Mental Health Parity Act of 1996

Background on the Mental Health Parity Act of 1996

The Mental Health Parity Act (MHPA) applies to group health plans that offer mental health benefits.

The MHPA does not require health plans to include mental health benefits in their benefits package.

In addition, MHPA does not apply to small employers who have fewer than 51 employees.^[1] MHPA requires that an employer have more than 50 employees on business days during the preceding calendar year and employ at least 2 employees on the first day of the plan year. However, your State (NAIC) may elect to regulate small groups or individual health arrangements.

MHPA and its regulations provide for parity in the application of annual and lifetime dollar limits on mental health benefits with dollar limits on medical/surgical benefits. In general, group health plans offering mental health benefits cannot set annual or lifetime dollar limits on mental health benefits that are lower than any such dollar limits for medical and surgical benefits.

The original statutory provisions contained a sunset provision providing that the parity requirements would not apply to benefits for services furnished on or after a certain date. This sunset has been extended several times. If you have questions about the sunset provision, contact the EBSA office nearest you.

Note: The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) requires group health plans and health insurance issuers to ensure that financial requirements (such as co-pays, deductibles) and treatment limitations (such as visit limits) applicable to mental health or substance use disorder (MH/SUD) benefits are no more restrictive than the predominant requirements or limitations applied to substantially all medical/surgical benefits. For more information on MHPAEA, see the fact sheet.

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^[1] Also note, that the MHPA also contains a 1 percent cost exemption . However, very few plans have claimed the 1 percent cost exemption since the MHPA also allows for other types of permissible cost containment provisions (such as day or visit limits, and co-pays and deductibles).