MENTAL HEALTH PARITY LAW

MENTAL HEALTH PARITY LAW

From Smart/Medical Consumer Wiki

The Mental Health Parity Law was signed by the President on October, 2008. The law ends discrimination against patients seeking treatment for mental illness. Private health insurers generally provide less coverage for mental illnesses and substance abuse than for other medical conditions, which will change the new law. Specifically, the law prohibits insurers and group health benefits that are most restrictive from those applied to medical and surgical services.

More than one-third of Americans will soon receive better insurance coverage for mental health treatments, required by this law. Federal officials said the law would improve coverage for 113 million people, including 82 million in employer-sponsored plans that are not subject to state regulation. The effective date, most health plans, will be Jan 1, 2010.

Key Provisions

Requires equity in financial requirements.

And insurer or group health plan must ensure that any financial requirements—such as deductibles, co-payments, co-insurance, and out-of-pocket expenses—applied to mental health and addiction benefits are no more restrictive or costly than the financial requirements applied to comparable medical and surgical benefits that the plan covers.

Requirements equity in treatment limits.

A group health plan must ensure that the treatment limitations—such as frequency of treatment, number of visits, and day of coverage—applied to mental health and addictive benefits are no more restrictive than the treatment limitations applied to comparable medical and surgical benefits that the plan covers.

Does not mandate mental health benefits.

The law does not mandate insurers or group health plans to provide any mental coverage. The law’s provisions only apply to plans that choose to offer mental health coverage.

Exempts certain businesses.

The law exempts small businesses with 50 or fewer employees. It also exempt those businesses that experience an overall premium increase of 2 percent or more in the first year and 1 percent in subsequent years.

Does not mandate out-of-network benefits.

The law simply states that if a plan already offers out-of-network benefits, it must offer out-of-network benefits on the same terms for mental health services as it does for medical and surgical services.

Does not pre-empt stronger state parity laws.

The bill establishes a federal floor but permits states to go further to protect their citizens. This bill would not supersede any state law that provides customer protection, benefits, rights, or remedies stronger than those in the bill.

Explicitly permits medical management of health benefits.

The bill allows the use of medical management tools that are based on valid medical evidence and pertinent to the patient’s medical condition so that specific coverage is not arbitrary in it’s application and more transparent to the patient.

Provides for enforcement.

The bill provides remedies to protect beneficiaries’ rights and permits enforcement of the bill’s equity requirements by the Internal Revenue Service, the Department of Health and Human Services, and the Department of Labor.

Estimated Cost


It is estimated that a miniscule impact on premiums for the mental health parity requirement—just two-tenths of one percent.

For example, over the last eight years, the Federal Employees Benefit Program (FEHBP) has made “parity” coverage for mental health care available to Members of Congress and 8.5 million other federal employees. Research has shown that there has been no significant cost increase attributable to this parity requirement in FEHBP.

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