Mental Health Parity Act
Encyclopedia
The Mental Health Parity Act (MHPA) is legislation signed into United States
law on September 26, 1996 that requires that annual or lifetime dollar limits on mental health
benefits be no lower than any such dollar limits for medical and surgical benefits offered by a group health plan
or health insurance
issuer offering coverage in connection with a group health plan. MHPA was largely superseded by rider legislation on the Troubled Asset Relief Program (TARP), signed into law by President George W. Bush
in October 2008.
(providing that the parity requirements would not apply to benefits for services furnished on or after September 30, 2001) has been extended six times. The current extension runs through December 31, 2007. Insurers promptly were able to "circumvent" the consumer protections arguably intended in the legislation by imposing maximum numbers of provider visits and/or caps on the number of days an insurer would cover for inpatient psychiatric hospitalizations. In essence, the law had little or no effect on mental health coverage by group insurance plans. The rider on TARP prohibits all group health plans that offer mental health coverage from imposing any greater limit on co-pays, co-insurance, numbers of visits, and/or number of days covered for hospital stays due to mental health conditions. The rider legislation was the culmination of a long campaign fought by Sen. Paul Wellstone
(D-MN) and his successors to enact mental health parity at the federal level. The new law's requirements will be phased in over several years. Still unsure is whether non-"biologically-based" mental illnesses such as PTSD and eating disorders are mandated to be covered by the new law.
It provides that employers retain discretion regarding the extent and scope of mental health benefits offered to workers and their families, including cost sharing, limits on numbers of visits or days of coverage, and requirements relating to medical necessity
.
or chemical dependency. The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) addresses addiction coverage issues.
The law also contains the following two exemptions.
s during the preceding calendar year, and who employs at least two employees on the first day of the plan year
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
law on September 26, 1996 that requires that annual or lifetime dollar limits on mental health
Mental health
Mental health describes either a level of cognitive or emotional well-being or an absence of a mental disorder. From perspectives of the discipline of positive psychology or holism mental health may include an individual's ability to enjoy life and procure a balance between life activities and...
benefits be no lower than any such dollar limits for medical and surgical benefits offered by a group health plan
Group Insurance
Group insurance is an insurance that covers a group of people, usually who are the members of societies, employees of a common employer, or professionals in a common group....
or health insurance
Health insurance
Health insurance is insurance against the risk of incurring medical expenses among individuals. By estimating the overall risk of health care expenses among a targeted group, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to ensure that money is...
issuer offering coverage in connection with a group health plan. MHPA was largely superseded by rider legislation on the Troubled Asset Relief Program (TARP), signed into law by President George W. Bush
George W. Bush
George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....
in October 2008.
Scope
The MHPA applies to group health plans for plan years beginning on or after January 1, 1998. The original sunset provisionSunset provision
In public policy, a sunset provision or clause is a measure within a statute, regulation or other law that provides that the law shall cease to have effect after a specific date, unless further legislative action is taken to extend the law...
(providing that the parity requirements would not apply to benefits for services furnished on or after September 30, 2001) has been extended six times. The current extension runs through December 31, 2007. Insurers promptly were able to "circumvent" the consumer protections arguably intended in the legislation by imposing maximum numbers of provider visits and/or caps on the number of days an insurer would cover for inpatient psychiatric hospitalizations. In essence, the law had little or no effect on mental health coverage by group insurance plans. The rider on TARP prohibits all group health plans that offer mental health coverage from imposing any greater limit on co-pays, co-insurance, numbers of visits, and/or number of days covered for hospital stays due to mental health conditions. The rider legislation was the culmination of a long campaign fought by Sen. Paul Wellstone
Paul Wellstone
Paul David Wellstone was a two-term U.S. Senator from the state of Minnesota and member of the Democratic-Farmer-Labor Party, which is affiliated with the national Democratic Party. Before being elected to the Senate in 1990, he was a professor of political science at Carleton College...
(D-MN) and his successors to enact mental health parity at the federal level. The new law's requirements will be phased in over several years. Still unsure is whether non-"biologically-based" mental illnesses such as PTSD and eating disorders are mandated to be covered by the new law.
Requirements
Generally the act requires parity of mental health benefits with medical and surgical benefits with respect to the application of aggregate lifetime and annual dollar limits under a group health planIt provides that employers retain discretion regarding the extent and scope of mental health benefits offered to workers and their families, including cost sharing, limits on numbers of visits or days of coverage, and requirements relating to medical necessity
Medical necessity
Medical necessity is a United States legal doctrine, related to activities which may be justified as reasonable, necessary, and/or appropriate, based on evidence-based clinical standards of care. Other countries may have medical doctrines or legal rules covering broadly similar grounds...
.
Exemptions
The law does not apply to benefits for substance abuseSubstance abuse
A substance-related disorder is an umbrella term used to describe several different conditions associated with several different substances .A substance related disorder is a condition in which an individual uses or abuses a...
or chemical dependency. The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) addresses addiction coverage issues.
The law also contains the following two exemptions.
Small employer
The MHPA does not apply to any group health plan or coverage of any employer who employed an average of between 2 and 50 employees on business dayBusiness day
A business day is considered every official working day of the week. Another common term is working day. Typically, these are the days between and including Monday to Friday and do not include public holidays and weekends....
s during the preceding calendar year, and who employs at least two employees on the first day of the plan year