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Mental Disability and Insurance Coverage

Mental illness afflicts millions of Americans, reducing quality of life, straining relationships, and impeding work performance. Despite the pleas of the medical community, and scientific research demonstrating both physical causes and effective treatments for many types of mental disability, insurers have historically treated mental illness as something distinct from other types of illness. Those suffering from mental illness have been stigmatized, blamed for their condition, and denied insurance or subjected to limitations on insurance coverage. Only in recent years, through the determined efforts of mental health advocates, have those suffering from mental disability begun to achieve access to treatment comparable to that for other illnesses. Recent federal and state laws have improved the position of those with mental illness and have given the legal community greater power to fight discrimination.

Overcoming the Physical/Mental Barrier

At the heart of the discrimination against persons suffering from mental illness is the erroneous (though long held) notion that mental disorders are somehow separate and distinct from physical disorders. Insurers have viewed the latter as real and genuine, but regarded the former with skepticism, as though individuals with mental illness were imagining their problems or had brought them on themselves. The result has been that insurers offer comparatively generous coverage for most medical conditions, but give very limited coverage for treatment of mental illness. Common limitations include larger co-payments, lower "caps" on annual and lifetime coverage, and far fewer days of inpatient and outpatient treatment. Increased mental health benefits, if available, typically mean higher premiums.

While insurers try to isolate mental health problems from other ailments, the medical and scientific communities are making great strides in discrediting the false notions underlying the insurers' efforts. The line between mental and physical ailments is nearly indistinct. There is now strong scientific evidence linking numerous mental disabilities and conditions to abnormalities in brain structure, chemistry or function. These findings demonstrate that mental illness can be identified and treated just like any other type of illness. Therefore, insurance protection for mental illness should be comparable to protection for other health problems. Many studies conclude that society would benefit from increased mental health coverage, enabling those suffering mental illness to get treatment so they can lead more enjoyable and more productive lives.

Laws Protecting Persons with Mental Illness

Thanks to the strong efforts of mental health advocates in courtrooms, the public and private sector, and state and federal legislatures, the tide of discrimination is starting to turn. Laws like the Americans with Disabilities Act, the Mental Health Parity Act, and similar state laws show an increased awareness of the problems of discrimination against those with mental illness. These laws, and court decisions interpreting them, give lawyers tools for combating discrimination. Medical research and principles of contract law provide additional ammunition.

The Americans with Disabilities Act
The Americans with Disabilities Act (ADA) offers strong protections for the disabled in many areas. While certain provisions of the law would overcome much of the discrimination that occurs with insurance, a special section of the ADA, added to address the insurance issue, renders the law's strength in this area less certain. Courts have treated insurance claims under the ADA with varying degrees of receptiveness, but it remains a foundation from which to oppose insurance discrimination based on mental disability.

The Mental Health Parity Act
The Mental Health Parity Act (MHPA), passed in 1996, was conceived as a means of ending discrimination between physical and mental health benefits in employer-provided insurance plans. Despite strong initial bipartisan support, however, opposition from insurers and employers derailed initial efforts to pass the law. Opponents argued that increasing mental health coverage limits would drive up costs. The proponents of the bill then backed off in their demands and the legislation that ultimately passed is restricted in scope. The MHPA does not require mental health coverage. It applies only to annual and lifetime benefits caps, does not apply to employers with fewer than 50 employees, and provides an exemption where mental health coverage would raise an employer's premiums above one percent. The law also has a sunset provision, which means it was enacted only for a limited time. The original sunset provision has been extended four times. The current extension runs through December 31, 2005.

State Laws
A number of states, including Texas, Maine, Maryland, Minnesota, New Hampshire, and Rhode Island, also have laws that improve the rights of the mentally disabled to secure insurance benefits. These laws do not apply, however, to employee benefit plans that are fully self-insured; these are instead governed by the federal Employee Retirement Income Security Act (ERISA). State laws are still an important means by which some of the mentally disabled may secure insurance benefits.

Challenges to Insurance Policies

Another way plaintiffs have attacked discriminatory insurance policies is by challenging the language of the policy. By demonstrating that a condition which the insurer had classified as mental illness (such as bipolar affective disorder) in fact had a physical basis, some insureds have gotten around restrictions on mental health coverage. Courts have also found coverage by looking at the nature of the treatment, such as forced feeding and dietary enhancement for a sufferer of anorexia, rather than the insurer's description of the condition. These victories, however, depend on the language of the contract. Health insurance contracts are often renewed annually and insurers often modify language they feel the courts have misinterpreted.


Discrimination on the basis of mental disability wrongly deprives full insurance benefits to the majority of individuals suffering from mental illness. This deprivation in turn hurts all people who rely on these individuals for work, support, or guidance at home or on the job. The denial of insurance benefits violates the principles behind federal and state laws created to eradicate discrimination based on mental illness. These same laws, plus court decisions on this issue, provide a means for those who have suffered wrongful discrimination to pursue equal treatment. The distinctions between physical and mental health are arbitrary. Society is best served by an insurance system that gives people suffering from any illness the chance to return to a healthy and productive life.

Next Steps
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