Will therapy affect my life insurance?

This is the question people ask before they book a first session, and it deserves a plain answer: the insurer may ask, may see your records if you sign, and may act on what it finds — within limits the Insurance Code sets.

The short answer: it can be considered, but not as a blanket reason to refuse you. For life, annuity or disability policies issued since 1984, "No insurer … shall refuse to insure, or refuse to continue to insure, or limit the amount, extent, or kind of coverage available to an individual, or charge a different rate for the same coverage solely because of a physical or mental impairment, except where the refusal, limitation or rate differential is based on sound actuarial principles or is related to actual and reasonably anticipated experience."¹ A "physical or mental impairment" is one "which substantially limits one or more of that person's major life activities."¹ A condition that does not substantially limit a major life activity is not an "impairment" within that section — which means the section gives you no protection for it; a condition that does is one the insurer may refuse or rate on "solely" only where the decision rests on actuarial grounds or actual experience. And whatever the insurer decides, you have rights to the reasons and the file: on an adverse underwriting decision the insurer must give "the specific reason or reasons for the adverse underwriting decision in writing," or tell you that you may request them,² and on written request within 90 business days it must furnish, within 21 business days, the reasons, "the specific items of personal and privileged information that support those reasons," and "the names and addresses of the institutional sources that supplied" them.² Your therapist cannot send the insurer anything without a signed authorization that meets the Confidentiality of Medical Information Act,³ ⁴ and the insurer's authorization must state how long it stays valid, which for an application "shall be no longer than" thirty months from signing.⁵

What the insurer can ask and see

Nothing in the Insurance Code stops an application from asking whether you have been treated for a mental health condition, and the underwriting privacy law assumes it will. The insurer may collect medical record information — "personal information that … relates to an individual's physical or mental condition, medical history, or medical treatment" and "is obtained from a medical professional or medical care institution, from the individual, or from the individual's spouse, parent, or legal guardian" — with your authorization.⁶ ⁵

That authorization has to meet two sets of rules. Under the Insurance Code the form must be "written in plain language," "dated," must specify "the types of persons authorized to disclose information about the individual," "the nature of the information authorized to be disclosed," and "the purposes for which the information is collected," and must state how long it lasts — for an application for "life, health or disability insurance," "no longer than … thirty months from the date the authorization is signed."⁵ Under the Confidentiality of Medical Information Act, your therapist "shall not disclose medical information … without first obtaining an authorization,"³ and that authorization must be "handwritten or … in a typeface no smaller than 14-point type," "clearly separate from any other language present on the same page," signed and dated by you, must state "the specific uses and limitations on the types of medical information to be disclosed," and must carry "an expiration date or event" — "one year or less, unless the person signing the authorization requests a specific date beyond a year …" (the other exception is for clinical trials and research).⁴ A provider may then release records to an insurer "if the insurance institution, agent, or support organization has complied with all of the requirements for obtaining the information" under the Insurance Code's privacy article.³ What are psychotherapy notes and who can see them? →

The insurer may also share what it collects with an "insurance-support organization" — shared underwriting databases and firms that supply consumer or investigative reports to insurers — but only what is "reasonably necessary" to "detect or prevent criminal activity, fraud, material misrepresentation, or material nondisclosure" or for either party "to perform its function in connection with an insurance transaction involving the individual."⁷

What the insurer cannot do

Section 10144 draws the line. The insurer cannot refuse, limit or rate you "solely because of a physical or mental impairment" unless the decision "is based on sound actuarial principles or is related to actual and reasonably anticipated experience."¹ Two consequences:

• Where a diagnosis amounts to an impairment, it cannot by itself justify refusing or rating you unless the decision "is based on sound actuarial principles or is related to actual and reasonably anticipated experience."¹ The bar is on decisions made "solely" because of the impairment; the insurer may still weigh the information alongside other factors.¹
• A condition that does not "substantially limit" a major life activity is not an impairment within the section — so for a course of therapy for, say, a period of grief or work stress, section 10144 neither restricts nor permits anything. The insurer may ask about it and may take it into account, subject to other law.¹

The general anti-discrimination section for life and disability insurance, section 10140, lists race, color, religion, sex, gender, gender identity, gender expression, national origin, ancestry and sexual orientation; it does not mention mental impairment, which is why section 10144 matters.⁸

If you are declined or rated

An "adverse underwriting decision" includes "a declination of insurance coverage," "a termination of insurance coverage," and, for life, health or disability insurance, "an offer to insure at higher than standard rates."⁶ When one happens:

