The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) is a federal law that generally prevents group health plans and health insurance issuers that provide mental health and substance use disorder (MH/SUD) benefits from imposing less favorable benefit limitations on those benefits than on medical and surgical coverage.
On Nov. 13, 2013, the Departments of Labor, Health and Human Services and the Treasury jointly issued a final rule implementing the MHPAEA. The final rule increases parity between MH/SUD benefits and medical and surgical benefits in group and individual health plans. The final rule applies for plan years beginning on or after July 1, 2014 (Jan. 1, 2015 for calendar year plans).
The MHPAEA was enacted on Oct. 3, 2008, to strengthen federal mental health parity requirements for health coverage. The MHPAEA supplemented the Mental Health Parity Act of 1996 (MHPA), which required parity with respect to aggregate lifetime and annual dollar limits for mental health benefits. The MHPAEA also extended the parity requirements to substance use disorder benefits. The MHPAEA became effective for plan years beginning after Oct. 3, 2009.
Under the MHPAEA, the financial requirements and treatment limits that group health plans and health insurance issuers apply to MH/SUD benefits generally cannot be more restrictive than those applicable to medical and surgical benefits.
AFFECTED HEALTH PLANS
The MHPAEA generally applies to plans sponsored by employers with more than 50 employees, including self-insured plans and fully-insured arrangements.
The MHPAEA does not require large group health plans and their health insurance issuers to cover MH/SUD benefits.The MHPAEA’s requirements apply only to large group health plans and their health insurance issuers that choose to include MH/SUD benefits in their benefit packages. However, other state and federal laws may require a plan to provide these benefits.
The Affordable Care Act (ACA), builds on the MHPAEA and requires some plans to cover MH/SUD services as an essential health benefit. Specifically, non-grandfathered health plans in the individual and small group markets are required to provide essential health benefits (which include MH/SUD services), as well as comply with the federal parity law requirements, beginning in 2014.
The MHPAEA contains the following parity requirements:The financial requirements (such as deductibles, copayments, coinsurance and out-of-pocket limits) applicable to MH/SUD benefits cannot be more restrictive than the predominant financial requirements applied to substantially all medical and surgical benefits.
Treatment limitations (such as frequency of treatment, number of visits, days of coverage or other similar limits on the scope or duration of coverage) must also comply with the MHPAEA’s parity requirements.
Nonquantitative treatment limitations (such as medical management standards, formulary design and determinations of usual, customary or reasonable amounts) are subject to a separate parity requirement.
If medical and surgical benefits are offered on an out-of-network basis, a plan or issuer must also offer MH/SUD benefits on an out-of-network basis.
In addition, the MHPAEA requires plans to make certain information available with respect to MH/SUD benefits, such as the criteria for medical necessity determinations and the reason for any denial of reimbursement or payment for MH/SUD services.
The MHPAEA’s provisions are included under ERISA. The Department of Labor (DOL) and the Internal Revenue Service (IRS) generally have enforcement authority over private sector employment-based plans that are subject to ERISA.
While ERISA does not contain a specific penalty for violations of the MHPAEA, plan participants and beneficiaries and the DOL may use ERISA’s civil enforcement provisions to enforce the MHPAEA. Also, when the DOL audits an ERISA covered health plan, it will often investigate the plan’s compliance with federal mental health parity requirements.
In addition, employers that violate the MHPAEA may be subject to an IRS excise tax. Generally, an excise tax of $100 per individual, per day will apply to MHPAEA violations, unless an exception applies. Any applicable excise taxes must be reported on IRS Form 8928, “Return of Certain Excise Taxes under Chapter 43 of the Internal Revenue Code.”
More information on the MHPAEA is available on the DOL’s website, including FAQs and a self-compliance tool.
This Legislative Brief is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.
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