With depression, anxiety, addiction and other psychological conditions on the rise, the push to find effective treatment has never been greater. This urgency in helping vast numbers of people struggling with mental illness has led to possible alternative and sometimes controversial treatment options; including the use of psychedelics, such as psilocybin.

With nearly 25 years experience litigating Long-Term Disability Insurance claims, I can say with a good degree of certainty that nearly all of my clients suffer some degree of mental illness. For many it is secondary to their primary disabling condition, while for others it is the primary cause of their disability and inability to work. 

By the time they come to see us, many of those with mental illness disabilities have tried everything, from talk therapy and medication trials to electroshock therapy, and not much has helped. Their doctors have labelled their conditions “treatment resistant” or “permanent” Many have lost hope for recovery and returning to work. 

This blog post will explore the potential future of psychedelics, in particular psilocybin as a therapeutic tool to treat mental health conditions, its effectiveness, risks, and the future challenges and opportunities it presents, not only in mental health care but also in the context of Long-Term Disability insurance claims.

The Psychedelic Shift: A New Treatment Standard?

Despite the doubts of insurers, psychedelics such as psilocybin are moving toward FDA approval in the United States, with MDMA for PTSD expected to be approved as early as 2025. Canada will likely follow suit. Psilocybin is also under fast-track review. Ketamine, while not officially approved for depression, is already prescribed off-label and through clinics offering ketamine infusions. Many of our clients have advised us that these infusions have provided them with significant relief. With these treatments becoming more viable, Long-Term Disability insurers will have to determine whether they qualify them as “appropriate treatment” as they assess what are already difficult claims to prove.

The Traditional LTD Approach to Mental Illness Claims

Long-term disability insurance policies typically cover mental illness, but insurers often impose stricter conditions on these claims. They may want objective evidence to prove that the mental illness is impacting a person’s functioning to the extent that they are not able to work. With invisible conditions, like mental illness and with a shortage of mental health treatment providers, it can be difficult, if not impossible to provide the evidence the insurer is requiring. 

In addition to proving impairment, the insurance companies will also require proof of “appropriate treatment”. In mental illness claims what is “appropriate” for one person, might not be appropriate for another. There is also the challenge of finding treatment providers and specialists who have the availability to provide treatment and prescribe and adjust medications.

When it comes to treatment, insurance companies usually have a standard pre-conception for what constitutes “appropriate treatment” for mental illnesses—which historically includes therapy, medication (like SSRIs or benzodiazepines), ongoing therapy by a certified therapist, consultation with a psychiatrist, and sometimes even inpatient care. Any deviation from what insurers consider “reasonable and appropriate” treatment can become a basis for the denial of Long-Term Disability benefits.

The question then becomes whether alternative treatments such as psychedelics like psilocybin would satisfy the insurance company’s “appropriate treatment” condition, while also helping demonstrate the severity of a person’s mental health disability.  

Most insurance companies consider psychotherapy and medication to be appropriate for the treatment for mental health related disabilities. Whether psilocybin therapy will be viewed as “appropriate”, is yet to be determined. It would be reasonable for insurers to first need to be convinced of the efficacy of the treatment, before determining whether it will satisfy the “appropriate treatment” condition in their policies. 

What is Psilocybin and How Does it Work?

Psilocybin is a psychedelic compound naturally occurring in certain species of mushrooms. When ingested, psilocybin is converted in the body to psilocin, which works on serotonin receptors in the brain, specifically the 5-HT2A receptor. This interaction leads to altered perceptions, emotions, and most importantly; cognitive processes.

The therapeutic potential of psilocybin comes from its ability to induce a state of heightened neuroplasticity, allowing for new neural connections to be made, potentially breaking harmful thought patterns associated with various mental health conditions. 

One of the key aspects of psilocybin therapy is its integration with traditional psychotherapy. This combination is believed to enhance the therapeutic potential of both approaches, while also mitigating the risks of psilocybin.  Some of the risks include: exacerbation of underlying mental health conditions; hallucinogen persisting perception disorder (HPPD); and bad trips. The psilocybin experience is conducted in a controlled, supportive environment under the guidance of trained therapists.  

What Mental Health Conditions Can Psilocybin Therapy Treat?

Research into psilocybin therapy has shown promising results for a range of mental health conditions, which happen to be the most common conditions that we see in our Long-Term Disability cases. Some of the most studied applications include:

1. Treatment-resistant depression: Psilocybin has shown remarkable efficacy in alleviating symptoms of depression that have not responded to traditional treatments such as talk therapy or SSRIs.

2. Anxiety disorders: Especially in the context of end-of-life care, psilocybin therapy has demonstrated strong potential in reducing anxiety and improving quality of life for terminally ill patients.

3. Addiction: Studies have indicated that psilocybin may be effective in treating various forms of addiction, including alcohol, nicotine and opioid dependence.

4. Post-traumatic stress disorder (PTSD): Preliminary research suggests that psilocybin, when combined with psychotherapy, could help individuals process traumatic experiences and reduce PTSD symptoms.

5. Obsessive-compulsive disorder (OCD): Early studies have shown promise in using psilocybin to disrupt the repetitive thought patterns characteristic of OCD.

The Future of Psilocybin

As we look to the future of psilocybin therapy, several challenges and opportunities come to light. Despite the growing evidence of its therapeutic potential, psilocybin remains a Schedule 1 controlled substance in many countries, including Canada. However, recent years have seen a shift in attitudes, with some jurisdictions decriminalizing or even legalizing its use for medical purposes.  

1. Regulatory Challenges: Despite growing evidence of its therapeutic potential, psilocybin remains a Schedule I controlled substance in many countries. While some jurisdictions have started to decriminalize or legalize its use for medical purposes, broader legalization is necessary for its inclusion in LTD claims.