1. Reasons. For an individual life, health or disability policy the insurer "shall provide the specific reason or reasons in writing at the time of the decision."² Otherwise — except where the decision followed a purely oral inquiry, when the explanation may be oral — it must give the reasons in writing or tell you that you may request them, and give you a summary of your rights.²
2. The file. Within 90 business days of the notice, write and ask. Within 21 business days the insurer must give you the reasons (if not already given), the specific items of information behind them, and the institutional sources' names and addresses.² These rights attach to coverage that is "individually underwritten";⁶ most employer group plans are not. Medical record information "shall be disclosed either directly to the individual about whom the information relates or to a medical professional designated by the individual," whichever you prefer.²
3. Access anyway. Separately, on written request an insurer or insurance-support organization must within 30 business days tell you the nature and substance of the recorded personal information it holds about you, let you see and copy it, and disclose to whom it has given the information in the previous two years.⁹ One catch specific to therapy: "Mental health record information shall be supplied directly to the individual … only with the approval of the qualified professional person with treatment responsibility for the condition to which the information relates."⁹

What to do

• Before applying: ask your therapist what the record says — the diagnosis code, the dates, whether it notes hospitalization or medication. What is a diagnosis code? → · How to get my therapy records →
• On the application: answer the questions asked, accurately. The privacy law lets an insurer withhold "specific items of privileged information" — claim- and litigation-related material, not your medical records — where it has "a reasonable suspicion … that the applicant … has engaged in criminal activity, fraud, material misrepresentation or material nondisclosure";² a non-disclosure is the one thing that can cost you more than the diagnosis.
• Read the authorization before signing: what it covers, who may disclose, and its expiry.⁴ ⁵ You are entitled to a copy.⁴ ⁵
• If declined or rated up: send the written request for reasons and file within 90 business days; take the reasons to another insurer or an independent agent, and ask whether the decision rests on "sound actuarial principles."¹ ²

Worked example

A woman who saw a therapist for eighteen months after a divorce, with a diagnosis of adjustment disorder and no medication, applies for term life cover. She answers "yes" to the mental health treatment question and signs the insurer's authorization, which states a purpose, names the insurer and expires in thirty months.⁵ Her therapist releases the records under a CMIA-compliant authorization.³ ⁴ The insurer offers cover at a higher-than-standard rate — an adverse underwriting decision.⁶ It must give the reasons in writing at the time.² She writes within 90 business days; within 21 business days she receives the items relied on and the sources.² Whether her adjustment disorder "substantially limit[ed]" a major life activity is a factual question. If it did, the insurer may rate on it only where the rating "is based on sound actuarial principles or is related to actual and reasonably anticipated experience"; if it did not, section 10144 does not reach the decision at all.¹ Either way she has the written reasons and the file, and she takes them to a second insurer.

Q&A

Q: Can I just not mention the therapy? A: The application will ask, and the privacy law treats "material misrepresentation or material nondisclosure" as grounds for the insurer to withhold privileged items from the file it must otherwise show you.² The consequences of a misstatement for the policy itself are governed by other parts of the Insurance Code, not cited here. Answer accurately.

Q: Does the insurer see my therapist's session notes? A: Only what your signed authorization covers, and only if the form meets both statutes.³ ⁴ ⁵ Psychotherapy notes kept separately are a distinct category. What are psychotherapy notes? →

Q: Is this the same for health insurance? A: Partly. Section 10144 also reaches disability policies that provide health benefits, but most health coverage is governed by other statutes, including the parity law. What is mental health parity? →

Q: What about disability insurance through work? A: Section 10144 covers "individual or group insurance providing life, annuity, or disability benefits."¹ The written-reasons and file rights above apply only to coverage that is "individually underwritten,"⁶ which most employer group plans are not. Can I get paid during mental health leave? →

Our therapist directory: See its current status →

Health coverage is different: Can insurance refuse me for a mental health history? →

