Understanding Mental Health Disability Benefits

Mental health disability benefits are paid under a group and individual disability insurance policy. The benefit covers those conditions that arise from a nervous or mental disorder that the insured suffers from. A disability insurance policy that pays for mental health disability provides this benefit for a limited period. This benefit limitation was put in place in response to a situation that occurred with the use of benefits from a disability insurance policy.

Past Treatment of Mental Health Disability

In the past mental health disability claims were treated in the same manner as other types of disabilities. When a nervous or mental disorder developed in an insured person, an insurance company provided income replacement for as long as the insured was out on the mental disability. In some instances this could last until the end of the policy’s benefit period, which is typically age 65.  

Abuse of Benefits

What happened was attorneys and physicians, two occupational groups considered the best to sell disability insurance to, began claiming disability benefits for nervous and mental disorders. As a result, a situation known as adverse selection occurred between these 2 classifications, resulting in higher disability insurance premiums. The insurance industry restricts benefits payable for a mental health disability to 2 years, which includes counseling and access to mental health services.

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