Effort seeks equal disability coverage

In 49 states, long-term disability benefit claims for physical ailments – like cancer, arthritis and stroke – are assessed differently than mental health issues such as major depressive disorder, anxiety, PTSD and eating disorders. Roughly 3.5million American employees are out of work for a behavioral health disability.

But one state has disability coverage parity, in which mental health conditions are covered in the same way as physical health conditions: Vermont.

A recent Milwaukee Journal Sentinel investigation of Wisconsin federal court lawsuits challenging the denial of long-term disability claims indicated a much higher denial rate for mental health issues. More than one-third of the suits involved workers with mental health conditions, yet it's estimated that less than 10% of claims are related to mental health. Interviews with patients, doctors, insurers and attorneys showed a clear incentive to deny long-term disability insurance coverage for mental health conditions.

For 99% of group disability plans sold in the United States, long-term disability benefits for a behavioral health condition max out at 24 months, often leaving those with severe and persistent mental health symptoms in dire straits. The U.S. passed its first federal health parity law years ago: the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008. However, disability carriers have continued to find loopholes, which has translated to people paying billions of dollars out of pocket to access the health care they need, according to White House domestic policy council director Neera Tanden.

Also in 2008, Vermont determined that limitations imposed by disability carriers were discriminatory. Specifically, the state's new policy disallowed the practice of limiting mental health disability coverage to 24 months. In other words, the coverage would extend as long as a patient needed it – the same as for a physical disability.

Ahead of Vermont's 2008 policy change, disability carriers lobbied against it, warning of a steep rise in insurance costs, as much as 25%. The higher costs never materialized.

In fact, more than 15 years later, Vermont officials have found that insurance parity makes economic sense because it gets people healthy and back to work.

"When you have equal and ready access, and access that limits hurdles, that can save the system money over time," said Kevin Gaffney, Vermont's commissioner of the Department of Financial Regulation. "People can get the services they need and the benefits they're entitled to."

In 2023, after a yearlong investigation, the federal Employee Retirement Income Security Act advisory council recommended that the U.S. Department of Labor promote the elimination of the 24-month limitation on mental health disability benefits – again, putting them on par with physical benefits.

The U.S. departments of Labor and Health and Human Services, and the Treasury, unveiled new requirements in September 2024, reemphasizing that mental health and substance use disorder benefits must be offered to the same degree as medical and surgical benefits. Still, acting Secretary of Labor Julie Su said "laws are only as good as enforcement."

Mental health advocate Patrick Kennedy, a former U.S. representative, told the Journal Sentinel that disability carriers need to follow the path of regular health insurers. He called on Congress to finally add some teeth to the effort: It "must require that if you have a mental health disorder like OCD, you get the same disability insurance as if you had Parkinson's."

Despite recommendations and endorsements, it remains unclear if the new Congress has any will to prioritize a bill of this magnitude, especially if disability carriers have a say. Just as disability carriers in Vermont expressed concern over a 25% increase in cost – before being proven wrong – the America Council of Life Insurance shared a survey with the advisory council from its member companies, which include Unum, The Hartford and Prudential, warning of a possible 20% increase in premium loads on average.

In addition to rhetoric about higher premiums, murmurs of fraud have remained a perennial concern across disability carriers since the inception of long-term disability insurance in the 1960s.

Jonathan Feigenbaum, a Massachusetts attorney with close to four decades of representing individuals in disability cases, said he simply doesn't come across "phonies" or malingerers. Much of that has to do with the fact that, for the majority of employees applying for long-term disability claims, they'd be getting – at best – 60% to 70% of their annual earnings.

In Feigenbaum's experience, the bulk of people applying for disability feel connected to their jobs. "People get some identity out of work. They'd rather work than not work, and I just don't run into people faking it or trying to take advantage of the situation," he said.

The president of Sun Life Financial U.S., a major insurer, acknowledged to the Journal Sentinel that he was skeptical of fraud as a significant issue.

"Most people who file for disability benefits genuinely need the benefit and also genuinely want to go back to work," said Dan Fishbein, the president of Sun Life Financial U.S. "As a company and as an industry, we have well-developed processes to make sure claims are legitimate."

Fishbein's opinion is notable because Sun Life is the only insurance carrier to endorse the ERISA advisory council in calling for national parity.

"It's long past time that disability insurance included the equal benefits for mental health as for physical health," Fishbein said.

However, Devon Portney Fernald, a spokesperson for Sun Life, said that if the company made changes independent of other disability carriers, Sun Life wouldn't be able to quote rates that are competitive.

Natalie Eilbert is reporting on problems at the intersection of disability insurance and mental health through a grant from the USC Annenberg Center for Health Journalism's 2024 National Fellowship Fund.