Does Disability Insurance Cover Mental Health?
Mental health coverage is an important consideration when choosing a long-term disability plan, even if you don’t consider yourself likely to ever need this type of coverage. True Own Occupation Disability insurance provides financial protection if a physician is unable to perform their primary duties due to an illness or injury. While the conversation around disability insurance often focuses on physical illness and injury, your coverage can also pay benefits if a mental nervous condition or substance abuse issue prevents you from working. However, the cost and extent of mental health coverage still varies widely from plan to plan and may be subject to certain limitations. Most short-term insurance policies, typically provided by an employer in the form of a group plan, do not provide coverage for mental or nervous disorders. While you should carefully review your short-term policy benefits to know exactly what is included, physicians usually receive the majority of their mental health disability coverage from an own-occupation long-term disability insurance policy.
While public awareness and understanding of mental illness is on the rise, mental health conditions are still often covered differently than physical accidents and injuries by physicians’ disability insurance. Most disability insurance policies include limitations on the amount of coverage for mental and nervous conditions, although unlimited coverage options do exist in certain situations. Most insurance companies include coverage that lasts for a limited duration of time that a policyholder can claim disability benefits due to a mental, nervous, or substance abuse disorder. Typically, the rider will limit the benefit period to 24 months. This means that if you are disabled by a mental nervous condition for longer than two years, your policy will stop paying benefits to supplement your lost income. A select few companies will offer an unlimited mental nervous rider if you qualify based on your existing health history for an additional cost. These riders may be referred to by a number of different names, including a Mental Disorder/Substance Abuse Limitation Rider, a Mental Nervous & Substance Abuse (MSNA) Limitation Rider, and Mental and/or Substance-Related Disorders (MSDR) Limitation Rider. Certain specialties and states may require this type of rider in your policy, although it is commonly offered as an optional addition to physician disability insurance plans. By adding a mental nervous limitation rider to your plan, you may be able to reduce the cost of your premiums. A physician’s mental nervous limitation rider should only limit the coverage in the case of conditions that are exclusively caused by a psychiatric condition or substance abuse disorder. A limitation rider usually does not apply to a disabling condition that is caused by an organic disease (such as MS, Parkinsons, Alzheimer’s, or dementia), stroke, infection, or injury. While some doctors choose to include a limitation rider for the discounted premium rate, others prefer to minimize their policy restrictions. In this case, it is often possible to find a policy that offers unlimited coverage for mental and nervous disorders if you are able to afford the higher premiums. With “unlimited” mental health coverage, your policy will cover mental or substance abuse conditions in the exact same way as other illnesses and injuries, without any unique exclusions or limitations. However, it’s important to understand that the majority of long-term insurance policies stipulate an overall maximum benefit amount and/or maximum benefit period that would still apply to a disabling mental illness. Even with unlimited mental health coverage, a disabling condition due to mental illness would still be subject to the benefit maximums outlined in your policy for any other disability. Further reading: The COLA Rider, AIB Rider, and FIO: Differences and Similarities in Disability Riders.
There are a variety of mental illnesses and substance abuse disorders that have the potential to prevent a physician from working. These disorders commonly include but are not limited to: anxiety, PTSD, depression, OCD, bipolar disorder, alcohol/drug addiction, and schizophrenia. In most cases, the onset of a disability must occur after the insurance policy is purchased in order to qualify for disability benefits. Based on the condition and its severity, an insurance company may exclude your disorder from your policy or even deny you from getting coverage outright in severe cases. However, physicians with pre-existing mental or nervous disorders are occasionally able to qualify for complete, unlimited coverage. If you have a pre-existing mental or nervous disorder, an insurance company will evaluate your individual case to determine your options for coverage. Depending on your prognosis and personal history, the carrier may determine you qualify for:
- Full coverage
- Partial coverage (with reduced benefits or specific exclusions)
- Denial of coverage
While many physicians never anticipate a need for mental health disability coverage themselves, these disorders are not uncommon. Mental health problems are the 4th most common cause of both short-term and long-term disabilities nationwide, according to the Council for Disability Awareness. In fact, the number of mental health related disabilities outnumber those caused by cardiovascular and circulatory diseases each year. A short-term disability (STD) usually lasts anywhere from several weeks to six months, although some policies will pay short-term disability benefits for up to one year. The most common mental health conditions that cause people to claim short-term disability benefits include:
- Anxiety disorders
- Substance addiction
- Bipolar disorder