nursing homes. It is provided for stable conditions that require daily, but not 24-hour, supervision. Reference: 21.5 in the License Exam Manual
Which of the following statements explains why a person would NOT be a good applicant for a long-term care insurance policy?
He already has a long-term disability policy. Because of his financial situation, he must rely on Medicaid to pay the cost of long-term care. He has a Medicare supplement policy that will cover the cost of long-term care. He has substantial savings put aside to cover the cost of long-term care. Explanation If a person is destitute, Medicaid will pay the cost of a long-term care. Because the cost of long-term care can be high, often as much as $50,000 or more a year, even a large savings is not a guarantee of continued care. Medicare supplement policies do not pay LTC costs, nor do disability policies. Reference: 21.3.2 in the License Exam Manual
Which of the following is NOT one of the requirements for a policy to be considered "Qualified"?
Insureds must be given a 30-day free look period. Insureds must have a chronic illness that is expected to last for a minimum of three months. Policies must state renewal conditions (guaranteed renewable) on the first page. Policies may include optional coverage for reimbursement of certain Medicare expenses. Explanation Coverage must be for long-term care expenses only and may not reimburse expenses under Medicare. Reference: 21.8 in the License Exam Manual
What protects an insured against unintentional lapse?
Insureds receive a second notice in the mail Another individual also receives the premium due notice The insurer calls all insureds over the age of 80 Insurers email a reminder to the insured 30 days before issuing a notice of cancellation Explanation The insurer must be given the name of another individual to whom a premium notice will be sent if the policy enters its grace period. Reference: 21.12.2 in the License Exam Manual
Qualified long-term care policies must meet the specific requirements of
Medicare IRMI Medicaid HIPAA Explanation To receive preferential tax treatment, long-term care policies must meet the rules and requirements set forth by the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Reference: 21.8 in the License Exam Manual
State long-term care insurance partnership programs are a joint effort of all of the following EXCEPT
Medicare state insurance departments commercial insurers Medicaid Explanation To encourage more individuals to purchase long-term care insurance, qualified state long-term care partnership programs were created as a joint effort of commercial insurers, the state's insurance department, and the state Medicaid agency. Reference: 21.9 in the License Exam Manual
Assisted living facilities provide
social networking at a facility other than the insured's home care for people who are no longer independent housing, meals, and help with personal care housing for families of terminally ill patients Explanation Assisted living facilities are generally for senior citizens who are still able to live independently but want the combination of housing, meal preparation, and personal and social support services. Medical care is generally available on the premises around the clock. Reference: 21.5 in the License Exam Manual
When marketing long-term care insurance, the insurer or agent must consider
the commission amount possible referral business if the insured is likable the suitability of the purchase Explanation One of the marketing standards for long-term care insurance is considering whether the purchase of a policy is suitable for the applicant's needs, objectives, and circumstances. Reference: 21.12.1 in the License Exam Manual
Which of the following statements regarding the respite care provision under a long-term care policy is CORRECT?
It pays a benefit for a family caregiver to get away from her duties for a short period of time. It pays a benefit to reimburse other family members who provide care for the insured. It pays a benefit for the insured to return home for short visits. It pays a benefit for the insured to take a break at an approved day spa or adult day care facility. Explanation 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. Reference: 21.5 in the License Exam Manual
Which of the following statements regarding home health care is NOT correct?
Most long-term care policies do not provide coverage for home health care. The services provided under home health care include physical therapy and certain types of custodial care. The care needed is able to be provided without the insured having to be confined to a nursing home. Home health care is an extension of intermediate custodial care. Explanation 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 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. Reference: 21.5 in the License Exam Manual
Which of the following statements regarding the elimination period in a long-term care policy is NOT true?
The longer the elimination period, the lower the premium. The elimination period can be considered a time deductible. The insured selects the length of the elimination period. The longer the elimination period, the higher the premium. Explanation To make the policy premium more affordable, the insured may select a longer elimination period. This period acts as a time deductible: care must be received for a specified number of days before the benefits begin to pay for the expenses. Reference: 21.6.3 in the License Exam Manual
A qualified long-term care insurance policy must contain which of the following requirements?
