Mental Health Parity Act of 1996

1 Percent Cost Exemption

How does a plan claim the exemption for a 1 percent increase in costs?

The increased cost exemption must be based on actual claims data, not on an increase in insurance premiums. The plan must implement the provisions of MHPA for at least 6 months and the calculation of the 1 percent cost exemption must be based on at least 6 months of actual claims data with parity in place. In addition:

• Group health plans covered under ERISA claiming the increased cost exemption must notify the Department of Labor and plan participants and beneficiaries 30 days before the exemption becomes effective.
• A formula for plans to calculate the increased cost of complying with parity is provided in the regulations.
• A summary of the aggregate data and the computation supporting the increased cost exemption must be made available to plan partici­pants and beneficiaries free of charge upon written request.

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