Mental Health Parity and Addiction Equity Act of 2008 Update

Nov 15, 2008 | Insurance News, Uncategorized | 0 comments

As part of the economic stabilization package (H.R. 1424), Congress passed mental health parity legislation which was signed into law on October 3, 2008, by President Bush as Public Law No: 110-343.

This new law amends the Employee Retirement Income Security Act (ERISA), the Public Health Service Act (PHSA), and the Internal Revenue Code (IRC) and applies to all ERISA group health plans and to health insurers that provide insurance coverage to group health plans.

In general, this new law requires group health plans that provide mental health or substance use disorder benefits to provide such benefits on par with medical-surgical benefits.

Exemptions

“Excepted” benefits to group health plans like disability income insurance, long-term care and Medicare Supplemental insurance that is offered separately are not included.

Like the current version of mental health parity, employers with 50 or fewer employees are exempted from the law.

Under the current version of mental health parity, self-funded state and local governmental plans subject to the PHSA were able to “opt out.” This is no longer the case.

Details of the New Law
The new Mental Health Parity Act does not require coverage of mental health or substance use disorder benefits.

However, if a group health plan does provide mental health or substance use disorder benefits, they are subject to a “parity” requirement, meaning that those mental health and substance use disorder benefits must have similar financial requirements (e.g., deductibles and co-pays) and treatment limitations (day/visit limits) as the group health plans’ medical and surgical benefits.

Financial Requirements
The financial requirements applied to mental health and substance use disorder benefits must not be more restrictive than the predominant financial requirements applied to substantially all medical and surgical benefits. “Financial requirements” are defined in the law as including deductibles, co-pays, coinsurance and any other out-of-pocket expenses.

Treatment Limitations
The treatment limitations applied to mental health or substance use disorder benefits must not be more restrictive than the predominant treatment limitations applied to substantially all medical and surgical benefits. “Treatment limitations” are defined as including limits on the frequency of treatment, number of visits, days of coverage, or other similar limits on the scope or duration of treatment.

Annual and Lifetime Limits
If a health insurance plan includes an aggregate annual or lifetime financial or treatment limit on substantially all medical and surgical benefits, it must either:

Apply the same applicable limits to mental health and to substance use disorder benefits o

Not include an aggregate annual or lifetime financial or treatment limit for mental health or substance use disorder benefits that is less than the limits applied to medical and surgical benefits.

Effective Date
The requirements of the new law are effective for plan years beginning on or after one year from the date the legislation was signed into law. As a result, the provisions apply to new contracts and renewals on or after October 3, 2009.

*If a group health plan is maintained pursuant to one or more collective bargaining agreements, the new law is effective for plan years beginning the latter of: (a) January 1, 2009, or (b) the date on which the last collective bargaining agreement relating to the plan terminates.