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Are There Exceptions to the Mental Illness Limitation in a Disability Insurance Policy?

Every year thousands of long term disability insurance claimants have their disability insurance claim limited to a specific payment period due to a Mental Illness limitation provision in their disability policy. On a daily basis our disability attorneys handle cases in which we try to get claimants paid beyond the limitation period. We recently received a great comment on our blog discussing the Mental Health Limitation:

Posted by Brad:

There are some exceptions to the Mental Illness Limitation, in certain circuit courts, specifically, take a look at California and the 9th circuit court of appeals. As you know, California has passed a law that voids discretionary language in insurance policies, and the 9th circuit has confirmed that ERISA preemption doesn’t supersede the state’s ban of discretionary language.

As such, in California, the majority of ERISA lawsuits, going forward, will be held under the de novo review. Under the de novo review, the 9th circuit has come out with many opinions that the term “mental illness” in ERISA plans is ambiguous. Often, particularly older ERISA plans, the term “mental illness” is not defined in the plan and is considered vague and ambiguous. Under de novo review, when a term in the plan is ambiguous, meaning there is more than one reasonable interpretation of the plan term, the definition that favors the claimant (against the drafter – insurance company) prevails as a matter of law – Contra Proferentem.

California isn’t the only state that has banned, or is looking at banning discretionary language in insurance contracts, included ERISA plans. I would suggest that claimants’ not give up just because they are disabled by a mental illness and their plan has a mental illness limitation (typically 24-months). These need to be looked at on a case by case basis, depending on the state the lawsuit will be filled, and if the corresponding federal circuit court has upheld that a ban in discretionary language is not preempted by ERISA.

I imagine the ERISA insurance companies will be “fixing” their plans to better define mental illness, but at this point, there still are a lot of older plans out there that offer claimants’ an opportunity to fight back on a more level playing field. Don’t give up just yet, even if you have a mental illness limitation in your plan. Have an experienced ERISA attorney (like Dell) check it out.

Our Response:


Thanks for your great comment which is spot on. As you are aware the ultimate issue comes down to how the mental nervous limitation is defined in the contract. There are cases all over the country in which courts have invalidated or found the mental nervous limitation to be ambiguous. These are great cases for claimants. On another note, there are more than 18 states that have abolished discretionary clauses and we are lobbying different states every day to get rid of these discretionary clause. For a current status on the states that have abolished discretionary clauses please see this page.

There are 12 opinions so far. Add your comment below.


What is the main reason for limiting mental health claims to 24 month payouts? I have never really understood this. Is it because the evidence is subjective and if all claims did not have this limitation, claimants who allege mental health disabilities would make it much harder for the carrier to challenge or deny the claim?

Attorney Greg Dell:


Mental nervous claims are the most common cause of disability claims. It is purely a business decision that disability companies write disability contracts that limit mental nervous claims to 24 months. Disability insurance companies are in business to make money and if they have a way to limit their exposure on a claim, then they will do so. A 24 month mental nervous limitation has been a common technique used by disability carriers since the mid 1990s.

Pete Cole:


I am an example of someone that had luck in obtaining benefits past the 24 months for a nervous condition (bipolar). As Greg states, get yourself a good attorney that specialises in disability. Make sure all your information from your healthcare providers consist of dotting each I, and crossing each T. Documentation, and a good attorney are the keys.


UNUM approved by LTD and so did SS. I was so happy Unum approved my claim, I did not understand UNUM approved the LTD as a mental disorder. Needless to say, Unum discontinued coverage after 24 months. During this time, SS approved my disability based on my physical condition, so I thought I was on UNUM disability till retirement age.

However, UNUM said that even though SS approved me for disability based on physical reasons, their (Unum) approval was on mental issues, so the coverage is terminated.

I have 180 days to appeal. What is the best approach to take for an appeal? Will UNUM automatically reject the appeal? – they rejected my initial claim.

Attorney Stephen Jessup:


It is very common that an insurance company will approve benefits for a mental health condition while ignoring a physical condition in an effort to limit benefits to the 24 months for the mental health limitation in the policy. Please feel free to contact our office to discuss your claim and to determine how we may assist you in appealing the decision. Additionally, please be advised that Unum may or may not have a right to a potential repayment on account of your SSDI award.


There was a federal law passed called the Mental Health Parity and Addiction Equity Act in 2008 which closed loopholes in the Mental Health Parity Act of 1996. If this is the law of the land, how can insurance companies even have today a limitation for mental or nervous or psychiatric diagnoses??? In many cases, severe depression, bipolar, PTSD, or schizophrenia is a disabling condition preventing not just working but most life activities. The affected person might be able to use his or her arms or legs, but if this person is suffering with a severe psychiatric condition, it doesn’t matter–he or she cannot work or function normally! Why and how are insurance companies able to get away with this limitation in their policies they sell people?

Attorney Stephen Jessup:

Anthony, we would certainly agree that it is unfortunate that Mental Health limitations are in place in disability insurance plans. However, these benefits are either purchased with the applicable policy provisions or provided by an employer with the language in the policy- creating a contract in which you pay (or sometimes are given as a benefit from your employer) for certain language. There are also limitations in many policies for a whole host of physical conditions. These provisions are considered legally enforceable contract provisions.


I am on LTD under prudential insurance for a physical disabilty… yes I also have mental health and they are limiting my LTD to 24 months based on my mental illness. My job duties is heavy duty and productivity high in demand. It seems Prudential is more focused on my mental than my physical and my Doctor filled out disabilty forms that i cannot due my job. now prudential is only approving in increments of like every two months. I keep questioning them why and I don’t get an answer or i get the run around. What can I do? I am also in appeal with SSDI.

Attorney Stephen Jessup:

Christina, please contact our office to discuss your claim as there are ways to get Prudential to accept your claim as a physical disability to avoid the application of the 24 month mental health limitation.


What kind of legislation is needed to bring this practice to an end? It seems incomprehensible that LTD policies can have 24 month mental health limitations when by nature serious mental illnesses are chronic, often reoccurring conditions. The number of LTD recipients is fairly small, so the financial exposure for the LTD carrier could not be a major factor.

Medical insurance has at least recognized that mental health coverage cannot be more restrictive than it is for a medical condition, and that has been in place several years now (Mental Health Parity and Addiction Equity Act of 2008).

These limitations really are an outrage and should not be in place. This is 2016, and there is something very discriminatory going on here.

Attorney Stephen Jessup:

Craig, unfortunately, there is probably no form of litigation that could bring to end the limitation of conditions in voluntary disability policies. The list of conditions subject to 24 month limitations go beyond mental health claims. The language in the policy is more a product of the employer deciding to have such limitations in the policy as it affects premium rates paid.


I am going through NC Insurance commission due the fact when I purchased my disability insurance through my employer, we were not given the limitations in writing up front nor were we encouraged to research them! The problem with looking online is the disability company can change the language of their policy to suit protecting themselves with no real compassion to the customer who pays and pays thinking they have protected themselves in case of a life change. In NC, our employers require employees to sign a form after reading written material of the medical policy they are purchasing every showing changes and limitations for the coming insurance year. Not true when I purchased American United Life American Insurance. The company is out of Maine and I am of the opinion they were to quick to sell companies their disinility plan and vague on the limitations.

I am out on depression/ anxiety due to the bad drug CHANTIX! I was approved for SSI disability and I now live in poverty. American Life Insurnace sure didn’t mind taken $400.00 a month out of my check! I feel fleeced and obviously ERISA has no protection for those with my problem.

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