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Do Long-Term Disability Insurance Policies Cover Mental Illness?

As health professionals, and the public at large, have come to understand mental illness more comprehensively, the frequency of diagnoses of psychiatric conditions has skyrocketed. Statistics from 2021 estimate that around 13% of the world’s population suffer from either a mental health or substance abuse disorder.

However, while society’s acceptance of mental illness awareness has increased dramatically, there are still important differences between physical and mental conditions in terms of their treatment by the disability insurance industry. It is possible to receive monthly benefits from a long-term disability insurance policy for a psychiatric condition, but there are important limitations you need to be aware of.

Mental Illness vs. Physical Illness

The American Psychiatric Association defines mental illnesses as health issues that involve “changes in emotion, thinking, or behavior.” These issues may cause patients distress, as well as difficulties in social and/or professional contexts. The severity of mental illness varies hugely from one patient to the next; one person might only experience mildly distressing symptoms, while another could struggle to perform even the most basic lifestyle or work activities for weeks on end.

Psychiatric illnesses fall into a range of diverse categories.

Anxiety Disorders

These conditions cause recurrent and debilitating feelings of fear or uncertainty. These feelings can occur in stressful situations (such as ahead of an important business meeting), but they can also arise in everyday settings that do not ordinarily cause negative emotions. Anxiety disorders are the most common reported mental health conditions, affecting an estimated 40 million American adults.

Common anxiety disorders include:

  • Generalized anxiety disorder (GAD)
  • Post-traumatic stress disorder (PTSD)
  • Obsessive-compulsive disorder (OCD)

Mood Disorders

These conditions leave sufferers with erratic or consistently low moods over extended periods of time. Symptoms can include feelings of hopelessness or worthlessness, low energy, loss of interest in work or lifestyle activities, and thoughts of self-harm and/or suicide.

Bipolar disorder and depression are two of the best-known mood disorders.

Eating Disorders

These conditions involve extremely unhealthy food habits, often accompanied by a problematic outlook on health or body image. Patients with mental health conditions related to food can suffer severe physical consequences, such as malnourishment, loss of bodily functions, and even death.

Common eating disorders include:

  • Anorexia nervosa
  • Bulimia nervosa
  • Binge-eating disorder

Psychotic Disorders

These conditions make it difficult for patients to experience reality as normal, sometimes distorting their perception of the world around them to such an extent that they cannot discern what’s real from what’s not.

Schizophrenia is perhaps the best-known psychotic disorder.

The Two-Year Limitation on Benefit Payments for Mental Health Conditions

The most significant difficulty with mental health disability claims under individual or group employer sponsored ERISA plans are the almost universal two-year limitation on monthly disability insurance benefit payments. Most long-term disability insurance policies will not provide monthly payments for psychological illnesses longer than 24 months.

In light of this, insurers will often attempt to frame disabilities as mental illnesses rather than physical ones where there is some uncertainty around the true cause of the condition.

Chronic fatigue, for example, is a condition with both physical and psychological causal factors, so insurance providers often attempt to build a case that a patient has the disability for mental health reasons as there will be a limit on the number of monthly benefits payments they have to make if they succeed. Dementia is another family of conditions that insurers often try to portray as psychological despite observable physical causes, such as nerve damage.

An important factor to consider in cases like these is the original cause of the claimant’s ill health. If a physical injury leads to symptoms of mental illness (such as where a car accident victim ends up with PTSD), the claimant’s long-term disability insurance benefits should not be limited by the two-year rule if the policy paid mental illness benefits “due to” a mental illness. If the policy had mental nervous language that said, “caused by” or “contributed to,” and there were both physical and mental issues, the benefits would be limited to 24 months.

In all cases, you should review your policy carefully to learn exactly what coverage you have in relation to a given disability and any mental/nervous or other limitations.

Proving Mental Illness for the Purposes of Long-Term Disability Insurance

Mental illnesses are generally much more difficult to identify than physical health issues. If you have a broken leg, for instance, it’s easy to present x-ray evidence proving this break beyond a doubt. Such convenient proving methods do not exist for conditions like clinical depression and schizophrenia.

However, there are steps you can take to be able to prove the existence of your mental illness when the need arises. Most importantly, you need to keep all medical documentation related to assessments and treatments you have received. The opinion of your treating physician, psychologist, or psychiatrist in relation to your mental illness, and the functional limitations it imposes on you in terms of your full- or part-time job, will be crucial to the success of your claim. If you have received treatment from multiple providers, you should keep records from all of them.

You should note that short-term disability insurance policies are sometimes less likely to cover mental health claims than long-term policies. Also, remember that your long-term policy will only start paying monthly benefits after the elimination or waiting period it specifies has elapsed.

Staying Financially Secure Despite Mental Illness

Developing a disability of any type is highly challenging, but disabling mental illness poses a unique set of difficulties. If you have a long-term disability insurance policy, whether it’s individually purchased or part of an employer-sponsored group plan, you may be able to access monthly benefits to sustain your finances while you recover from a psychiatric disability.
Contact DarrasLaw today if you need help with a mental health disability claim. If your insurer has rejected your initial individual or group ERISA claim, our long-term disability attorney can work with you to devise an effective appeal strategy. We also offer free initial policy analysis and claim assistance.

DarrasLaw is Americas' most honored and decorated disability litigation firm in the country. Mr. Darras has seen more, evaluated more, litigated more, and resolved more individual and group long term disability and long-term care cases than any other lawyer in the United States.

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