Sources

1. Cal. Insurance Code §10144 — "No insurer issuing, providing, or administering any contract of individual or group insurance providing life, annuity, or disability benefits applied for and issued on or after January 1, 1984, shall refuse to insure, or refuse to continue to insure, or limit the amount, extent, or kind of coverage available to an individual, or charge a different rate for the same coverage solely because of a physical or mental impairment, except where the refusal, limitation or rate differential is based on sound actuarial principles or is related to actual and reasonably anticipated experience. 'Physical or mental impairment' means any physical, sensory, or mental impairment which substantially limits one or more of that person's major life activities" — california.public.law.
2. Cal. Insurance Code §791.10 — (a)(1) "Either provide the applicant, policyholder, or individual proposed for coverage with the specific reason or reasons for the adverse underwriting decision in writing or, except as provided in subdivision (e), advise the person that upon written request he or she may receive the specific reason or reasons in writing," and (a)(2) the summary of rights; (b) "Upon receipt of a written request within 90 business days from the date of the mailing of notice or other communication of an adverse underwriting decision … the insurance institution or agent shall furnish to such person within 21 business days from the date of receipt of such written request: (1) The specific reason or reasons for the adverse underwriting decision, in writing … (2) The specific items of personal and privileged information that support those reasons," with (b)(2)(A) the exception for "a reasonable suspicion, based upon specific information available for review by the commissioner, that the applicant, policyholder or individual proposed for coverage has engaged in criminal activity, fraud, material misrepresentation or material nondisclosure," and (b)(2)(B) medical record information "disclosed either directly to the individual about whom the information relates or to a medical professional designated by the individual … whichever the individual prefers"; (b)(3) "The names and addresses of the institutional sources that supplied the specific items of information"; (e) for "an individual life, health, or disability insurance policy, the insurance institution or agent responsible for the decision shall provide the specific reason or reasons in writing at the time of the decision" — california.public.law.
3. Cal. Civil Code §56.10 — (a) "A provider of health care, health care service plan, or contractor shall not disclose medical information regarding a patient of the provider of health care or an enrollee or subscriber of a health care service plan without first obtaining an authorization, except as provided in subdivision (b) or (c)"; (c)(11) disclosure "to an insurance institution, agent, or support organization, subject to Article 6.6 (commencing with Section 791) of Chapter 1 of Part 2 of Division 1 of the Insurance Code, of medical information if the insurance institution, agent, or support organization has complied with all of the requirements for obtaining the information pursuant to" that article — california.public.law.
4. Cal. Civil Code §56.11(b) — an authorization is valid if it "(1) Is handwritten or is in a typeface no smaller than 14-point type. (2) Is clearly separate from any other language present on the same page and is executed by a signature that serves no other purpose than to execute the authorization. (3) Is signed … and dated by" the patient or listed representative; "(4) States the specific uses and limitations on the types of medical information to be disclosed"; (5)–(7) the names or functions of the discloser and recipients and the limits on their use; "(8) States an expiration date or event. The expiration date or event shall limit the duration of the authorization to one year or less, unless the person signing the authorization requests a specific date beyond a year or unless the authorization is related to an approved clinical trial … or medical research study …"; "(9) Advises the person signing the authorization of the right to receive a copy of the authorization" — california.public.law.
5. Cal. Insurance Code §791.06 — "no insurance institution, agent or insurance-support organization may utilize as its disclosure authorization form … a form or statement which authorizes the disclosure of personal or privileged information about an individual … unless the form or statement: (a) Is written in plain language. (b) Is dated. (c) Specifies the types of persons authorized to disclose information about the individual. (d) Specifies the nature of the information authorized to be disclosed. (e) Names the insurance institution or agent … (f) Specifies the purposes for which the information is collected. (g) Specifies the length of time the authorization shall remain valid, which shall be no longer than: (1) In the case of authorizations signed for the purpose of collecting information in connection with an application for an insurance policy … (A) Thirty months from the date the authorization is signed if the application or request involves life, health or disability insurance"; (h) the right "to receive a copy of the authorization form" — california.public.law.
6. Cal. Insurance Code §791.02 — (a) "'Adverse underwriting decision' means any of the following actions with respect to insurance transactions involving insurance coverage that is individually underwritten: (1) (A) A declination of insurance coverage. (B) A termination of insurance coverage … (E) In the case of a life, health, or disability insurance coverage, an offer to insure at higher than standard rates"; (q) "'Medical record information' means personal information that is both of the following: (1) Relates to an individual's physical or mental condition, medical history, or medical treatment. (2) Is obtained from a medical professional or medical care institution, from the individual, or from the individual's spouse, parent, or legal guardian" — california.public.law.
7. Cal. Insurance Code §791.13 — "An insurance institution, agent, or insurance-support organization shall not disclose any personal or privileged information about an individual collected or received in connection with an insurance transaction unless the disclosure is: (a) With the written authorization of the individual … (c) To an insurance institution, agent, insurance-support organization or self-insurer, provided the information disclosed is limited to that which is reasonably necessary under either paragraph (1) or (2): (1) To detect or prevent criminal activity, fraud, material misrepresentation, or material nondisclosure in connection with insurance transactions; or (2) For either the disclosing or receiving insurance institution, agent, or insurance-support organization to perform its function in connection with an insurance transaction involving the individual" — california.public.law.
8. Cal. Insurance Code §10140(a) — "No admitted insurer, licensed to issue life or disability insurance, shall fail or refuse to accept an application for that insurance, to issue that insurance to an applicant therefor, or issue or cancel that insurance, under conditions less favorable to the insured than in other comparable cases, except for reasons applicable alike to persons of every race, color, religion, sex, gender, gender identity, gender expression, national origin, ancestry, or sexual orientation"; the section does not mention physical or mental impairment — california.public.law.
9. Cal. Insurance Code §791.08 — (a) on "a written request … for access to recorded personal information about the individual," the insurer, agent or insurance-support organization "shall within 30 business days from the date such request is received: (1) Inform the individual of the nature and substance of such recorded personal information … (2) Permit the individual to see and copy, in person, such recorded personal information … (3) Disclose to the individual the identity, if recorded, of those persons to whom the insurance institution, agent or insurance-support organization has disclosed such personal information within two years prior to such request"; (c) medical record information supplied "either directly to the individual or to a medical professional designated by the individual," and "Mental health record information shall be supplied directly to the individual, pursuant to this section, only with the approval of the qualified professional person with treatment responsibility for the condition to which the information relates" — california.public.law.

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