Nearly all long-term disability insurance policies exclude coverage for disabilities caused or contributed to by “pre-existing” conditions. Although the 2014 Affordable Care Act known widely as “Obamacare” now prohibits pre-existing condition exclusions in health insurance policies, it is important to understand that this law does not apply to disability insurance.

The legitimate purpose for these pre-existing condition exclusions is to prevent people who already know they are disabled due to an illness from gaming the insurance system by enrolling in coverage just so they can turn around and make a claim. In practice, however, these exclusions often pose serious, unexpected obstacles to honest, hard-working people who thought they were protected and never expected to become unable to work. Insurance companies have great financial incentive to review every claim to determine whether they can avoid paying a disabled person’s benefits based on the pre-existing condition exclusion. Therefore, it is critical that individuals with significant health conditions fully understand and consider the specific pre-existing condition terms in their disability policies as early as possible and before making a claim whenever possible.

There are typically two parts to a disability policy’s pre-existing conditions exclusion: (1) How that policy defines a “pre-existing” illness, and (2) If your disability is found to be caused by a pre-existing illness, whether the insurance company can still apply the exclusion to your claim based on how long you were covered by the policy before you became disabled. Here it is important to note that in rare cases, a policy may apply the exclusion regardless of how long a person has been insured before becoming disabled.

Different policies have different definitions for what constitutes a pre-existing condition, so it is important to examine your policy or have it examined by an experienced attorney. To help you understand how these exclusions work, we have selected a pre-existing condition exclusion contained in an actual Cigna disability policy. While this example includes many terms that are commonly in the insurance industry, every policy is different so you should examine your own policy before making important decisions about your potential claim. Example:

We will not pay benefits for any period of Disability caused or contributed to by, or resulting from, a Pre-existing Condition. A “Pre-existing Condition” means any Injury or Sickness for which you incurred expenses, received medical treatment, care or services including diagnostic measures, took prescribed drugs or medicines, or for which a reasonable person would have consulted a Physician within 3 months before your most recent effective date of insurance….

This limitation will not apply to a period of Disability that begins after you are covered for at least 12 months after your most recent effective date of insurance, or the effective date of any added or increased benefits.

When a long-term disability claim is filed, one of the first things insurance companies do is determine whether the person making the claim is still subject to policy’s pre-existing condition defense. In our example above, even if that person becomes disabled due to a pre-existing condition, the claim will not be excluded so long as the disability does not start until that person has been covered by the policy for 12 consecutive months. For private policies that people purchase directly from insurance companies, the effective date of coverage should be stated near the top of the policy. For individuals who have disability coverage through their employers, it can be more difficult to determine the most recent effective date of coverage. While some employers provide disability coverage automatically to all employees, in most cases, long-term disability coverage is optional, and employees must elect to participate in the policy. For most, this would occur at the time their employment begins, but some employees wait to enroll in the long-term disability coverage later.

Next, regardless of whether you are automatically enrolled in your employer’s disability policy or you sign up for coverage, many policies include a waiting period during which individuals must be actively employed before their coverage actually begins under the policy. It is not uncommon for employees to have waiting periods of one to six months before their effective date of coverage begins and this will be the date used to determine whether you are subject to the policy’s pre-existing condition exclusion. In some cases, you may be offered an opportunity to increase your coverage amount. For example, some employees are able to enroll in optional coverage that increases a long-term disability benefit from 50% or 60% to 70% of their prior salary. While this is a wise decision, it can affect the date used to determine whether you are still subject to a pre-existing condition review or at least whether your added coverage might be subject to the pre-existing condition exclusion.

In some cases, an employer may switch long-term disability insurance companies or switch to a different policy with the same insurance company before you become disabled. Even if your disability begins less than a year (or whatever period is specified in the policy) before you stop working, that does not necessarily mean your claim is subject to a pre-existing condition review. Many policies include provisions that give you credit for the time you were covered under your employer’s prior disability insurance policy. Our firm has successfully represented individuals whose claims were denied based on a pre-ex exclusion by helping them prove they should have been given credit for the time they were covered under a prior policy. It is a good idea to keep records of dates of hire, enrollment periods, confirmation of benefits elected, and to request copies of your policies and plan documents.

Once your most recent effective date of coverage is established, the insurance company will determine when your disability began. In the sample policy quoted above, “Disability” was defined as being unable to work due to illness. Therefore, the Disability begins on the first date the person is unable to work rather than when they began to experience significant or even debilitating symptoms. This can become a very important consideration for someone who is working while suffering from a chronic, pre-existing illness, but who has not been covered by the policy long enough to avoid application of the policy’s exclusion. An experienced attorney can assist someone experiencing chronic illness in understanding how long they would need to find a way to continue working through a debilitating illness to satisfy their policy requirements and avoid forfeiture of substantial future benefits.

