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Most plan sponsors have become familiar with the provisions of the Mental Health Parity Act of 1996 (“MHPA”). The MHPA required group health plan sponsors to eliminate certain annual caps and lifetime limits on mental health benefits. Notwithstanding the MHPA, however, many plan sponsors continued to impose reduced coinsurance limits and frequency limitations on mental health benefits. Now, as part of the emergency economic stabilization legislation that was signed by President Bush on October 3, 2008, the mental health parity rules have been expanded significantly.
Although the new law does not require group health plans to provide mental health benefits, plans that choose to offer such benefits must provide parity between mental health benefits and medical benefits. Additionally, while the existing MHPA rule applied only to mental health benefits, the new law has been expanded to cover substance abuse benefits as well.
Under the new law, to the extent that a group health plan offers both medical benefits and mental health or substance abuse benefits, the “financial requirements” applicable to mental health or substance abuse benefits may not be more restrictive than the most common or frequent financial requirements applied to substantially all medical and surgical benefits offered under the plan. Financial requirements include such things as deductibles, copayments, coinsurance, and out-of-pocket expenses. Furthermore, plans may not have separate cost-sharing arrangements (i.e., premium payments) that apply only to mental health or substance abuse benefits.
Likewise, the “treatment limitations” applicable to mental health or substance abuse benefits cannot be any more restrictive than the most common or frequent limitations that apply to substantially all medical and surgical benefits covered under the plan. Treatment limitations include limits on the frequency of treatment, the number of visits, the days of coverage, or similar limits on the scope or duration of treatment. Additionally, to the extent that a group health plan offers “out-of network” coverage for medical conditions, such “out-of-network” coverage also must be made available for mental health and substance abuse treatment.
Plan sponsors can qualify for a cost exemption from the new rules, but only if the plan has complied with the parity requirements for the first six months of the plan year involved. A group health plan will qualify for the exemption if the increased cost to the plan of complying with the parity requirements is greater than two percent of the actual total plan costs in the first plan year in which the parity requirements are applied, and one percent in each of the subsequent plan years. The cost increase must be determined by a qualified actuary.
The good news is that these changes are not effective until the plan year beginning on or after October 3, 2009. Thus, for calendar year plans, the effective date will be January 1, 2010. This gives plan sponsors some time to analyze their options. Such options might include an analysis of the potential costs of expanding mental health coverage, the potential for a cost exemption, or the possibility of eliminating mental health benefits altogether. |