2. Insurance Coverage: As psilocybin therapy becomes more mainstream, the conversation around insurance coverage will become crucial. Patients undergoing treatment may face challenges in proving its necessity for their LTD claims.

3. Equitable Access: Ensuring that psilocybin therapy is accessible to those in need, particularly LTD claimants, will be key. Developing standardized treatment protocols and certification programs for therapists is essential.

4. Long-term Research: While early studies are promising, more long-term research is needed to establish the efficacy and safety of psilocybin therapy, particularly for LTD claims requiring evidence of sustained medical necessity.

5. Ethical and Legal Considerations: As with any emerging treatment, clear ethical guidelines must be established to ensure responsible use, informed consent, and protection of patient rights—especially for those on LTD seeking alternative treatments.

If insurers do ultimately accept psilocybin therapy as “appropriate treatment” based on its ability to induce rapid and lasting changes in individuals suffering from conditions like depression, anxiety, and addiction, then the therapy may offer hope to those who have not found relief through traditional methods. It may also go a long way in helping our clients prove the severity of their illness. However, it’s crucial to approach this emerging field with both optimism and caution, ensuring that treatment providers explore its potential with rigorous scientific scrutiny and a commitment to patient safety and well-being. 

There is also the converse risk that, if the treatment is proven safe and effective and widely accepted, insurers may expect people to undergo psilocybin therapy, in order to comply with the “appropriate treatment” provisions in their policies. If they fail to exhaust this treatment option, the insurers could argue that they are not complying with treatment or they are not as disabled as they purport to be and then deny their Long-Term Disability benefits. 

In our law practice, we often see clients who are resistant to taking traditional pharmacological treatment for very legitimate reasons and to the detriment of their Long-Term Disability claims.

How Will Long-Term Disability Insurance Companies Handle Psychedelics as a Treatment for Mental Illness?

The landscape of mental health treatment is shifting. With growing research and regulatory changes, psychedelics like psilocybin, MDMA, and ketamine are emerging as legitimate treatments for conditions like depression, PTSD, and anxiety disorders. While this is promising for patients, it raises critical questions about how long-term disability (LTD) insurance companies will handle disability claims involving these treatments.

In our experience, when clients have exhausted all traditional treatment options, with little or no relief or improvement in their conditions, they often turn to alternative treatments. Our position is that by doing so, our clients are demonstrating their motivation to improve their condition and functioning, often at the expense of very costly alternative treatments. Sometimes, however, insurers will consider alternative treatments and argue that they are not “appropriate” in the context of their policies or that the alternative treatment may be making our client’s condition worse. 

If psilocybin therapy is going to form part of our client’s treatment plan, it will be important for insurers to accept the new therapy as “appropriate” or at the very least, not detrimental to our client’s condition and recovery.

What Can Claimants Do?

If you are currently receiving Long-Term Disability benefits and are considering psychedelic treatment such as psilocybin, here are some steps to protect your claim:

1. Obtain Medical Support – Make sure your psychiatrist or doctor formally recommends the treatment and documents why standard treatments have not been effective.

2. Keep Detailed Records – Maintain thorough records of your symptoms, treatment sessions, and any improvements or side effects.

3. Understand Your Policy – Review your Long-Term Disability policy carefully to see if there are exclusions for experimental treatments or non-traditional care settings.

4. Consult a Long-Term Disability Lawyer – If your insurer denies or threatens to terminate your benefits due to psychedelic treatment, legal representation can help challenge the decision.

Conclusion

As research on psychedelics advances and regulatory bodies approve their use, LTD insurers will have to adapt. Claimants should be prepared for resistance, but with the right medical and legal support, they should be able to argue the appropriateness of the treatment. If you have questions about how your Long-Term Disability claim might be affected by psychedelic treatments, consulting an experienced disability lawyer is a wise step.

Contact us for a Free Consultation

At Mulqueen Disability Law, we prioritise staying informed. While psilocybin therapy is not yet widely available, its potential to alleviate suffering for those with mental health conditions is significant. As the landscape of mental health treatment evolves, we remain committed to advocating for our clients’ rights to access effective and appropriate care.

Mulqueen Disability Law specializes in hard-to-prove long-term disability claims for “Invisible Conditions” such as mental illness (depression, anxiety, PTSD) and chronic conditions (pain, neurological, immunological, concussion, post-COVID)  Contact us for a free confidential consultation.

Mulqueen Disability Law is a boutique law firm, focused on litigating long-term disability insurance benefit claims. Courtney Mulqueen and her team of legal professionals are Trauma-Informed Certified and have over two decades of experience exclusively in the area of long-term disability law. She and her team draw on their “insider” experience working for the insurance companies (including, Canada Life, Sun Life, Manulife, and OTIP), that they now sue for their clients.  

The preceding is not intended to be legal advice. This blog is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog, you understand that there is no solicitor client relationship between you and the blog publisher. The blog should not be used as a substitute for competent legal advice from a licensed lawyer in your jurisdiction. If your disability claim has been denied and you require legal advice, please contact a lawyer specializing in disability law.

Floris, Gabriele, et al. “Psilocybin reduces heroin seeking behavior and modulates inflammatory gene expression in the nucleus accumbens and prefrontal cortex of male rats.” Molecular Psychiatry (2024): 1-16.

Johnson, Matthew W. “Classic psychedelics in addiction treatment: The case for psilocybin in tobacco smoking cessation.” Disruptive psychopharmacology (2022): 213-227.

van der Meer, Pim B., et al. “Therapeutic effect of psilocybin in addiction: A systematic review.” Frontiers in psychiatry 14 (2023): 1134454.