Pre-existing Conditions in ERISA Disability Plans

Preexisting condition exclusion provisions in group short and long term disability plans are quite different from preexisting conditions as we typically understand them. Those with potentially disabling conditions may still be able to secure their income through disability insurance, depending on the preexisting condition exclusion contained in the plan. Here is a typical preexisting condition exclusion as it appears in an ERISA based Unum group long term disability plan:

You have a pre-existing condition when you apply for coverage when you first become eligible if: (a) you received medical treatment, consultation, care or services including diagnostic measures, or took prescribed drugs or medicines in the 12 months just prior to your effective date of coverage; or you had symptoms for which an ordinarily prudent person would have consulted a health care provider in the 12 months just prior to your effective date of coverage; and (b) the disability begins in the first 12 months after your effective date of coverage.

This provision creates a “look back period” and a “preexisting condition period.” The look back period tells us when a condition is preexisting: it is preexisting if the person received treatment for it, or should have, in the 12 months before she became covered by the group disability policy. The preexisting condition period tells us when a condition that is preexisting cannot be the basis for being paid disability benefits under the plan: a person will be excluded from coverage if she becomes disabled from a preexisting condition during the first 12 months after she becomes a covered person under the plan.

Courts have long understood the difference between traditional preexisting condition provisions and those contained in group short and long term disability plans. The first circuit court of appeals (which sits in Boston and covers Maine, New Hampshire, Massachusetts, Rhode Island and Puerto Rico) had the following to say about the difference:

The exclusion clause at issue here does not apply to pre-existing conditions in the ordinary sense. A routine pre-existing condition clause aims to bar coverage for claims arising from conditions existing before the effective date of an insurance policy; such policies focus on the prior origination or prior manifestation of the condition. [citation omitted] The clause in Hughes’ policy might be described more accurately as a “recent treatment” exclusion because it prohibits coverage for any total disability which occurs during a probationary period and is attributable to a condition for which the insured received medical treatment just prior to the probationary period. Hughes v. Boston Mut. Life Ins. Co., 26 F.3d 264, 269 (1994).

The court went on to discuss the different purpose for such exclusions:

Unlike the standard pre-existing condition clause, the recent treatment exclusion is not strictly designed to weed out known insurance risks; it would even permit activity which, if not reported on an application for a policy with a standard pre-existing condition clause, might suggest fraud. For example, as counsel for Boston Mutual suggested at oral argument, an insured who was disabled within the probationary period and did not receive medical treatment for a condition contributing to the disability during the pre-probationary period would be entitled to coverage even if she (1) received treatment for such a condition before (but not during) the pre-probationary period, (2) knowingly suffered from symptoms of the condition during the pre-probationary period without seeking medical attention, or (3) received treatment during the pre-probationary period for a broken arm (not a symptom of MS) caused by a fall attributable to loss of balance resulting from undiagnosed MS. Id.

So, what is the take away for people who have group short or long term disability or are planning to obtain such coverage? You may be covered, or may be able to obtain coverage, even if you have a condition that would preclude you from coverage under the traditional preexisting condition provisions. Consult an attorney if you have a condition that may become disabling in the future, so that you can properly understand the preexisting condition exclusion in your plan and plan accordingly: it may help you to secure disability benefits that you might not have thought possible.