Parity for Mental Health in Disability Insurance. It's Time.

Growing up in the group insurance industry, a rookie underwriter is quickly taught the basic elements of risk selection.? Many learn those teachings in a framework that looks to avoid risk in pricing benefits for employers, even if the intent of the teaching was more progressive. I was fortunate to have been mentored by leaders who taught me to accept risk, and in doing so, determine how to evaluate best case/worse case scenarios. My early lessons demonstrated for me ways to determine the degree to which you could mitigate outcomes that were not anticipated.? In doing so, I learned what a “good” risk was, and which accounts to avoid if I couldn’t see a path to mitigate the risks that gave me the most concern. I also learned that certain benefit designs could increase the risk of the plan being underpriced or difficult to administer, and as such, I needed to reflect strategies to mitigate when finalizing a decision to quote or not to quote. And being trained as a group long-term disability underwriter, I learned which industries and occupations to pay careful attention to, and yes, which to maybe avoid.

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I also understood that certain benefit designs were deemed risky, and subject to higher costs and potential abuse.? Short waiting periods would increase claim frequency. High-benefit replacement ratios, especially on employee-paid plans might discourage claimants from attempting to return to work.? I also learned that in addition to benefit eligibility issues being a factor in risk selection, certain causes for disability were not treated equally. Disabilities caused by mental illness related diagnoses, as well as substance abuse, have long been subject to limitations in benefit payment duration (typically 2 years), and sometimes excluded completely from many group disability insurance plans. ?I should remind you that my underwriter training began in the early 1980’s, and disability insurance was not unique in limiting or excluding benefits for mental illness.? Medical insurance programs also had different approaches for handling these claims when it came to coverage.

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Disability insurers have a goal of providing affordable income protection benefits across a wide variety of occupations, employers and medical conditions.? The risk selection process involves assessing what risks are insurable and what are not and when deemed insurable, finding the appropriate premium levels.? There has been concern that fully covering mental illness related conditions would necessitate increasing costs across all disabilities and render it unaffordable by some employers and employees.

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But are parameters that were put in place nearly 50 years ago to limit or eliminate liability still appropriate in 2024?? Depression, anxiety and substance abuse have been as present in society as physical disabilities throughout history. Environmental and financial stresses have also been present, but may not have received the attention they are getting today. And both employers and their benefit carriers are engaged now more than ever in providing access to mental health resources to help their employees navigate through turbulent personal times. So why not go one step further and advocate for parity for mental health benefits in group disability insurance?

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The Mental Health Parity and Addiction Equity Act was enacted into law in 2008. This legislation aimed to ensure that health insurance coverage for mental health conditions, including drug and alcohol related substance disorders, be no more restrictive than that available for other medical conditions. Last year, the ERISA Advisory Council urged Congress to pass legislation for mental health parity in disability insurance.?

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Additionally, employers and insurers alike have been promoting programs to assist employees access and receive treatment for mental illness related disorders. ?For example, Amazon has introduced a mental health benefit which allows employees to access mental health resources, information and counseling via an app, as well as providing additional mental health tools to employees who enroll in a health plan.(1)

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One group insurer has come out to publicly support the ERISA Advisory Council’s call for parity for mental health in disability insurance – Sun Life.? In support of the company’s position, Dan Fishbein, M.D., president of Sun Life, U.S., stated in a press release issued last month that “mental health is health, unequivocally. Just as with physical conditions, mental health conditions can render a person unable to work.”? Dan goes on to add, “Mental health conditions should be covered by long-term disability in the same way that physical conditions are.” (2) ?

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I applaud the action taken here by Sun Life and encourage other group insurance carriers to consider following suit. In full disclosure, Dan and I were colleagues almost 20 years ago when we both worked for Aetna. If you followed the evolution of the 2008 passage of The Mental Health Parity and Addiction Equity Act, you’ll know leaders at Aetna were in support of this legislation. Many of the arguments against both parity laws are similar, and mainly tied to cost, but as Dan again notes, “if all disability carriers provided mental health parity, the additional cost would be relatively modest. Plus, disability insurers bring significant resources to manage the cost, especially by helping people get back to health and back to work.”?

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If I remember the part of my underwriter training, where I was taught to solve for ways to cover a risk versus avoid one, I truly believe that having mental health disabilities covered in a more comprehensive way and on par with other conditions is the right thing to do. The power of carrier’s early intervention and claim management tools can effectively manage the risk, and potentially encourage people to seek treatment sooner which may ultimately prevent and/or shorten disability lengths.? The stigma so many people feel about even discussing a mental illness may also be positively impacted if treated equally in the benefits determination process.? Productivity should also be enhanced, as leveling the playing field for mental health related disabilities will demonstrate to employees that their employers – and the carriers they choose to provide benefits – truly care about their well-being.

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My roles through my career enabled me to participate in an industry focused on providing appropriate salary continuation benefits and opportunities to return to work employees who become disabled, while giving me a forum to advocate for the rights of people with disabilities. Last spring in "Differently Enabled," I wrote, “when a claim is incurred related to a disability, it creates a disruption for both employers and employees- and having income protected in the event something causes someone not to be able to work has historically been an appreciated, if not undervalued benefit.”? The disruption to which I refer affects employers, employees and their families, regardless of the nature or cause of disability. Let’s make parity for mental health benefits in disability insurance a priority for 2024.? It’s time.

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(1)? Amazon Blog New Mental Health Benefits, October 13, 2022

(2)? Sun Life U.S. calls for mental health parity in disability insurance, December 13, 2023

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Reisenwitz, from the German, translates something akin to “travel joke” in English. It explains why many a German-speaking border agent would snicker as I passed through passport control when I was working in Europe. I would subsequently translate the name to mean traveling fool – a jester, or a “wit,” given my career on the road. Throughout that career – and my overall life journey – I have acquired insight I have found beneficial that I’d like to share in this periodic newsletter. You can decide if it’s wisdom – or “witz”dom.? Hopefully you’ll find a little of both.