Millions of Americans suffer from a wide variety of emotional illnesses. According to the National Institutes of Health, as of 2019, one in five U.S. adults lives with a mental illness, among whom 13.1 million struggle with serious mental illness. This number represents 5.2% of all U.S. adults. With the advent of the COVID-19 public health emergency and the resulting economic recession, these numbers have worsened, as about 4 in 10 adults in the U.S. have reported symptoms of anxiety or depressive disorder, up from 1 in 10 adults who reported these symptoms from January to June 2019. For many, the severity of their ongoing emotional illnesses prevents them from working. If you are considering stopping work due to the severity of your mental illness, you may be eligible for a variety of disability benefits.
The two most common disability benefits available to those suffering from mental illness are Social Security Disability benefits and long term disability (LTD) insurance benefits. Other potential benefits include short term disability insurance, Supplemental Security Income, and disability retirement benefits offered to employees of the federal government, many state governments, and the small percentage of employees in the private sector covered by pension plans. This article will focus on the issues disability claimants will experience when applying for LTD benefits.
Long Term Disability Insurance and Mental Health
LTD benefits are often offered as a benefit of employment administered by private insurance companies. Generally, these benefits are governed by federal law under the Employee Retirement Income Security Act (ERISA) 29 U.S.C. §1001, et seq. and regulations promulgated by the U.S. Department of Labor. 29 C.F.R. 2560.503-1 et seq. LTD benefits are payable if a claimant meets the LTD policy’s definition of disability and if the claimant’s medical condition does not fall within one of the limitations or exclusions of the LTD policy. Each policy identifies how much a claimant can receive in LTD benefits, the maximum benefit and minimum benefit a claimant is entitled to, and the maximum duration for which a claimant can receive LTD benefits.
It is important to note that an LTD policy’s definition of disability can change over time. For example, when initially filing a claim for LTD benefits it is common for claimants to have to prove that they are unable to perform the material duties of their regular occupation. But after disability benefits have been payable for 24 months, typically the insurance carrier will require the claimant to prove disability from any occupation for which they can be reasonably become qualified based on education training or experience.
For some claimants who suffer from mental illness, it is possible for their conditions to improve upon ceasing work completely. Claimants with mental illness should assess whether they believe they are precluded from working, not simply in their prior position, but in any position, especially upon receiving 24 months of benefits.
Pre-Existing Conditions and Mental Health Disability
In addition, there are a number of limitations or exclusions that may particularly impact claimants who allege disability caused or contributed to by mental illness. One exclusion to look out for is the Pre-Existing Condition Exclusion, which provides that if a claimant received treatment for a mental or physical condition during a specified period of time before his or her insurance became effective, the claimant may be ineligible to receive LTD benefits. The Pre-Existing Condition Exclusion is often drafted broadly to include conditions “whether or not diagnosed or misdiagnosed,” for which a claimant consults any licensed medical professional to receive medical treatment, services or advice; undergoes diagnostic procedures, including self-administered procedures; or takes prescribed drugs or medications.
The Pre-Existing Condition Exclusion applies similarly to both mental and physical conditions. Most of the time the pre-existing clause will only affect a disability claim filed within one year of coverage beginning under the LTD plan. In that case, coverage will generally be negated if there was treatment for the disabling condition within the so-called “look-back” period immediately preceding coverage under the Plan beginning. It is therefore advisable for LTD claimants to have worked at least one full year after their initial date of coverage to circumvent the Pre-Existing Condition Exclusion.
Mental Illness Limitations Clauses
One instance where mental health claims are treated differently from other medical claims is through a carrier invoking a mental illness limitations clause. Most LTD policies limit payment of LTD benefits to a claimant for a certain period of time (typically 24 months) if the claimant’s disability was caused or contributed by a mental disorder. Many LTD policies also have similar limitations clauses for claimants who allege disability due to a substance use disorder. Unless a claimant can establish that he or she meets the definition of disability of the LTD policy solely through other concurrent physical impairments, a claimant will typically be subject to a limited pay period if only alleging disability based on mental illness or substance use disorder, which can be a symptom of one’s mental illness.
The Courts Weigh In
Some disability claimants allege that applying a mental illness or substance use disorder limitations clause is in violation of the Mental Health Parity and Addiction Equity Act (MHPAEA), a federal law that generally prevents group health plans and health insurance issuers that provide mental health or substance use disorder benefits from imposing less favorable benefit limitations on those benefits than on medical or surgical benefits, as well as similar state mental health parity laws. The MHPAEA is limited to health insurance, however, and does not explicitly provide protections for beneficiaries of disability insurance policies. In response, some states have recognized the incompatibility between the goals of their own mental health parity statutes and mental illness limitation clauses in disability insurance policies. For example, in September 2017, the United States District Court for the District of Montana ruled that applying such limitations clauses violated Montana’s mental health parity law, which provides that a group or individual disability insurance policy in the state must provide a “level of benefits for the necessary care and treatment of severe mental illness … no less favorable than that level provided for other physical illness generally.” The Court found that the state mental health parity law voided a 24-month limit on payment for mental health claims in the LTD policy. See Sand-Smith v. Liberty Life Assurance Co. of Bos., No. CV 17-0004-BLG-SPW, 2017 WL 4169430, at *5 (D. Mont. Sept. 20, 2017). In addition, on September 25, 2020, California Governor Newsom signed Senate Bill 855 into law, which expands the California Mental Health Parity Act by prohibiting plans and insurers, including disability insurers, from limiting mental health and substance use disorder benefits or coverage to short-term or acute treatment.
Broadly speaking, however, courts have not found that the MHPAEA voids mental illness and substance use disorder limitations clauses in LTD policies, and have generally upheld the validity of such limitations clauses. In many cases, the limitations clauses at issue feature significant hairsplitting. For example, in Berkoben v. Aetna Life Insurance Co., the LTD policy at issue excepted schizophrenia, but not schizoaffective disorder, from the limitations clause. Berkoben v. Aetna Life Ins. Co., 8 F. Supp. 3d 689 (W.D. Pa. 2014). Unfortunately, the inapplicability of the MHPAEA to disability insurance policies allows insurance carriers to make such arbitrary distinctions that can be the difference between a claimant receiving disability payments until their Social Security normal retirement age and a claimant receiving disability payments for only 24 months.
Reach Out for Legal Assistance
When applying for long term disability insurance benefits, it is important for any claimant, especially those alleging disability due to mental illness, to consider the complexity of the long term disability claims process. Please be careful and consider contacting me if you have questions about your long term disability insurance claim. Please feel free to call at 301.563.6685 for a free consultation regarding your claim.
Contact Peter Casciano, Esq.
About Andalman & Flynn, P.C.: Founded in 1998 in downtown Silver Spring, Maryland, Andalman & Flynn has forged a distinguished reputation for legal excellence. The firm represents individuals seeking disability benefits throughout the country and practices family law throughout Maryland and the District of Columbia. The firm focuses on cases that impact the rights of everyone, and are there for clients when responsive legal help is most critical. The firm has provided legal analysis on national and local television and radio, and their attorneys often testify before legislative bodies and are routinely invited to contribute to prominent legal publications. For more information about Andalman & Flynn, please visit the website at andalmanflynn.com or call 301.563.6685