Mental Health Parity Act
By the Centers for Medicare & Medicaid Services
The Mental Health Parity Act of 1996 (MHPA) is a federal law that may apply to two different types of coverage:
1) Large group self-funded group health plans (CMS has jurisdiction over self-funded public sector (non-federal governmental)
plans while the Department of Labor 866-444-3272 has jurisdiction over private sector self-funded group health plans.);
2) Large group fully insured group health plans.
Contact your state's insurance department to find out about whether additional protections apply to your coverage if you are in a fully
insured group health plan or have individual market (non-employment based) health coverage.
Medicare and Medicaid are not issuers of health insurance. They are public health plans through which individuals obtain health
coverage. Contact your specific Medicare or Medicaid contractor to discuss your level of benefits.
Employment-related group health plans that provide benefits through insurance are known as fully insured group health plans. Employment-related
group health plans that pay for coverage directly, without purchasing health insurance from an issuer, are called self-funded group health plans.
Contact your plan administrator to find out if your group coverage is fully insured or self-funded.
The MHPA may prevent your large group health plan from placing annual or lifetime dollar limits on mental health benefits that are lower - less
favorable - than annual or lifetime dollar limits for medical and surgical benefits offered under the plan. MHPA does NOT apply to small group health
plans or health insurance coverage in the individual (non-employment based) market, but you should check to see if your state law requires mental health
parity in such other cases. (Visit www.ncsl.org, on the right hand side of the page enter "mental health parity" then select "State Laws
Mandating or Regulating Mental Health Benefits" in order to view State specific information.) MHPA applies to most group health plans with more than
50 workers. According to Federal Standards, MHPA does NOT apply to group health plans sponsored by employers with fewer than 51 workers.
For example, if your large group health plan has a $1 million lifetime limit on medical and surgical benefits, it cannot put a $100,000 lifetime limit on
mental health benefits. The term "mental health benefits" means benefits for mental health services defined by the health plan or coverage.
Under current law, large group health plans may impose some restrictions on mental health benefits and still comply with the law. MHPA does not
prohibit large group health plans from:
- Covering mental health services within network only, even though the plan will pay for out of network services for medical/surgical benefits (although
with higher out-of-pocket cost to the subscriber);
- Increasing co-payments or limiting the number of visits for mental health benefits;
- Imposing limits on the number of covered visits, even if the plan does not impose similar visit limits for medical and surgical benefits; and
- Having different cost-sharing arrangements, such as higher coinsurance payments for mental health benefits, as compared to medical and surgical benefits.
- Although the law requires "parity," or equivalence, with regard to dollar limits, MHPA does NOT require large group health plans and their
health insurance issuers to include mental health coverage in their benefits package. The law's requirements apply only to large group health plans
and their health insurance issuers that include mental health benefits in their benefits packages.
Some additional information:
- A visit limit coupled with a usual, customary, and reasonable (UCR) charge is not the equivalent of an annual or lifetime dollar limit.
As a result, it is not a violation of the MHPA requirements. Payments made by the plan on the basis of UCR charges will vary from one case
to the next. What is not permitted is a limit on the number of visits, together with a fixed dollar limit per visit, for example, 60 visits annually
at $50 per visit (totaling $3,000), unless the medical-surgical coverage is the same.
- You may be in a network plan that has an annual limit for mental health benefits received out-of-network, with no limits for out-of-network medical
and surgical benefits. MHPA allows this as long as there is parity between medical and surgical benefits and mental health benefits received in
- A large group health plan (or health insurance coverage offered in connection with a group health plan) is not subject to MHPA if the application
of its provisions to the plan raises costs by at least 1%.
If your large group health plan has separate dollar limits for mental health benefits, the dollar amounts that your plan has for treatment of substance
abuse or chemical dependency are NOT counted when adding up the limits for mental health benefits and medical and surgical benefits to determine if there is parity.
An example of a coverage provision that violates MHPA is as follows: Your plan has a limit of 60 visits per year for mental health benefits, along with a
fixed dollar limit of $50 per visit - a total annual dollar limit of $3,000. It places no similar limits on medical and surgical benefits. MHPA does NOT allow
this inequality to exist for large group health plans covered by the law.
For additional information, you may e-mail us at email@example.com.
Note: There are three exceptions to the MHPA requirements:
- MHPA requirements do not apply to small employers who have between 2 and 50 employees;
- Large group health plans that can demonstrate that compliance with MHPA increases their cost by at least one percent can notify their beneficiaries
that MHPA does not apply to their coverage; and
- A non-federal government employer that provides self-funded group health plan coverage to its employees (coverage that is not provided through an
insurer) may elect to exempt its plan (opt-out) from most requirements of Title XXVII of the Public Health Service (PHS) Act, with the exception of
requirements of the Genetic Information Nondiscrimination Act (GINA) requirements pertaining to the certification and disclosure of an individual's
creditable coverage under the plan, and the issuance of a notice of opt out to enrollees at the time of enrollment and on an annual basis thereafter.
On October 3, 2008, the President signed the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). Key changes made by MHPAEA, which is generally
effective for plan years beginning after October 3, 2009, include the following:
- If a group health plan includes medical/surgical benefits and mental health benefits, the financial requirements (e.g., deductibles and co-payments)
and treatment limitations (e.g., number of visits or days of coverage) that apply to mental health benefits must be no more restrictive than the predominant
financial requirements or treatment limitations that apply to substantially all medical/surgical benefits;
- If a group health plan includes medical/surgical benefits and substance use disorder benefits, the financial requirements and treatment limitations
that apply to substance use disorder benefits must be no more restrictive than the predominant financial requirements or treatment limitations that apply
to substantially all medical/surgical benefits;
- Mental health benefits and substance use disorder benefits may not be subject to any separate cost sharing requirements or treatment limitations that
only apply to such benefits;
- If a group health plan includes medical/surgical benefits and mental health benefits, and the plan provides for out of network medical/surgical benefits,
it must provide for out of network mental health benefits;
- If a group health plan includes medical/surgical benefits and substance use disorder benefits, and the plan provides for out of network medical/surgical
benefits, it must provide for out of network substance use disorder benefits;
- Standards for medical necessity determinations and reasons for any denial of benefits relating to mental health benefits and substance use disorder
benefits must be made available upon request to plan participants;
- The parity requirements for the existing law (regarding annual and lifetime dollar limits) will continue and will be extended to substance use