Learn how the Mental Health Parity and Addiction Equity Act expands the availability of behavioral health care to all Americans.
The Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008 requires health insurers and group health plans to provide the same level of benefits for mental and/or substance use treatment and services that they do for medical/surgical care. The Affordable Care Act further expands the MHPAEA’s requirements by ensuring that qualified plans offered on the Health Insurance Marketplace cover many behavioral health treatments and services.
Mental Health and Addiction Parity Rule for Medicaid and CHIP
The previously released final regulations of the MHPAEA only apply to commercial market and do not apply to Medicaid and the Children’s Health Insurance Program (CHIP). CMS’s new proposed regulation applies these changes to Medicaid and CHIP, preventing inequity between beneficiaries who have mental health or substance use disorder conditions in the commercial market (including the state and federal marketplace) and Medicaid and CHIP. This also promotes greater cross-state consistency for patients.
For more information, please visit Medicaid.gov.
Final MHPAEA Rule
The final rule provides details about the implementation of the MHPAEA, such as:
- Ensuring that parity applies to intermediate levels of care, such as treatment received in residential or intensive outpatient settings
- Clarifying the scope of the transparency required by health plans, including the disclosure rights of plan participants, to ensure compliance with the law
- Clarifying that parity applies to all plan standards, including geographic limits, facility-type limits, and network adequacy
- Eliminating an exception to the existing parity rule that was determined to be confusing, unnecessary, and open to abuse
Learn more from the following resources:
- CMS presentation on the final rule: Application of MHPAEA to Medicaid and CHIP (CMS-2333-F) (PDF | 163 KB)
- The Final Parity Rule
- The Final Parity Rule Fact Sheet
- FAQ on the Mental Health Parity and Addiction Equity Act (Sub-classifications)
- FAQs on Mental Health Parity Implementation (Affordable Care Act FAQs Part V)
- FAQs on Mental Health Parity Implementation (Affordable Care Act FAQs Part VII)
- FAQs on Mental Health Parity Implementation (Affordable Care Act FAQs Part XVII)
How the MHPAEA Works
MHPAEA requires many insurance plans that cover mental health or substance use disorders to offer coverage for those services that is no more restrictive than the coverage for medical or surgical conditions. This requirement applies to:
- Copays, coinsurance, and out-of-pocket maximums
- Limitations on services utilization, such as limits on the number of inpatient days or outpatient visits that are covered
- The use of care management tools
- Coverage for out-of-network providers
- Criteria for medical necessity determinations
MHPAEA does not require insurance plans to offer coverage for mental illnesses or substance use disorders in general, or for any specific mental illness or substance use disorder. It also does not require plans to offer coverage for specific treatments or services for mental and/or substance use disorders. However, coverage that insurance plans do offer for mental and/or substance use disorders must be provided at parity with coverage for medical or surgical health conditions.
Affordable Care Act Extension of MHPAEA Requirements
The Affordable Care Act significantly extends the reach of the MHPAEA’s requirements. Starting in 2014, the Affordable Care Act will require all small group and individual market plans created after March 23, 2010, to comply with federal parity requirements. Qualified Health Plans offered through the Health Insurance Marketplace in every state must include coverage for mental and/or substance use disorders as one of the 10 categories of Essential Health Benefits, and that coverage must comply with the federal parity requirements set forth in the MHPAEA.
A small group plan is defined as an employment-based plan that includes no more than 50 employees. A large group plan is an employment-based plan that includes 51 or more employees. An individual plan is one that someone purchases directly from an insurance company, and is not employment-based. Small group plans created before March 23, 2010, will be “grandfathered,” and will not be subject to the Essential Health Benefits requirements or the MHPAEA.
The Department of Health and Human Services (HHS) has also released guidance explaining how federal parity requirements will be applied to the Children’s Health Insurance Program (CHIP), Medicaid managed-care organizations, and, in states that expand Medicaid, to Alternative Benefit Plans.
- Guidance: Centers for Medicare & Medicaid Services (CMS) Letter to State Medicaid Directors – 2013 (PDF | 157 KB)
Who Must Provide Equal Coverage
Federal MHPAEA laws apply to:
- Large employer-funded plans (with more than 51 insured employees)
- Small employer-funded plans (with 50 or fewer employees, unless “grandfathered”)
- Individual market plans
- Medicaid managed-care programs
- Medicaid Alternative Benefit Plans and benchmark equivalent plans
The federal Office of Personnel Management has also issued guidance to apply the requirements of MHPAEA to coverage offered through the Federal Employees Health Benefit Program.
