Vermont is the only state that treats mental and physical disability claims the same. Why don't we?

Only one state has disability coverage parity, in which mental health conditions are covered in the same way as physical health conditions: Vermont.

In the other 49 states, long-term disability benefit claims for physical ailments — cancer, arthritis, stroke — are assessed differently than mental health issues — major depressive disorder, anxiety, PTSD and eating disorders.

For 99% of group disability plans sold in the United States, long-term disability benefits for a behavioral health condition max out at 24 months, often leaving those with severe and persistent mental health symptoms in dire straits.

In addition, the Journal Sentinel previously reported on its analysis of five years of lawsuits, filed between 2019 and 2023 in Wisconsin federal district courts, over the denial of long-term disability benefits claims. More than one-third involved workers with mental health conditions. Yet it's estimated that less than 10% of all claims are related to mental health issues. That means the number of lawsuits involving mental health issues claims was far out of proportion, and indicates a much higher denial rate for them.

The Journal Sentinel also reported that it examined legal filings associated with dozens of independent medical professionals tied to Wisconsin cases — and involved in thousands of cases nationally. It then talked with patients, doctors, insurers and attorneys. The data showed a clear incentive to tip the scale toward denying disability insurance coverage for mental health issues, often from medical professionals who were not licensed in the state, were not actively practicing, or were not specialists in the area they were reviewing.

Why is Vermont the outlier?

The first draft of what would become Vermont's approach was written by clinical psychologist Ken Libertoff on a snowy evening at his kitchen table in Montpelier.

It was the mid-1980s, and mental health and substance use disorder parity in the state was still a decade away. But Libertoff, who has since passed away, understood “the terrible void” among Vermonters struggling with mental health symptoms, as he told one local outlet, as republished by The Free Library.

Elizabeth Costle, Vermont’s commissioner to the Department of Financial Regulation, in 1997 signed a more refined version of Libertoff's health insurance parity proposal into Vermont law. Then, in 2008, Commissioner Paulette Thabault issued a bulletin, Vermont's way of setting policy and informing the public.

Thabault's bulletin determined that limitations imposed by disability carriers were also discriminatory. Specifically, the bulletin disallowed the practice of limiting mental health disability coverage to 24 months. In other words, the coverage would extend as long as a patient needed it — the same as for a physical disability.

In the same year that Vermont removed long-term disability coverage limitations on mental health conditions, the U.S. passed its first federal health parity law, The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008.

Although momentous, disability carriers have continued to find loopholes, which has translated to people paying billions of dollars out of pocket to access the health care they need, according to Neera Tanden, the White House domestic policy council director.

Are the fears of parity legitimate?

Vermont officials have found that insurance parity isn't just good policy because it clears the way for access to health care regardless of whether a person's problem is physical or mental. They've found it also makes economic sense because it gets people healthy and back into active working roles in society.

"When you have equal and ready access, and access that limits hurdles, that can save the system money over time," said Kevin Gaffney, Vermont's commissioner of the Department of Financial Regulation. "People can get the services they need and the benefits they're entitled to."

Ahead of Vermont's 2008 bulletin, disability carriers lobbied Vermont Commissioner Thabault to halt signing the parity bill into law. They warned of a steep rise in insurance costs, as much as 25%.

The higher costs never materialized.

Phil Keller, who served as Vermont’s director of Rates and Forms from 2008 to 2014 and the director of Insurance Regulation from 2015 to 2022, testified before the ERISA Advisory Council. 

“Not once during those seven years (as director of Insurance Regulation) was I made aware of complaints from either consumers or agents that the cost of disability insurance had risen because of the required coverage of mental health conditions,” Keller told the Council.

Multiple examiners confirmed Keller's experience. An attorney with the Mental Health Legal Advisors Committee of the Commonwealth of Massachusetts reviewed eight years of disability rate filings in Vermont by five major insurers and found coverage for mental health conditions "had little or no impact on the pricing of disability policies," Keller testified.

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Julie Su, the acting U.S. Secretary of Labor, speaks at Wellpoint Care Network on West Capitol Drive in Milwaukee on Sept. 9. National and state leaders convened to discuss mental health parity.

