A guide to disability insurance for transgender people

Buying disability insurance as a transgender person is more complicated, more expensive, and more time-consuming than it is for cisgender people.

Rebecca Shoenthal author photo

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Rebecca Shoenthal

Rebecca Shoenthal

Editor & Licensed Life Insurance Expert

Rebecca Shoenthal is a licensed life, disability, and health insurance expert and a former editor at Policygenius. Her insights about life insurance and finance have appeared in The Wall Street Journal, Fox Business, The Balance, HerMoney, SBLI, and John Hancock.

Updated December 15, 2021 | 9 min read

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Disability insurance is protection for your income. If you become disabled and can’t work but still need to pay your bills, you’ll be financially covered until you recover from your disability or your coverage ends. Disability insurance benefits help you put food on the table, pay for medical expenses, and generally uphold your standard of living while you’re disabled.

Because of social and cultural discrimination, transgender people suffer high rates of depression and anxiety. Insurance companies have determined that this increased risk of mental illness can mean a higher likelihood of disability. Additionally, transgender-related medical procedures, such as gender-affirming treatment, are also seen by carriers as potential risks.

But it’s not impossible to get disability insurance coverage if you are transgender, and it may be a lifeline if you develop a medical condition after your coverage begins.

Read on to learn about getting disability insurance as a transgender person.

Why you should buy disability insurance before gender confirmation surgery

It’s better to buy disability insurance sooner rather than later, because the older you get, the more likely you are to suffer a disability that forces you out of your job. You’ll pay lower premiums as a young person.

Disability insurance companies will not offer you coverage if you have surgery pending, and your eligibility for disability insurance coverage may still be limited even after the surgery is successfully completed.

You may be able to save money by buying disability insurance before beginning gender-affirming treatment. You may only be able to get coverage after undergoing those treatments at very high premium rates.

Surgery and hormone therapy

Many carriers require you to return to work for a period of time after your surgery until you display no “residual” symptoms.

Policygenius can help you find an insurance company that works directly with your coverage needs, including one that offers more generous benefit options to transgender people. You may have to wait as long as three to six years before getting full disability insurance coverage, even if you’re otherwise healthy.

If the disability insurance company knows you plan to transition, you may be offered a policy with an exclusion for transition-related surgeries or hormone therapy. People who have already transitioned may be required to submit an exhaustive description of all surgeries and hormone therapy they’ve received.

The disability insurance you already have may not even come into play after an operation. That’s because recovery times may be within the elimination period — you won’t be able to collect benefits until after the elimination period ends. Once you can return to your job, you’re no longer considered disabled.

Premiums, elimination and benefit periods, and exclusions

How much disability insurance coverage you need is dependent on your current income. Disability insurance replaces about 60% of your pre-tax income, which should roughly equal your after-tax income. The more coverage you purchase, the higher your premiums.

Disability insurance payouts usually occur monthly, but the length of time your disability insurance pays out while you’re disabled is limited to a benefit period. If you have a short-term disability insurance policy, which is usually only offered as part of an employee benefits package, the benefits period is probably only a number of months long and may max out at one year. But you can also purchase a long-term disability insurance policy, which has a benefit period that lasts many years, and even until retirement. The longer the benefit period, the more premiums you’ll pay.

Before you start receiving benefits after filing a claim, you will need to wait out an elimination period, which lets the insurance company monitor your progress in case you recover from your disability before the carrier is liable to pay you benefits. Under a short-term policy, the elimination period may be only a few weeks. But under a long-term policy, the elimination period is usually around 90 days, although shorter elimination periods may be offered for a higher premium.

What’s covered by your disability insurance should be carefully spelled out in your policy, but certain conditions are not covered. These are called exclusions. If you have a medical condition prior to buying the disability insurance policy, there’s a good chance that, if it causes you to become disabled, you won’t be able to claim disability insurance benefits from it.

How your employment affects your insurance rates

Transgender people experience unemployment rates about twice as high as those of cisgender people. Because of discrimination at the workplace, and even during the hiring process, transgender people may be excluded from salary jobs and forced to work freelance or become self-employed.

Your employment affects your ability to get disability coverage. Insurers may require you to show consistent income before you can buy an individual disability insurance policy. You may also be offered a short-term disability insurance policy, which could be more affordable, although they offer less coverage.

If you’re in a traditionally dangerous industry, you may be forced to pay much higher premiums than someone who works in an office environment, or you may not be able to get coverage at all. In order to get disability insurance as a freelancer or business owner, you’ll need to show two years of income or signed contracts indicating future earnings.

