When you file a claim for long-term disability (“LTD”) insurance benefits, you naturally expect that the insurance company will comply, treat you fairly, and pay the benefits to which you are entitled. However, the vast majority of group (ERISA) LTD policies contain limitations and exclusions that may limit the duration of benefit payments you can receive or prevent you from collecting benefits altogether. To say this is frustrating is an understatement. After all, you (or your employer) have likely paid insurance premiums for many years to ensure that you’re covered should you become sick or injured.
In this entry, we cover common exclusions and limitations found in LTD policies, including:
- Preexisting Conditions
- Mental or Nervous Disorders
- Self-Reported Symptoms and Conditions
- Alcoholism and Drug Addiction or Abuse
Pre-Existing Condition Limitations are very common in LTD policies. A Pre-Existing Condition Limitation Clause typically excludes coverage for a pre-existing condition. A pre-existing condition is a medical condition that is excluded from coverage by an insurance company because the condition was believed to exist prior to the individual obtaining coverage from the particular insurance company.
Policies that contain this type of limitation clause typically will not cover disabilities caused by a condition that was treated in the three months prior to the time in which you became covered under your disability insurance policy.
Because application of this limitation results in a denial of LTD benefits without the necessity of ever performing a review on the merits of the claim, insurers have a financial incentive to apply a Pre-Existing Condition Limitation to as many claims as possible. As a result, we frequently see disability insurance companies go to great lengths to demonstrate that a claimant’s disability results from this exclusion. For example, we have seen claimants who suffered a heart attack and filed for disability, but the insurer will look back at the medical records and find that the claimant had high blood pressure at a routine doctor’s visit within the relevant time period. Additionally, insurers will often apply a Pre-Existing Condition Limitation to a disability caused by a condition that existed in the three months before becoming insured, even if the claimant and the claimant’s doctors did not know about the condition at that time. In this situation, insurers are often applying an unreasonably restrictive interpretation of policy language.
Mental or Nervous Disorders
Mental Illness Limitations are also very common in LTD policies. A Mental Illness Limitation clause limits disability benefits awarded to an employee if his or her disability is caused by a mental/nervous condition.
Policies that contain a limitation like this typically limit your benefits to no more than two years (24 months) if you are disabled due to a psychiatric condition, such as depression, anxiety, panic disorder, bipolar disorder, or post-traumatic stress disorder (PTSD). However, every policy is different, so the limitation period may be shorter or longer depending on the terms of your policy.
As it is that they can limit their financial liability to a finite period of time, insurers have a strong financial incentive to apply a Mental Illness Limitation to as many claims as possible. We frequently see disability insurance companies go to great lengths to demonstrate that a claimant’s disability results from a mental health condition or nervous disorder, and not from a physical condition. In fact, some policies say that if the disability is any way caused by a mental condition, even if there are physical conditions present, the disability is limited. This can be problematic if, for example, the claimant suffers a debilitating sickness or injury and becomes, understandably, depressed about their loss of functioning, job, and the like. In those cases, a claimant must be extremely careful in how they present their disability. If their overwhelming condition is based upon a failed back surgery, for example, depending on the policy language, it may be better to focus their claim on those physical limitations and not the onset of depression that came into their life after they could no longer do the things they love. The only way to tell whether the policy can be so interpreted is to have an experienced ERISA attorney review the policy before making a claim.
Self-Reported Symptoms and Conditions
This is a big one. Self-Reported Symptoms and Conditions Limitations are very common in LTD policies. This limitation clause limits the length of time an insurance company will pay disability benefits for conditions caused by on self-reported symptoms.
Self-Reported Symptoms and Conditions Limitations are typically applied to disabilities caused by symptoms such as pain, fatigue, or cognitive dysfunction (often described as “brain fog”). By imposing this limitation, insurers aim to limit the duration of LTD benefits for individuals suffering from certain conditions, including chronic pain, fibromyalgia, chronic fatigue, arthritis, tinnitus, lupus, Lyme disease, and sometimes headaches or migraines.
As with all of the benefit limitations discussed above, insurers have a financial incentive to apply a Self-Reported Symptoms and Conditions Limitation to as many claims as possible. As a result, we frequently see disability insurance companies go to great lengths to classify a claimant’s condition as “self-reported.”
But there is good news. We have been at the forefront of helping to change the law that applies here to this issue. No longer can insurers avoid liability based simply on an assertion that there is no objective evidence to support the claimant’s subjective complaints (like pain and fatigue) unless the policy includes specific language to that effect if the condition is known to have those subjective symptoms and complaints. Here is an example of one such case that we handled all the way to the court just below the Supreme Court that reached this holding. This has been a huge development for disabled employees, who may not have a way of quantifying their pain in a way that is measurable on a chart or in a test, and would have therefore been denied their LTD benefits.
Alcoholism and Drug Addiction or Abuse
Additionally, Alcohol and Substance Abuse Limitations are becoming increasingly common in LTD policies. An Alcohol and Substance Abuse Limitation clause limits the length of time an insurance company will pay benefits for disabilities caused by alcoholism or drug addiction.
Policies that contain a limitation like this typically limit your benefits to no more than two years (24 months) if you are disabled due to substance abuse or alcoholism. However, every policy is different, so the limitation period may be shorter or longer depending on the terms of your policy. Moreover, many policies do not cover disabilities arising from substance abuse or alcoholism at all.
As with all of the benefit limitations discussed above, insurers have a financial incentive to apply an Alcohol and Substance Abuse Limitation to as many claims as possible. As a result, we frequently see disability insurance companies go to great lengths to demonstrate that a claimant’s disability results from alcoholism or drug addiction. This is especially true for claimants taking prescription pain relievers for a diagnosed medical condition. Many of these medications are highly addictive and insurers frequently (and incorrectly) argue that a claimant is taking more medication than necessary for his or her injury or illness so that the insurer can apply this exclusion.
As a tangentially related aside, some Accidental Death & Dismemberment (“AD&D”) policies will also refuse payment of benefits if the injury or death is a result of Alcohol or Substance Abuse. That can include anything from liver failure to driving your four-wheeler off the side of a mountain.
Other common exclusions
There are a number of other exclusions that are often incorporated into disability insurance policies, including but not limited to:
- War or acts of war and/or riots
- Suicide attempts
- Normal pregnancy
- Injuries on the job
- Intentional acts causing disability
Is it possible to overcome these exclusions?
Many LTD policies have exclusions and limitations that may restrict the duration of benefit payments you can receive or prevent you from collecting benefits altogether. Time and time again, insurers will wrongfully apply these exclusions and limitations in order to reduce its financial obligation to deserving claimants. However, it is not impossible to overcome these tactics. It is critically important that claimants have an experienced ERISA attorney review their policy (or policies) and go over all the possible exclusions that may apply early on in the life of the claim. There may be exclusions that their experience has taught them are avoidable and there may be others that are not obviously applicable, but that the claimant will need to address head on.
Read more about what to do if your claim is denied here.
Disclaimer: We are ERISA attorneys, but we are not your attorneys and this article does not create an attorney-client relationship. The information in this blog post is provided for general information purposes only, and may not reflect the current law in your jurisdiction. No information in this blog post should be construed or seen as legal advice, nor is it intended to be a substitute for legal counsel on any subject matter.