Mike De Sisti / Milwaukee Journal Sentinel

'The laws are only as good as enforcement'

Fifteen years after Vermont made parity the norm, the 2023 Employee Retirement Income Security Act, or ERISA, advisory council completed a yearlong investigation into the question of expanding disability benefits for people with mental health conditions nationally. The Council recommended the Department of Labor promote the elimination of the 24-month limitation on mental health disability benefits — again, putting them on par with physical benefits.

Earlier this year, the Departments of Labor, Health and Human Services, and the Treasury unveiled new requirements in Milwaukee,  re-emphasizing that mental health and substance use disorder benefits must be offered to the same degree as medical and surgical benefits.

Still, Acting Secretary of Labor Julie Su said at the Sept. 9 unveiling that "laws are only as good as enforcement" and the new order requires more agency resources to work on investigating claims and educating insurance companies.

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Mental health advocate Patrick Kennedy, while in Milwaukee, called on Congress to add teeth to the effort to get disability insurance parity.

Katie Klann / For The Journal Sentinel

Mental health advocate Patrick Kennedy, a former congressman, told the Journal Sentinel that disability carriers need to follow the path of regular health insurers. He called on Congress to finally add some teeth to the effort, saying it "must require that if you have a mental health disorder like OCD, you get the same disability insurance as if you had Parkinson's."

Despite recommendations and endorsements, however, it remains unclear if the new Congress has any will to prioritize a bill of this magnitude, especially if disability carriers have a say in it.

Just as disability carriers in Vermont expressed concern over a 25% increase in cost — before being proven wrong — the America Council of Life Insurance shared a survey with the Council from its member companies, which include Unum, the Hartford and Prudential, warning of a possible 20% increase in premium loads on average.

Most people 'genuinely need the benefit'

In addition to rhetoric about higher premiums, murmurs of fraud have remained a perennial concern across disability carriers since the inception of long-term disability insurance in the 1960s.

Jonathan Feigenbaum, a Massachusetts-based attorney with close to four decades of representing individuals in disability cases, said he simply doesn't come across "phonies" or malingerers in his line of work. Much of that has to do with the fact that, for the majority of employees applying for long-term disability claims, they'd be getting ― at best ― 60% to 70% of their annual earnings.

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Jonathan Feigenbaum, an employee-rights attorney from Boston, has represented long-term disability cases for more than 40 years. He's been instrumental in shifting how disability claims are determined in Massachusetts.

Shawn G. Henry

In Feigenbaum's experience, the bulk of people out there applying for disability claims feel connected to their jobs. "People get some identity out of work. They'd rather work than not work, and I just don't run into people faking it or trying to take advantage of the situation," Feigenbaum said.

Even the president of Sun Life Financial U.S., a major insurer, acknowledged in a Journal Sentinel interview that he was skeptical of fraud as a significant issue, regardless of physical or mental health conditions.

"Most people who file for disability benefits genuinely need the benefit and also genuinely want to go back to work," said Dan Fishbein, the president of Sun Life Financial U.S. "There's a percentage always out there trying to take advantage, but as a company and as an industry, we have well-developed processes to make sure claims are legitimate."

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Dan Fishbein, the president of Sun Life Financial U.S., endorsed recommendations in December 2023 from the ERISA Advisory Council to remove the 24-month cap on coverage for a mental health/substance use disorder disability. Sun Life remains the only disability carrier to endorse the recommendation.

Courtesy Of Dan Fishbein

Fishbein's opinion is notable because Sun Life is the only insurance carrier to endorse the ERISA Advisory Council in calling for national parity.

"It's long past time that disability insurance included the equal benefits for mental health as for physical health," Fishbein said.

However, Devon Portney Fernald, a spokesperson for Sun Life, which has offices in Milwaukee, said that if it made changes independent of all disability carriers, it would "create upheaval in the market" and the company wouldn't be able to quote rates that are competitive.

As a result, one state in America has tried parity and found it effective, and one CEO in the insurance industry has stuck his neck out and said it's long past time for parity to be the norm, helping the roughly 3.5 million American employees out of work for a behavioral health disability.

But the words are largely symbolic, and real change is nowhere in sight.