Pre-existing conditions

Whether due to social challenges or undertreatment from health care professionals, some illnesses remain more prevalent among the transgender community. These conditions may be treated as exclusions under your disability insurance policy, or they may increase your premium. Occasionally, as with life insurance some pre-existing conditions will prevent you from getting coverage entirely.

Depression and anxiety

Transgender people have higher rates of depression and anxiety than cisgender people. However, these conditions, as well as other mental illnesses, are almost always treated as exclusions for disability insurance. You can still get coverage, but the insurance company will reject any claim you file for a disability caused by a mental illness you already had before purchasing the policy.

It’s possible to purchase a policy without depression and anxiety as exclusions. You’ll have to prove that a doctor has been treating your illness for at least six months, and often, depending on the insurer, for a certain number of years. The health care provider will need to provide detailed documentation showing the prescriptions you’re taking, the type of treatment you’re receiving, and your prognosis.

HIV and AIDS

The CDC reports that as many as 28% of transgender people are living with HIV. As with other illnesses, HIV and AIDS will be excluded from coverage if coverage is offered to you at all. Because of the inherent risk involved with AIDS-defining illnesses, insurers may even consider HIV-prevention treatments, like PrEP, to be enough to deny you coverage, as such treatments imply risk to the insurer.

Before you purchase a policy, ask your representative at the carrier whether you’d be covered if you’re on PrEP, such as taking Truvada. Be sure to get the response in writing.

Drug and alcohol abuse

Rates of drug and alcohol abuse are higher for transgender people than cisgender people, largely as a result of living in a stressful environment and the cultural stigma against seeking treatment for substance abuse. If you have a history of using illicit drugs or alcohol addiction, it may affect your ability to get disability insurance coverage. Talk to your insurance company about your options, as you may be able to get covered if you’ve been clean for a period of time.

What to do if you get denied coverage

Before you shop around for disability insurance, you should compare rates and policies until you find one that completely satisfies your needs. But if a carrier denies you disability insurance coverage because of your medical history, you may need to keep searching for one that offers more favorable terms for transgender people.

The carrier thinks I’m the wrong gender. What do I do?

Every disability insurance company prices premiums differently. However, on average, women are charged more than men for similar disability insurance policies. If the disability insurance company lists your gender identity incorrectly, it’s not only humiliating; it could also cost you.

The carrier you choose may assess your rates depending on your gender assigned at birth instead of your gender after transitioning. And most if not all carriers do not allow you to list nonbinary, genderqueer, genderfluid, gender nonconforming, or other genders beyond male or female as your gender. Remember to shop around for a carrier that works to your needs.

Rescission

Transgender people especially need to document all therapy and medical treatments they’ve received, both pre-transition and post-transition, even if completely unrelated to being transgender. That’s because of rescission, which is the disability insurance company’s right to rescind coverage if you intentionally misrepresented your health history prior to purchasing the policy.

The company will investigate any claim you make, including requesting information from your physician about the cause of your disability. If the carrier determines that the cause was due to a condition that you should’ve mentioned prior to buying the policy, it may deny your claim and cancel your coverage altogether. Be sure to be completely honest about any serious illnesses you’ve had in the past.

You do have certain rights in the case of rescission, including appealing to state law. This can be especially helpful if, when you applied, you were unaware of the condition that caused the rescission or its severity.

Social Security disability insurance

Long-term disability insurance can be pricey, and a policy that fits your coverage needs may not fit into your financial plan. Short-term disability insurance may be less expensive, but it’s usually only offered as part of a group plan from an employer. Because transgender people frequently have limited resources and may struggle to find full-time employment, they may have to receive disability insurance from the Social Security Administration.

Social Security disability insurance is free in that you don’t need to pay premiums for coverage — every taxpayer pays a tiny amount out of each paycheck to fund the SSA. If it’s the only option you have, you may be eligible for Social Security disability insurance benefits if you become disabled and can’t work. The U.S. government adjusts benefit amounts each year, and the amount you can receive depends on how long you were in the workforce before you became disabled. As of 2018, the maximum Social Security disability benefit amount is $2,788, although the average benefit amount is $1,197.

Keep in mind that qualifying for disability benefits under Social Security is notoriously difficult. You have to meet a very strict definition of disability, and many aren’t disabled enough; as many as two-thirds of Social Security disability claims are denied. But you have the option to appeal the decision, which may entail reconsideration by the agency, a hearing with a judge, and review by both an appeals council and a federal court.