Life and Health California Exam Long-Term Care Insurance 1 — Questions and Answers
Question 1: Under federal law, a long-term care insurance policy qualifies as a 'tax-qualified' policy if the insured is certified as unable to perform at least how many activities of daily living (ADLs)?
- 1 out of 6
- 2 out of 6 (Correct answer)
- 3 out of 6
- 4 out of 6
Correct answer: 2 out of 6
A tax-qualified LTC policy requires that the insured be unable to perform at least 2 of 6 ADLs (bathing, dressing, toileting, transferring, continence, eating) for a period expected to last at least 90 days.
Question 2: Which of the following is NOT one of the six activities of daily living (ADLs) used to trigger LTC benefits?
- Bathing
- Dressing
- Ambulating (walking) (Correct answer)
- Continence
Correct answer: Ambulating (walking)
The six standard ADLs are bathing, dressing, toileting, transferring, continence, and eating; ambulating (walking) is not among the federally recognized ADLs for LTC triggers.
Question 3: The 'elimination period' in a long-term care insurance policy functions similarly to:
- A premium waiver
- A deductible expressed in days rather than dollars (Correct answer)
- The policy's benefit period
- A coordination of benefits clause
Correct answer: A deductible expressed in days rather than dollars
The LTC elimination period is a time-based deductible during which the insured pays for care out of pocket before the policy begins paying benefits.
Question 4: Under California's long-term care insurance regulations, the minimum benefit period for individual LTC policies is:
- 6 months
- 12 months
- 24 months (Correct answer)
- 36 months
Correct answer: 24 months
California requires individual LTC policies to offer a minimum benefit period of at least 12 months, though 24-month and longer periods are standard for compliance with federal tax-qualified status.
Question 5: A long-term care policy that pays a fixed daily benefit regardless of the actual cost of care is called a(n):
- Reimbursement policy
- Indemnity policy (Correct answer)
- Partnership policy
- Pool of money policy
Correct answer: Indemnity policy
An indemnity LTC policy pays a fixed daily benefit as specified in the policy, regardless of what the actual long-term care services cost.
Question 6: The California LTC Partnership Program allows policyholders to:
- Share LTC benefits with a spouse
- Protect personal assets equal to the LTC benefits paid when applying for Medi-Cal (Correct answer)
- Receive LTC benefits from both private insurance and Medi-Cal simultaneously
- Deduct LTC premiums from California state income taxes
Correct answer: Protect personal assets equal to the LTC benefits paid when applying for Medi-Cal
The California LTC Partnership Program lets policyholders protect a dollar of personal assets from Medi-Cal spend-down requirements for every dollar of LTC benefits their policy pays.
Life and Health California Exam Long-Term Care Insurance 1
Under federal law, a long-term care insurance policy qualifies as a 'tax-qualified' policy if the insured is certified as unable to perform at least how many activities of daily living (ADLs)?