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Mental Health Parity

The Mental Health Parity Act amends the Employee Retirement Income Security Act (ERISA) and the Public Health Service Act to prohibit employers’ health plans from imposing any caps or limitations on mental health treatment or substance use disorder benefits that aren’t applied to medical and surgical benefits.

Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 was passed by Congress as part of the $700 billion financial rescue package in October 2008. The measure requires covered employers that provide health plans to cover mental illness and substance abuse on the same basis as physical conditions. President George W. Bush signed the financial package on October 3, 2008.

Originally, the mental health parity law was set to go into effect one year after enactment, with a different effective date for collective bargaining agreements. Congress deferred the effective date of the Act to January 2010 for plans that otherwise would have been covered in 2009.

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The Mental Health Parity Act does not require health insurance plans to provide mental health or substance use disorder benefits. However, for group health plans with 50 or more employees that choose to provide mental health and substance use disorder benefits, the Act does require parity with medical and surgical benefits.

Thus, group health plans that provide both medical and surgical benefits and mental health and substance use disorder benefits may not impose financial requirements and treatment limitations applicable to mental health and substance use disorder benefits that are more restrictive than the financial requirements and treatment limitations applied to medical and surgical benefits. Requirements such as copayments and deductibles and limitations such as number of visits or frequency of treatments can be no more restrictive on mental health and substance use disorder benefits than the requirements or limitations imposed on medical and surgical benefits.

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Here are some of the provisions of the mental health law:

  • It applies to group health plans of 51 or more employees.
  • It forbids employers and insurers from placing stricter limits (for example, higher copayments or covering fewer doctor’s visits) on mental health care than on other health conditions.
  • It applies to out-of-network coverage so that plans that offer out-of-network coverage for medical conditions also must provide out-of-network coverage for mental conditions.
  • It leaves in place state parity measures.
  • It requires that the U.S. Departments of Labor (DOL), Health and Human Services, and the Treasury issue regulations within one year.

The new law changes the Mental Health Parity Act (MHPA) of 1996, a federal law that required annual and lifetime dollar limits on mental health benefits be no lower than the limits for medical and surgical benefits offered by a group health plan or health insurance issuer offering coverage in connection with a group health plan.

Under the 1996 Mental Health Parity Act, employers could set different rules on cost-sharing (for example, copayments) and number of visits for mental health care compared with other types of health care. This changes under the new mental health parity measure.