Activities of Daily Living (ADL)

Activities of daily living are the basic self-care tasks used to measure functional capacity, and in United States tax and insurance law they are a closed, named list rather than a general idea. Internal Revenue Code section 7702B(c)(2)(B) provides that "each of the following is an activity of daily living: (i) Eating. (ii) Toileting. (iii) Transferring. (iv) Bathing. (v) Dressing. (vi) Continence." NAIC's Long-Term Care Insurance Model Regulation, which states adopt with variations, requires a long-term care policy that uses the term to define it as meaning "at least bathing, continence, dressing, eating, toileting and transferring", and then defines each one individually. The two authorities describe the same six items, which is why a long-term care policy sold anywhere in the country is measuring the same things. The acronym ADL is used interchangeably with the full phrase, including in insurance documents and clinical assessments.

What each activity means. The model regulation supplies definitions, and they are narrower and more specific than the everyday words. Bathing is "washing oneself by sponge bath; or in either a tub or shower, including the task of getting into or out of the tub or shower". Dressing is "putting on and taking off all items of clothing and any necessary braces, fasteners or artificial limbs". Transferring is moving into or out of a bed, chair or wheelchair. Toileting is "getting to and from the toilet, getting on and off the toilet, and performing associated personal hygiene". Continence is the ability to maintain control of bowel and bladder function, or, where that is not possible, the ability to perform the associated personal hygiene including caring for a catheter or colostomy bag. Eating is "feeding oneself by getting food into the body from a receptacle (such as a plate, cup or table) or by a feeding tube or intravenously". Note what several of those include: help getting into the shower counts toward bathing, and managing a colostomy bag counts toward continence.

The trigger, and its second route. Section 7702B(c)(2)(A) defines a chronically ill individual as one certified by a licensed health care practitioner as being unable to perform, without substantial assistance from another individual, at least two activities of daily living for a period of at least 90 days due to a loss of functional capacity; or as having a similar level of disability as determined under regulations; or as requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment. The middle route is dormant rather than usable: the NAIC's model regulation records that the Treasury has prescribed no such standard, that federal tax law does not require a qualified contract to include that trigger, and that the model regulation does not mandate its inclusion. So in practice a claimant reaches the definition by the activities route or by the cognitive route. Cognitive impairment is a separate route rather than a seventh activity, and it is the route that matters for dementia, where someone may remain physically able to bathe and dress while being unsafe left alone. The model regulation defines cognitive impairment as a deficiency in short or long-term memory, orientation as to person, place and time, deductive or abstract reasoning, or judgment as it relates to safety awareness.

The counting rules, which are three different numbers. This is where careful reading pays. First, the certification under the first route is about at least two activities. Second, and separately, the Code provides that a contract is not a qualified long-term care insurance contract "unless the determination of whether an individual is a chronically ill individual described in subparagraph (A)(i) takes into account at least 5 of such activities" — so a qualified contract may leave one of the six out of its own test, but not two. Third, on the state side, the model regulation says eligibility for payment of benefits "shall not be more restrictive than requiring either a deficiency in the ability to perform not more than three (3) of the activities of daily living or the presence of cognitive impairment", which permits a policy to require up to three deficiencies. Insurers may also add activities beyond the six, provided the additions are defined in the policy. So "two of six" is an accurate description of the common contract and is not the statutory floor.

How a deficiency is measured, and by whom. The model regulation limits how strictly an insurer may define a deficiency: it may be no more restrictive than requiring the hands-on assistance of another person to perform the activity, or, where the deficiency is cognitive, than requiring that supervision or verbal cueing by another person is needed to protect the insured or others. Hands-on assistance is itself defined, as physical assistance without which the individual would not be able to perform the activity. Assessments of activities of daily living and cognitive impairment must be performed by licensed or certified professionals such as physicians, nurses or social workers, and the Code limits certification to a licensed health care practitioner, meaning a physician as defined in the Social Security Act, a registered professional nurse, a licensed social worker, or others the Treasury prescribes.

The 90 days is not a wait. The Code's first route requires that the inability be expected to last at least 90 days, which is a statement about prognosis at the time of certification. The model regulation records the Internal Revenue Service's position that "the 90-day requirement under this benefit trigger does not establish a waiting period before which benefits may be paid or before which services may constitute qualified long-term care services". The wait, where there is one, comes from the policy's own elimination period, which is a separate provision and may be shorter, longer or zero. The two are regularly conflated because both are commonly ninety days.

A licensed health care practitioner assesses the individual and certifies whether they meet one of the routes in the statutory definition. The insurer applies the policy's own benefit trigger, which must be at least as generous as the model regulation permits and, for a tax-qualified contract, must take into account at least five of the six activities. If the trigger is met, the policy's elimination period runs and then benefits become payable. The certification has to be current: the Code excludes an individual who otherwise meets the requirements unless a licensed health care practitioner has certified within the preceding 12-month period that they do, and an insurer is not prevented from assessing more often than that.

A worked example of the five-of-six rule, and why the arithmetic is not intuitive. Suppose a tax-qualified policy takes into account five activities and omits continence, which the Code permits. An insured can no longer bathe without hands-on assistance and can no longer maintain continence. In ordinary language that is two activities of daily living. Under this contract's own test it is one, because continence is not among the five the contract counts, and a policy requiring a deficiency in two will not pay. Change the contract to one that counts all six and the same person qualifies. The lesson is not that five-of-six contracts are defective, because the Code expressly allows them, but that the number in the brochure and the list in the policy are two different facts and only the second decides a claim.

Three things are therefore worth reading in any long-term care contract before it is needed. Which activities does the policy count, and does it add any beyond the six? How many deficiencies does it require, remembering that the model regulation permits up to three? And what is the elimination period, which is the actual wait and is unrelated to the 90-day prognosis in the trigger?

Pros

• The list is fixed by statute, so every tax-qualified policy is measuring the same six things and contracts can genuinely be compared on this point.
• Each activity has a regulated definition, which removes much of the argument about what counts as needing help.
• The cognitive impairment route works independently of the activities, so dementia is covered without the insured having to fail physical tasks.
• Where the NAIC model regulation has been adopted, it caps how strictly a deficiency may be defined and requires assessments by licensed or certified professionals.

Cons

• The trigger is a real threshold, and a person who needs a great deal of help while still managing five of the six activities may not meet it.
• A qualified contract may leave one activity out of its own test, and the one left out can be the one an insured actually loses.
• A policy may require a deficiency in up to three activities rather than two, which is a materially harder standard for the same premium dollar.
• The 90-day prognosis and the policy's elimination period are separate and are routinely confused, which produces wrong expectations about when money arrives.
• Certification must be renewed within each preceding 12-month period, and an insurer may reassess more often than that.