On October 3rd, 2008, the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 was signed into law. This new Federal law requires group health insurance plans (those with more than 50 insured employees) that offer coverage for mental illness and substance use disorders to provide those benefits in no more restrictive way than all other medical and surgical procedures covered by the plan. The Mental Health Parity and Addiction Equity Act does not require group health plans to cover mental health (MH) and substance use disorder (SUD) benefits but, when plans do cover these benefits, MH and SUD benefits must be covered at levels that are no lower and with treatment limitations that are no more restrictive than would be the case for the other medical and surgical benefits offered by the plan.
> Why is the Federal parity law important?
The Mental Health Parity and Addiction Equity Act:
- Eliminates the practice of unequal health treatment. This practice has kept individuals with untreated substance use and mental health disorders from receiving critically important treatment services. Providing parity provides insurance coverage for substance use and mental health disorders equally to other chronic health conditions like diabetes, asthma, and hypertension.
- Improves access to much needed mental health and substance use disorder treatment services through more equitable coverage. Millions of Americans with mental health (MH) and/or substance use disorders (SUD) fail to receive the treatment they need to get and stay well. The lack of health insurance coverage for MH and SUD treatment has contributed to a large gap in treatment services. Improving coverage of MH and SUD services will help more people get the care they need.
> How does the Federal parity law work?
The law requires group health insurance plans (those with more than 50 insured employees) that offer coverage for mental illness and substance use disorders to provide those benefits in a no more restrictive way than all other medical and surgical procedures covered by the plan. Specifically the law prohibits imposing financial requirements (such as deductibles, copays, coinsurance or out-of-pocket maximums) or treatment limitations (including day or visit limits and medical management tools) on MH and SUD benefits in a way that is more restrictive than those imposed on other medical or surgical benefits provided by the plan.
- Health plans are prohibited from applying separate financial requirements (such as deductibles, copays, coinsurance or out-of-pocket maximums) for MH and SUD benefits.
- If plans providing MH and SUD benefits have out-of-network coverage for medical and surgical benefits, they must also cover out-of-network MH and SUD providers.
Group health insurance plans can still manage the use and cost of the benefits they provide by determining both the medical necessity criteria and the scope of coverage and when prior authorization for treatment is required. However, under the Federal parity law, large group plans are required to provide participants and beneficiaries with the medical necessity and managed care criteria used to make decisions about coverage and, if MH or SUD benefits are denied, with the reasons for denial of benefits.
> Who does the Federal parity law apply to?
The Mental Health Parity and Addiction Equity Act applies to over 100 million people who are enrolled in large group employer-funded (more than 50 insured employees) or State-regulated plans, and to those who are covered by managed-care Medicaid programs.
- The Federal parity law includes provisions allowing certain types of plans to request an exemption from the law. Employer-based plans who can demonstrate that their total health care costs have increased by two percent as a result of the requirements of the parity law can ask to be exempt for the year following the first year or one year. Non-Federal employer group health plans sponsored by State and local governments can also opt out of the Federal parity law, the Federal Employees Health Benefit Program adopted the practice of parity in 2001.
- The Federal parity law currently does NOT apply to small employers who have fewer than 51 employees and to plans offered in the individual market. However, starting in 2014, small group and individual market plans purchased through State health exchanges will have to comply with the requirements of the Mental Health Parity and Addiction Equity Act. If you receive your health insurance coverage through a small employer it is important to note that small employers have the choice to retain their existing coverage or to purchase coverage outside of an exchange and in doing so can continue to be exempt from the parity requirement.
In addition, many States have parity laws and other types of laws aimed at protecting consumers that provide benefits and protections beyond the Mental Health Parity and Addiction Equity Act. The Federal parity law makes clear that State laws that provide greater protections than the Federal law continue to remain in effect.
> Is the Federal parity law now in effect?
Yes, both the Mental Health Parity and Addiction Equity Act approved by Congress and the Federal regulations issued to implement the Mental Health Parity and Addiction Equity Act are now effective for all plans covered by the law. For most plans, the requirements of the law became effective in January of 2010. In February 2010, the Federal Departments of Health and Human Services, Labor, and Treasury issued regulations to help implement the Federal parity law. For most plans, those regulations became effective in January 2011.
> How is the Federal parity law enforced?
A number of State and Federal agencies share responsibility to oversee and enforce compliance of the Mental Health Parity and Addiction Equity Act. State insurance commissioners and the Federal Department of Labor have oversight over employer-funded large group health plans. State insurance commissioners have oversight on individual and small employer plans (fewer than 51 employees insured). Self-funded employer plans are regulated by the Federal Department of Labor. Large group self-funded plans provided by State and local governments and churches are regulated by the Federal Department of Health and Human Services. The Federal Department of Treasury's Internal Revenue Service also has oversight to help enforce the law.
> What should consumers do if they think the Federal parity law is being violated?
Enforcement of the Federal parity law varies based on the type of insurance plan. Some plans are primarily enforced by the States, and in some States, State laws may provide stronger consumer protections than the Federal law for some plans. In these cases, the State's insurance commissioner or another entity in the State is primarily responsible for enforcement of the law. For other types of plans, the Federal parity law is primarily enforced by the Federal Department of Labor, the Federal Department of Health and Human Services, and/or the Internal Revenue Service.
Consumers that have concerns about compliance with MHPAEA can contact the CMS help line at 1-877-267-2323 extension 6-1565 or at email@example.com or the Department of Labor online or at 1-866-444-3272.
For covered State and local plans and for church plans you should contact the Department of Health and Human Services at 1-877-267-2323 extension 6-5511 or CMS's Health Insurance for Consumers webpage.
Consumers should also contact their State insurance commissioner or the appropriate health insurance oversight authority in their State.