Mental Health and Life Insurance Denials
A recent Yahoo! Lifestyle article (Woman’s Post About Life Insurance Denial for Mental Health History Goes Viral) described the ordeal of an applicant’s denial of $10,000 in life insurance due to the fact that she disclosed a medical history including depression and anxiety on the application. Unfortunately, this woman’s story is far from unique. The health insurance industry has long imposed a double standard regarding mental health and mental illness versus physical health and illness, despite laws requiring a measure of equality when providing both physical and mental health benefits. The story in the Yahoo! article brings to light this same double standard when it comes to life insurance and shows that underwriters view mental health issues much more cynically than physical issues when reviewing an applicant’s medical history.
The issue is further being brought into the spotlight due to a current presidential candidate whose son has mental health issues, sparking a national debate about how mental health is perceived in terms of social stigma as well as what the law requires regarding insurance coverage for mental health.
Mental health is insurable.
Mental health is definitely insurable under the law. Regarding health insurance benefits, the mental health parity law requires insurers to treat mental health issues the same as physical issues regarding benefits such as deductibles and co-pays. Prior to the parity law, insurers would typically charge higher co-pays and/or separate deductibles for mental health and would severely limit the number of office visits they would cover in a given year. Note that not all types of health plans come under the parity law, and those that don’t may still treat mental health care unequally.
Note also that insurers are not actually required to provide coverage for mental health, but if they do, then they must provide parity of benefits. Most plans do cover mental health due to market forces, competition and consumer demand, even if not required to do so by law.
Parity law or no, many insurers continue to wrongfully treat policyholders differently when it comes to mental health claims. As with other instances of insurance bad faith and wrongful claim denials, aggrieved policyholders sometimes have to turn to the courts to vindicate their rights to mental health benefits under their policy. The results have been striking in many cases. For instance, Blue Shield paid $7 million in 2018 to settle a class action lawsuit brought by customers who were wrongfully denied coverage for mental health treatment.
Additionally, insurance regulators have penalized insurers for their wrongful acts. For example, the Kaiser Foundation was fined $4 million in 2013 for failing to provide mental health treatment to patients in a timely manner. Later, in 2015 and again in 2017, Kaiser paid to settle similar complaints lodged by the California Department of Managed Health Care. A lawsuit was also brought against Kaiser for related issues. The case of Arce v. Kaiser Foundation Health Plan, Inc. dealt with the denial of coverage for Applied Behavior Analysis (ABA) therapy for children with autism. Attorney Robert Gianelli, who represented insurance policyholders in the case, was named Attorney of the Year by California Lawyer magazine and a finalist for the Consumer Attorneys of California’s Consumer Attorney of the Year for his work on the case.
How does a history of mental illness affect a life insurance application?
The process of applying for life insurance includes completing a detailed medical history and usually going through some sort of physical exam as well. Life insurance companies look at this medical history very closely to determine whether to offer you a policy or not as well as deciding what type of premium to charge. Regarding mental health issues, the conventional wisdom is that reporting mild issues won’t have any effect on your policy. If the issues are more serious, the insurer is likely to cover you but at a higher premium. If, however, the issues are considered severe, the company is likely to deny your application altogether.
Depression and post-traumatic stress disorder (PTSD) are considered to be the conditions most likely to result in a denial. The company is insuring your life, after all, and people suffering from depression or PTSD are generally considered to be at greater risk of suicide.
Is suicide even covered by life insurance?
Contrary to popular belief, life insurance policies do not, as a rule, exclude death by suicide from coverage. They do, however, often exclude suicide for an initial period of as much as two years, in order to keep someone who is already planning to kill themselves from taking out a life insurance policy as part of their plan to end their life. If the death occurs after the end of the exclusion period, however, then the fact the death was caused by suicide should not result in a denial of benefits.
Take the Right Steps to Get the Health Care You Deserve
How mental health issues are treated by insurance companies can vary greatly from insurer to insurer, so don’t get too discouraged if your application is denied. Even before that happens, however, a better approach is to first talk to an independent agent if you have concerns over mental health in your medical history. An experienced agent may be able to steer you toward a company that is more likely to cover you, and it can be harder to obtain insurance once you’ve already been turned down.
If you feel your application for life insurance has been unfairly denied, or if your claim for life or health benefits under an active policy has been denied, contact an experienced insurance law attorney or law firm in your state. Insurance bad faith lawyers typically offer free consultations and take cases on a contingency fee basis, meaning you won’t have to pay them anything until after they recover benefits and/or money damages for you.