If you determine that you cannot avoid a pre-existing condition review under your policy, the next step is to determine whether your disabling illness falls with the policy’s definition of a “pre-existing” condition. For most policies, the insurance company will review a specific period of time prior to your initial date of coverage (commonly referred to as a “lookback period”) to determine whether your disabling condition is excluded. In our example above, this is the 3 months right before the client became enrolled in coverage under the policy. Other policies commonly use look-back periods of 6 months or one year and a few, especially individual policies purchased directly by the insured, don’t even have a time limit on how far back the insurance company can go in searching for evidence that you had the condition at some point in the past.

The insurance company will obtain and scrutinize all of your medical records for the entire policy look-back period. A condition may be considered “pre-existing” even if the claimant did not see a doctor specifically for that same condition during the look-back period. For instance, in the policy cited above, a claimant who has chronic back or neck pain and took regular medications to manage pain during the lookback period may be barred from receiving disability benefits for a similar back or neck condition under the policy exclusion for pre-existing conditions. Even medical records for doctor’s visits after the end of the lookback period can create problems. For instance, where someone with disabling back or neck pain that causes that person to stop working 4 months after enrolling in the policy tells her doctor that she has been experiencing symptoms for 6 months, an insurer can deny the claim based on the argument that “a reasonable person would have consulted a Physician” for those symptoms during the policy lookback period.

Insurers are frequently guilty of overreach in applying the pre-existing condition exclusion. Common examples include medications that can be used to treat multiple conditions. Insurers have tried to exclude claims for people who take such medications to treat a non-disabling symptom, but later develop a disabling condition for which that same medication is commonly prescribed. Other examples include patients who work despite long-term back pain from degenerative spine conditions that are not disabling, but later suffer a disc herniation in an adjacent level of the spine that does cause disabling symptoms. Many insurers will attempt to equate the two conditions requiring a detailed medical analysis to distinguish the two conditions.

Whenever possible, you should understand and consider the ramifications of the specific pre-existing condition exclusions in your disability policies before you stop working due to a medical or psychiatric condition. Many people with long-term or progressive medical illnesses struggle to continue working for weeks, months, and even years despite significant medical impairments. Dedicated employees, professionals, and business owners often find themselves working longer hours to complete tasks, taking work home, or working on weekends but still falling behind because of their cognitive or physical struggles. Eventually, despite their best efforts, they fall behind, miss deadlines or production goals, or make the types of mistakes they never made in the past. If you are one of these individuals, it is important to obtain a copy of your disability insurance policies and review the pre-existing condition language in those policies as soon as you realize your illness is impacting your ability to continue working, because when you decide to finally stop working can be the difference between receiving the monthly benefits you paid for or giving the insurance company an easy way to avoid paying anything on your claim.  Knowing in advance how long you have to find a way to continue working before you can make a claim that is not subject to a pre-existing condition review under your policy can mean the difference between providing for yourself and your family or forfeiting the insurance coverage you thought was there to protect you.

For individuals with chronic medical conditions, the pre-existing condition exclusion may also become important when deciding whether to try to transition into another, less strenuous occupation. This is because starting a new job with an employer and new disability insurance coverage will usually mean a new look-back period followed by a new one year or similar period during which you will need to work and be covered in order to avoid exclusion of a disability claim related to that chronic illness. An optimistic and determined individual hoping to manage their symptoms more effectively in some new work environment may inadvertently lose coverage under both their old policy and new policy. Employees with conditions that wax and wane and only require treatment on an intermittent basis may be able to avoid a new policy’s pre-existing condition exclusion where they can show they have a long enough period of time with no treatment, medications, or significant symptoms. But for those individuals who have chronic symptoms managed by medications, the better choice may be to initiate a disability insurance claim with their original employer rather than risking a lapse of disability insurance coverage.

Employees should also be aware that good faith attempts to modify occupational duties or accept a different position with the same employer can create problems for future disability claims. This is because insurers may be able to use your modified job or job title when later assessing whether you qualify as disabled. “Accommodations” by employers that do not really equate to anything more than a job title change can actually hurt a future claim for benefits when it changes your job description to a lighter duty occupation, removes a travel requirement or reduces your income which serves as the basis for calculating future disability benefits.

Anyone experiencing a medical or psychiatric condition should read, understand, and plan for the challenges presented by pre-existing condition exclusions in their disability coverage before making important occupational decisions. The attorneys at Robinson & Warncke are experienced in evaluating policy terms and providing consultations to help individuals experiencing serious illness make the right choices and avoid unintended consequences whenever possible and assist individuals whose claims have been denied based on pre-existing condition exclusions.