Back in January of this year, we found ourselves in the awkward but not unpleasant position of praising Sun Life after they encouraged Congress to pass legislation requiring mental health and substance abuse parity among long-term disability insurance plans. Sun Life’s goal was to level the playing field among insurance providers by requiring all providers to provide the same level of long-term mental health disability benefits. Per their press release:

“Any one company introducing this approach without a market-wide solution would immediately be uncompetitive. A legislative solution is therefore the best option, ensuring an equitable approach for all covered workers, while supporting a strong and sustainable market for disability insurance.”

Minnesota leads the way

We’re happy to share that Minnesota’s legislature is charging ahead, with HF 3836, “Disability Income Coverage; Parity for Mental Illness and Substance Use Disorders,” introduced on February 22, 2024. If the bill passes, it will go into effect on August 1, 2024. One can hope that other states will follow suit, creating momentum for a possible federal law in the not-too-distant future.

Wait, doesn’t insurance already cover mental health?

Yes, it does! Mental health and substance use disorder benefits parity already exists across providers for health insurance, but not for disability insurance, a key distinction.

Under the current rules, long-term disability insurance providers frequently limit how long one can collect disability benefits when their mental health or substance abuse conditions prevent them from working, usually capped at two years. The problem is that mental health disabilities frequently last longer than 2 years. Just like people who are suffering or recovering from a physical injury or illness, people with debilitating mental health or substance abuse conditions need to pay their bills while they are disabled. Limiting those claims to a 2 year benefit seems overtly discriminatory and certainly arbitrary.

Just like long-term disability benefits for physical conditions, the goal is to get people suffering from mental health conditions back on their feet and back to work, but in some instances this effort can take many years. Sometimes such patients can never return to work. This legislation would ensure that permanently disabled mental health and substance abuse patients don’t find themselves in a financial crisis on top of everything else, if they have not recovered in 2 years.

For those who want to absorb the nuances of this effort, this joint statement from the American Council of Life Insurers and America’s Health Insurance Plans provides thorough background.