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 MHPA was largely superseded by rider legislation on the Troubled Asset Relief Program (TARP), signed into law by President George W. Bush in October 2008.
So, in essence, MHPA is no longer affecting health insurance coverage. The basic meaning to be derived from the MHPA act was that mental health coverage had to have no limits on it or be equal with the benefit maximums for medical insurance caps. This law was primarily for group health insurance and never had any bearing on individual health insurance at all. In fact, most individual health insurance plans do not cover mental health or have very limited benefits that are covered only after the annual deductible is met.
So, again, your individual health insurance policy doesn’t cover mental health benefits in 99% of the cases we see. The MHPA act is only for group health insurance.
The Mental Health Parity Act of 1996 was then revised with the Mental Health Parity and Addiction Equity Act of 2008, which went into effect on January 1, 2010. This revision added substance abuse to the included conditions to be covered by insurance as any other health or surgical service would be. However, it was not a requirement for all group health plans to include coverage for mental health and substance abuse care.
As a result of health reform, mental health coverage is considered an essential health benefit (EHB), and both group and individual insurance plans are required to provide coverage at the same cost as any other medical benefit. The Affordable Care Act has made mental health care a part of basic health insurance plans.
Under health reform, the legislation of 2008 has been expanded under the Federal Parity Law. The law has required that all group health insurance policies now cover treatment of mental health and substance abuse disorders. “Specifically the law prohibits imposing financial requirements (such as deductibles, copays, coinsurance or out-of-pocket maximums) or treatment limitations (including day or visit limits and medical management tools) on MH and SUD benefits in a way that is more restrictive than those imposed on other medical or surgical benefits provided by the plan.”¹
As mentioned, the law currently only applies to those who have a health insurance plan through an employer in a larger company (more than 50 employees). It does not apply to small employers who offer insurance through individual plans, but in 2014, small group and individual plans will be required to abide by the Mental Health Parity and Addiction Equity Act (MHPAEA). When health reform takes full effect, individuals and small businesses with coverage through exchanges will have mental health coverage, and many states will also require their private individual plans to cover this benefit. For now, employers with under 50 workers who provide insurance have the legal right to exclude these benefits, and individual health plans can also cover mental health care, or not. State laws also have their own parity laws that help those who need this kind of coverage.
Limitations on visits or expenses for services cannot be applied to mental health and substance abuse related care by health insurance companies, unless a plan has the same criteria for physical treatment. An example of this would be if a patient was required to make a $20 copayment for a doctor’s visit, a $50 copayment to see a psychologist would be reduced to the price of the regular physician.
The MHPAEA also guarantees coverage for all mental health and substance abuse diagnoses. The law makes it possible for a patient to receive all necessary services of this sort. If your health insurance policy has out-of-network benefits, your treatment will be covered when receiving care in other states. However, until 2014, there are still many limitations on inpatient and outpatient mental health services for those with individual coverage.
For more information about the Federal parity law, visit the Substance Abuse and Mental Health Services Administration site.
1. Substance Abuse and Mental Health Services Administration, “Mental Health Parity and Addiction Equality Act”. http://www.samhsa.gov/healthreform/parity/
2. American Psychological Association, “Mental Health Insurance Under the Federal Parity Law”. http://www.apa.org/helpcenter/federal-parity-law.aspx