- Some plans may request an exemption from the law. If an employer-based plan can demonstrate that the requirements of the parity law have increased its health care costs by two percent in the first year that the MHPAEA applies to the plan, or by at least one percent in subsequent years, they may ask to be exempt for the following year.
- Self-insured non-federal government employee plans can opt out of the federal parity law.
Other Limits to MHPAEA
The requirements of MHPAEA do not apply to:
- Small employer plans created before March 23, 2010, (these will be “grandfathered,” and therefore exempt from the requirements of parity)
- Church-sponsored plans and self-insured plans sponsored by state and local governments
- Retiree-only plans
- Traditional Medicaid (fee-for-service, non-managed care)
Availability of Plan Information Requirements
MHPAEA requires that plans make certain information available with respect to mental health and substance use disorder benefits.
Insurers typically make decisions to cover or deny coverage for specific mental health and substance use disorder services based on whether that service is “medically necessary” for the patient. These insurers must share the criteria that they use to make these medical necessity determinations with any current or potential participant, beneficiary, or contracting provider upon request.
MHPAEA also provides that insurers must explain the reason for any denial of reimbursement or payment for services for mental health and substance use disorder benefits to the participant or beneficiary upon request, or as otherwise required.
A number of state and federal agencies share oversight and enforcement of parity. Enforcement varies based on the type of insurance plan.
State insurance commissioners oversee individual and employer-funded plans of less than 51 insured employees, as well as fully insured large group plans. However, the following states have determined that their insurance commissioner lacks the authority under their current state laws to enforce MHPAEA: Alabama, Oklahoma, Missouri, Texas, and Wyoming. In these states, HHS exercises enforcement authority.
Under a "fully insured" plan, enrollees pay premiums to an insurance company that must pay for the cost of covered health care services. In contrast, a “self-funded” or “self-insured” plan is one where the employer sets aside funds to pay for the full cost of employees’ health care. These plans typically hire an insurance company to help with claims processing. Cost-sharing requirements such as deductibles, copays, and coinsurance may apply under both types of plans.
The Department of Labor (DOL) and the Internal Revenue Service generally have enforcement authority over self-insured private sector employment-based plans that are subject to the Employee Retirement Income Security Act (ERISA). HHS has direct enforcement authority with respect to self-funded non-federal governmental plans.
Employees with questions about the MHPAEA or complaints about compliance by their employment-based group health plans can contact any of the departments. The departments will work together and, to the extent an insurer is involved, will work with the states, as appropriate, to ensure parity violations are corrected.
Some state laws provide even stronger consumer protections than the federal parity requirements. In those cases, the MHPAEA permits the state to enforce the law’s stricter requirements, generally through the state’s insurance commissioner.
Consumer Questions or Complaints
A number of federal helplines are available to field questions and comments from consumers with questions about federal parity requirements. Consumers should also contact their state insurance commissioner or the appropriate health insurance oversight authority in their state.
General Questions and Comments
CMS Health Insurance Helpline
877-267-2323 Extension 6-1565
Questions about Self-Funded State and Local Plans and Church Plans
CMS Health Insurance Helpline
877-267-2323 Extension 6-1565
Plans Overseen by State Insurance Commissioners
State insurance commissioners are the best source of information for questions regarding plans they oversee. Access the National Association of Insurance Commissioners – States and Jurisdictions website.
Learn more from the following resources:
- The federal Mental Health and Addiction Insurance Help Web Portal to help direct consumers to the appropriate agency and resources for parity complaints, appeals and other actions.
- Approaches in Implementing the Mental Health Parity and Addiction Equity Act: Best Practices from the States – 2016 (PDF | 406 KB)
- Know Your Rights: Parity for Mental Health and Substance Use Disorder Benefits
- Parity of Mental Health and Substance Use Benefits with Other Benefits: Using Your Employer-Sponsored Health Plan to Cover Services
- The full text of the Mental Health Parity and Addiction Equity Act (PDF | 55 KB)
- The Final Parity Rule describing how the law must be implemented
- A summary of the parity law published by the Center for Consumer Information and Insurance Oversight
- U.S. Department of Health and Human Services’ 2012 Study: Short-Term Analysis to Support Mental Health and Substance Use Disorder Parity Implementation
- Department of Labor Mental Health Parity resources