Today, tens of millions of Americans suffer from some form of mental disorder, including but not limited to depression, anxiety, substance abuse issues, asocial or antisocial tendencies, and others. Mental health issues have become so widespread that many psychiatric professionals have likened it to an epidemic, prompting federal lawmakers to pass legislation ensuring mental health coverage by insurers.

The Mental Health Parity and Addiction Equity Act: Overview

The Mental Health Parity Act, later expanded into the Mental Health Parity and Addiction Equity Act (MHPAEA), are the result of decades of shifting opinion in how we view the seriousness of psychological disorders and mental health.

The MHPAEA requires mental health/substance abuse coverage to be at parity with medical/surgical coverage. In other words, a qualified insurance plan cannot make mental health and substance abuse coverage more difficult and more expensive to obtain than standard medical or surgical coverage. The law recognizes that mental health treatment was often limited in the past due to practices that made mental health coverage more restrictive.

Elements of Coverage That Must be at Parity

Qualified insurance plans have to guarantee that coverage is at parity for:

• Co-pays;
• Coinsurance;
• Out-of-pocket maximums;
• Limits on the number of and length of covered inpatient/outpatient visits;
• Out-of-network coverage; and
• medical necessity criteria (which is used to determine whether treatment will be paid for by insurance).

The term "at parity" means that these insurance plans elements -- for mental health and for medical treatment/surgery -- are comparable. For example, a plan wouldn't meet parity requirements if the length of inpatient visits covered by insurance were shorter for mental health treatment than for medical treatment.

The Department of Labor's "Self-Compliance Tool for the MHPAEA" is intended to help plan administrators and health insurance issuers understand these requirements.

Exemptions From the MHPAEA Parity Requirements

The following health insurance plans are presently exempt from MHPAEA parity requirements:

• Retiree plans
• Medicare
• Some Medicaid plans
• Government sponsored self-insured plans
• Church sponsored plans
• TriCare
• Small employer plans created before March 23, 2010.

There are also two voluntary opt-out options:

1. Purely self-insured employees; and
2. An employer who can demonstrate that implementation of the parity requirements has increased costs by over 2% in a year, or by at least 1% in the following years.

Effects of the Affordable Care Act

The Affordable Care Act (ACA) has affected a number of aspects of MHPAEA, primarily by extending the parity requirements to apply to more plans. Before the ACA was implemented, small employer plans (businesses with less than 50 employees) were exempt, effecting many millions of Americans working for small businesses.

Furthermore, the parity requirements did not apply to plans that didn’t cover mental health or substance abuse. Thus, prior to the ACA, businesses could avoid expensive parity requirements by simply offering barebones insurance plans that didn’t include mental health or substance abuse coverage at all.

The ACA has made it so that small employer-funded plans are no longer exempt, with an exception for small employer plans created before March 23, 2010. Also, insurance plans are prohibited from leaving out mental health coverage altogether, since mental health is now one of the "essential health benefits" under the law. Any non-exempt insurance plan must come with mental health and substance abuse coverage, while meeting parity requirements.

State Mental Health Parity Laws

The MHPAEA parity requirements are federal requirements. State parity laws can be stricter about enforcing parity, and some are. For example, New York has one of the stricter parity laws among the states. Not only does it require a minimum of 30 days inpatient and 20 days outpatient treatment for mental health, the law also explicitly defines those illnesses that must be fully covered by insurance.

Defining the illnesses that must be covered is a way of getting around the medical necessity criteria that insurance companies frequently use to escape having to pay for treatment. For example, because major depression now falls under medical necessity in New York, an insurance plan (with mental health coverage) cannot avoid paying for major depression treatment by arguing that it’s not a medical necessity.

Get Professional Legal Help With Your MHPAEA Questions

If you believe that your insurance plan is not offering comparable mental health and substance abuse benefits, in violation of federal or state law, you may want to seek legal counsel. Get started today by contacting a local healthcare attorney with expertise in such matters.