Plain version: a long-term care policy does not pay because of a diagnosis. It pays when the insured can no longer take care of themselves, and the policy spells out that test, called the benefit trigger.
Benefit triggers (either one can start benefits):
Activities of daily living (ADLs): a policy that is not federally qualified may not require more than impairment in 2 of these 7 ADLs: eating, bathing, dressing, ambulating, transferring, toileting and continence. The federally qualified list has six; ambulating is the one it leaves out.
Cognitive impairment: loss of intellectual capacity, including from Alzheimer's disease, that requires continual supervision to protect the insured or others. Someone who can still do every ADL can qualify this way.
A prior hospital stay cannot be required.
Under a federally qualified policy, the licensed health care practitioner's written certification is renewed every 12 months.
Individual, group and tax status:
Coverage is sold as individual and group policies. Group policies include those issued to employers, labor organizations and qualifying associations. An association must have at least 100 persons at the outset, be organized in good faith for a primary purpose other than obtaining insurance, and have at least one year of active existence.
Tax-qualified (federally qualified) contracts must be guaranteed renewable, may not have a cash surrender value or other money that can be borrowed, pledged or assigned, and cover qualified long-term care services. Premiums can count as a medical expense up to a yearly per-person cap that rises with age.
Non-tax-qualified policies: an insurer that offers federally qualified contracts must also file, offer and market non-qualified coverage at the same time, and each form must say on page one whether it is intended to be federally qualified.
Guaranteed renewability and rates:
Under a guaranteed renewable policy, the insurer cannot change the coverage terms or refuse renewal, and cannot end the policy because of the insured's age or declining health. It may change premium rates, but only for an entire class of insureds, never for one person. A policy whose rates can never change is noncancellable.
A premium rate schedule must be filed with and approved by the commissioner before the policy is offered or sold to a California resident.
Since January 1, 2021, a policy cannot be issued on a rate schedule with increases tied to attained age or policy duration.