How Pre-Existing Condition Exclusions Operate in Long-Term Disability Insurance

Employees in Chicago claiming long-term disability benefits under an employer’s group policy, enforced under ERISA § 502(a), often are surprised that disability insurance policies have pre-existing condition exclusions. Though more than a decade ago such exclusions were banned in health insurance coverage, they are alive and well in long-term disability insurance. But they operate differently in group policies where coverage is often provided automatically, without you applying or showing evidence of insurability.

What Do Pre-Existing Conditions Exclude?

Pre-existing condition exclusions in long-term disability plans usually only exclude claims based on a pre-existing condition if you make the claim within the first 12 months of gaining coverage under that insurance policy. Even if you have been with the same employer for 12 months, you could still be subject to an exclusion if there was a waiting period until you became covered by the policy. Alternatively, if the employer changed insurance carriers and did not negotiate to waive the exclusion for any employees who already satisfied it under the prior policy, you could be subject to another 12-month waiting period.

What Is a Pre-Existing Condition?

Each long-term disability insurance policy defines pre-existing condition slightly differently. But the definition usually focuses on signs you knew or suspected you had an illness ultimately becoming the disabling illness. This is called adverse selection. Examples are getting treatment or taking medication, even though the condition may not be formally diagnosed yet.

When Is It Not a Pre-Existing Condition?

A good example of how narrow the exclusion is occurred recently in Gustafson-Feis v. Reliance Standard Life Ins. Co., No. C20-5336, 2021 WL 1561690 (W.D. Wash. Apr. 21, 2021). There, the plaintiff was in a car accident where she broke bones in her pelvis and sacrum, requiring multiple surgeries. Shortly after gaining coverage under a new policy, plaintiff suffered a labral tear in her hip. Reliance Standard denied the claim, asserting the disability was likely related to the prior hip injury. Plaintiff’s doctors explained the current pain was caused by the hardware in her sacrum and the current labral tear, not the prior car accident. Notwithstanding, Reliance felt it was related because it was part of her hip. The court disagreed, determining plaintiff suffered a new injury that was not a pre-existing condition, even if part of the same body part as where there is a pre-existing condition.

If your long-term disability insurance claim was denied due to a pre-existing condition exclusion, call a skilled ERISA long-term disability attorney right away. You may have a valid claim.