Coverage for conditions that result from war Coverage for drug and alcohol dependency A probationary period of no longer than 180 days Guaranteed renewability Explanation As a result of the 1996 Health Insurance Portability and Accountability Act (HIPAA), all long-term care policies sold today must be guaranteed renewable. The insurer cannot cancel the policy and must renew coverage each year, as long as the insured pays the premiums. Reference: 21.8 in the License Exam Manual
Which of the following is an optional benefit to a long-term care insurance policy?
Home day care Tax incentives Nonforfeiture benefit Medicare Explanation Nonforfeiture benefits are one of the optional benefits that may be added to a long-term care insurance policy. This benefit provides for either a growth in cash value or for a guaranteed return of some stated percentage of the premium, minus any paid benefits if the policy is lapsed or surrendered. Reference: 21.6.4 in the License Exam Manual
Which of the following terms describes the ability to perform certain independent tasks?
Listing of daily activities Activities of daily living Daily tasks of living Activities of daily tasks Explanation Activities of daily living (ADLs) are a standardized list of routine and basic functions that are used to determine a person's ability to live independently. Reference: 21.4.1 in the License Exam Manual
Which of the following types of care is described as a broad range of medical, personal, and environmental services designed to assist individuals who have lost their ability to remain completely independent in the community?
Long-term care In-house care Chronic care Specified care Explanation Long-term care (LTC) refers to care provided for an extended period of time, normally more than 90 days. Depending on the severity of the impairment, assistance may be given at home, at an adult care center, or in a nursing home. Reference: 21.3.3 in the License Exam Manual
MAG Trading Co. established a tax-qualified, long-term care insurance plan for its employees. Which of the following statements is NOT correct?
MAG Trading's employees can exclude from their income any employer-paid premium contributions. MAG Trading can take a deduction for the premiums it pays. Premiums paid by MAG Trading are considered a necessary business expense for tax purposes. Benefits received from the plan are subject to income tax. Explanation 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. Reference: 21.8 in the License Exam Manual
Which of the following statements about long-term care coverage is CORRECT?
Medicare and Medicaid are designed to cover a significant portion of the costs of long-term custodial or nursing home care. Long-term care insurance provides a broad range of coverage for services rendered at home, at adult care centers, or in nursing homes. Medicaid provides long-term care coverage for individuals, regardless of income levels. Medicare supplement policies provide a significant amount of long-term care coverage. Explanation Although Medicare and Medicare supplement policies protect the elderly against the costs of medical care, neither covers a significant portion of long-term custodial or nursing home care. Although Medicaid provides some long-term custodial care coverage, only individuals who are almost destitute are eligible to receive benefits. Long-term care insurance provides a broad range of coverage for services rendered at home, at adult care centers, and in nursing homes. Reference: 21.6 in the License Exam Manual
A long-term care policy cannot limit or exclude coverage for which of the following conditions?
Mental disorders Intentionally self-inflicted injuries Service provided outside the United States Alzheimer's disease Explanation Although some mental or nervous conditions may be limited or excluded, benefits may not be excluded on the basis of Alzheimer's disease or other organic brain disorders. Reference: 21.7 in the License Exam Manual
Which of the following is a common benefit trigger for a long-term care policy?
