According to the National Institute of Mental Health Disorders, about 26 percent of Americans ages 18 and older suffer from a diagnosable mental disorder in a given year. Nearly 10 percent of Americans suffer from a depressive illness, such as major depression, bipolar disorder, or dysthymia.
What happens if your mental illness limits or even prevents you from working? Does disability insurance cover mental health conditions?
Mental illness is not by itself a disability. However, there is a class of mental health disabilities called psychiatric disabilities. According to the Center for Psychiatric Rehabilitation at Boston University, these refer to mental illnesses that significantly interfere with major life activities, such as working.
On the center’s website, it says:
“The irregular nature of mental illness may create problems in establishing or maintaining consistent work or school patterns. Some individuals may need time off for medical appointments or to recuperate. The irregular nature of mental illness might also impair an individual’s performance.”
The Social Security Administration recognizes several mental disorders that can cause long term disability and qualify sufferers for Social Security Disability Insurance (SSDI) benefits. These include:
- Anxiety disorders
- Asperger’s Syndrome
- Bipolar Disorder
- Drug addiction
- Memory loss
- Mood disorders
- Obsessive-Compulsive Disorder
- Organic mental disorders
- Panic attacks
- Somatoform disorders
To qualify for SSDI, conditions must:
- Be diagnosed by a doctor.
- Prevent you from doing any work which you have done up until now.
- Render you unable to reasonably be trained for other work that is available at the time of your disability.
- Be expected to last at least a year.
Most private disability insurance companies also require that you be under the care of a physician to claim a mental disability. That’s because sufferers don’t always seek regular treatment. Many stop taking their medication. Any failure to seek medical help with a mental disorder and to demonstrate a desire to get better can be grounds for the insurance company to deny your claim.
According to the Integrated Benefits Institute, mental issues are the fourth most common reason for disability claims, accounting for about 9 percent of all claims.
In general, long term disability insurance will pay benefits equaling 60 percent to 80 percent of your work-related income. If you earn $4,000 in after-tax income, an LTD policy would pay $2,400 to $3,200 a month if you suffer a qualifying disability.
How an insurance company covers mental health disability depends on whether it was a pre-existing condition when you applied or whether it developed after you purchased coverage.
Insurers have different underwriting guidelines. Compared with physical disabilities, benefits are often limited in cases of mental health disabilities because:
- They are more difficult to diagnose than physical disabilities.
- It’s more challenging to prove their effect on job performance and ability.
- They are more likely to be treatable than some physical disabilities that are permanent.
Some insurers will cover certain mental conditions but not others. Others may stipulate that if you have attempted suicide in the past, you cannot collect benefits for at least 10 years after the policy has been issued.
Another common way that some insurers limit benefits for mental and nervous disabilities is to impose a cap on how long you can collect benefits. For example, some carriers place a 24-month limit on disabilities, regardless of the length of your policy benefit period.
On the other hand, a few disability insurance companies do not have limitations on mental/nervous disorder claims.
You should research and obtain quotes from multiple carriers before deciding on disability insurance. This is especially true if you’re concerned about having a mental health disability. Insurers treat underwrite and treat mental health conditions differently.
A licensed, independent insurance agent can help you through the process. They can do the research and legwork, then offer recommendations.
From the time you submit an application, it may take four to six weeks before your policy is issued. In some cases, it could take longer.
Once you’ve settled on a policy, you can apply for coverage. This involves filling out a short form. The application gathers personal, professional, and basic medical information.
You or your agent will submit the form to the insurer. You will also provide supporting documentation. This includes proof of employment and income. You will also have to authorize the release of medical records. Some insurers will also check driving records and your credit report. If so, you will have to authorize the release of those documents.
The insurer will schedule a paramedical exam. This will include an interview about your medical history. The examiner will record your height, weight, blood pressure and pulse, and collect blood and urine. The whole process takes about 30 minutes.
Your exam results will be sent to the insurance company’s underwriter. They will also review your medical, financial, and employment records. Your personal physician will be asked to fill out a form called an attending physician’s statement.
Based on your risk assessment, you will receive an offer with a premium amount. If you accept the offer, the insurance company will issue your policy. If it’s unsatisfactory, you can start the process over with another carrier.
If a mental health disability limits your ability to work, you can file a claim for benefits with the insurer. You should contact the insurance company or your agent as soon as possible. The insurance company will respond by sending forms for you to complete.
You should be prepared to inform the insurer of your diagnosis and the date you became disabled.
To collect benefits, you will have to prove to the insurance company that:
- You have suffered a disabling accident or illness; and
- The disabling event will adversely impact your ability to practice medicine.
This will be accomplished through medical records and a written statement from your treating physician. Records will include your medical history, physician notes, MRIs, x-rays, and lab reports.
The written statement should:
- Detail the nature of your illness.
- Describe the treatment plan.
The statement should also verify one of the following:
- You cannot work at all.
- You will be limited in what tasks you perform.
- You will be limited by how much time you can work.
Some experts advise enlisting an attorney before making contact with the insurance company. Insurance companies may contest a disability claim. If so, having legal counsel can help move the process along.
Jack Wolstenholm is the head of content at Breeze.
The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.