Prior hospitalization Cognitive or mental impairment Inability to operate a motor vehicle Retirement Explanation A benefit trigger is an event or condition that must occur before policy benefits become payable. Diagnosis of chronic illness is a benefit trigger and can be based on 2 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 2 activities of daily living (ADLs), which are eating, toileting, transferring (getting out of bed), bathing, dressing, and continence. An individual would also be considered chronically ill if he requires substantial supervision to protect his health or safety because of severe cognitive impairment. Reference: 21.4.2 in the License Exam Manual
Care that is provided on an intermittent basis by licensed nurses is known as
intermediate care custodial care home health care skilled nursing care Explanation There are 3 levels of long-term care. Skilled nursing care is provided on a 24-hour basis, 7 days per week and may only be performed by licensed nurses under a doctor's orders. Intermediate care is intermittent care and is also provided by licensed nurses under a doctor's orders; however, care is provided fewer than 7 days a week or less than 8 hours per day. Custodial care may be provided by someone without medical training who is hired to help the insured in performing ADLs. Reference: 21.5 in the License Exam Manual
All of the following are levels of long-term care EXCEPT
intermediate nursing care hospital care skilled nursing care custodial care Explanation The 3 levels of long-term care are skilled nursing care, custodial care, and intermediate nursing care. Skilled nursing care is continuous, around-the-clock care provided by licensed medical professionals under the direct supervision of a physician. Custodial care provides assistance in meeting daily living requirements, such as bathing, dressing, getting out of bed, and toileting, and it is given under a doctor's order. Intermediate nursing care is provided by RNs, licensed practical nurses, and nurses' aides under the supervision of a physician. Reference: 21.5 in the License Exam Manual
To be considered qualified, a long-term care insurance policy must conform to requirements concerning all of the following EXCEPT
premium charges marketing standards policy replacement policy conversion Explanation To be considered a qualified contract, a long-term care insurance policy must follow NAIC's long-term care insurance model regulations, which address the following: policy replacement, conversion, marketing standards, prohibitions on limits and exclusions, and policy renewability, among other things. These regulations do not address premium charges. Reference: 21.8 in the License Exam Manual
Regarding long-term care insurance, the existence of symptoms that would cause an ordinarily prudent person to seek diagnosis or treatment, or a condition for which medical advice or treatment was recommended by or received from a provider of health care services within 6 months before the effective date of an insured's coverage, is known as
a pre-existing condition previous symptoms the 6-month rule a pre-coverage warranty Explanation The most restrictive definition allowed for a pre-existing condition in long-term care insurance is the existence of symptoms that would cause an ordinarily prudent person to seek diagnosis or treatment, or a condition for which medical advice or treatment was recommended by or received from a provider of health care services within 6 months preceding the effective date of an insured's coverage. Reference: 21.12.2 in the License Exam Manual
Javier purchased a long-term care insurance policy with an optional benefit that provides a yearly increase in benefits. His policy offers
a return of benefits option an insurability option nonforfeiture benefits inflation protection Explanation Inflation protection is an optional benefit that provides for automatic annual increases in benefits based on a cost-ofliving adjustment (COLA). The increase is stated as a percentage and is compounded annually. Reference: 21.6.4 in the License Exam Manual
For a long-term care insurance policy to begin paying benefits, the insured must
be diagnosed as chronically ill receive skilled nursing care for at least 3 days be hospitalized for at least 3 days be diagnosed as terminally ill Explanation 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. The illness must be expected to last a minimum of 90 days. Reference: 21.8 in the License Exam Manual
All of the following are required long-term care insurance standards EXCEPT
providing a shopper's guide and an outline of coverage a clearly visible notice on the policy that it is guaranteed renewable requiring an applicant to sign a Notice Regarding Replacement, if necessary a 10-day free-look period Explanation The required free-look period for a long-term care insurance policy is 30 days. All of the other statements are marketing standards. Reference: 21.12.1 in the License Exam Manual
Long-term care policies can limit or exclude coverage for all of the following EXCEPT
self-inflicted injuries treatment provided without cost to the insured alcoholism or drug addiction a family history of a heart condition Explanation Long-term care policies cannot exclude or limit coverage by type of illness, treatment, medical condition, or accident. They exclude war or acts of war, alcohol or drug abuse, self-inflicted injuries, treatment provided at no cost to the insured (i.e.; veteran's hospital), and mental illness and nervous disorders for which there is no demonstrable organic cause. Dementia, Alzheimer's disease and other organic-based mental illnesses are covered. Reference: 21.7 in the License Exam Manual
