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Frequently Asked Questions

For Employees about the Mental Health Parity and Addiction Equity Act

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The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) was signed into law on October 3, 2008 and became effective for plan years beginning on or after October 3, 2009. MHPAEA greatly expands on an earlier law, the Mental Health Parity Act of 1996 (MHPA ‘96). On February 2, 2010 the Departments of Health and Human Services, Labor and the Treasury jointly issued interim final regulations implementing MHPAEA, which became applicable for plan years beginning on or after July 1, 2010.

MHPAEA generally applies to group health plans and health insurance issuers that provide coverage for either mental health or substance use disorder benefits and medical/surgical benefits. These FAQs provide basic information about the important protections MHPAEA provides with respect to parity in coverage of mental health and substance use disorder benefits and medical/surgical benefits provided by employment-based group health plans.

Q1: What new protections does MHPAEA provide for participants and beneficiaries?

MHPA ‘96 required parity with respect to aggregate lifetime and annual dollar limits for mental health benefits. MHPAEA expands those provisions to include substance use disorder benefits. Thus, under MHPAEA group health plans and issuers may not impose a lifetime or annual dollar limit on mental health or substance use disorder benefits that is lower than the lifetime or annual dollar limit imposed on medical/surgical benefits.

MHPAEA also requires group health plans and health insurance issuers to ensure that financial requirements (such as copays and deductibles), and quantitative treatment limitations (such as visit limits), applicable to mental health or substance use disorder benefits are generally no more restrictive than the requirements or limitations applied to medical/surgical benefits. The MHPAEA regulations also require plans and issuers to ensure parity with respect to nonquantitative treatment limitations (such as medical management standards).

Q2: Can group health plans still apply financial requirements and treatment limitations, such as copays or visit limits on mental health and substance use disorder benefits?

Generally, yes. Group health plans and issuers may still apply financial requirements and treatment limitations with respect to mental health and substance use disorder benefits; however, they must do so in accordance with the requirements under MHPAEA.

There is a test for determining whether a financial requirement or treatment limitation for mental health or substance use disorder benefits is permissible. The general rule is that a plan may not impose a financial requirement or quantitative treatment limitation applicable to mental health or substance use disorder benefits in any classification that is more restrictive than the predominant financial requirement or quantitative limitation of that type applied to substantially all medical/surgical benefits in the same classification. How to apply this test is discussed in more detail in the following FAQs. You can always contact the Department of Labor at www.askebsa.dol.gov or 1-866-444-3272 if you have questions about your mental health or substance use disorder benefits under your employment-based group health plan.

Q3: What is a financial requirement or quantitative treatment limitation?

The most common types of financial requirements include deductibles, copays, coinsurance, and out-of-pocket maximums. Types of quantitative treatment limitations include annual, episode, and lifetime day and visit limits, for example, number of treatments, visits, or days of coverage. These are just examples, therefore, you could find a type of financial requirement and quantitative treatment limitations that is not specifically listed here.

Q4: The test for determining parity refers to levels of types of financial requirements or treatment limitations. What is a level of a type of financial requirement or treatment limitation?

The level of a type of financial requirement or treatment limitation refers to the magnitude of the type of financial requirement or treatment limitation. For example, different levels of coinsurance include 20% and 30%, different levels of copays include $15 and $20, or different levels of an episode limit include 21 inpatient days per episode and 30 inpatient days per episode.

Q5: How can I determine if a financial requirement or quantitative treatment limitation applicable to mental health and substance use disorder benefits is permissible?

To determine if a quantitative financial requirement (such as a copay) or quantitative treatment limitation (such as a visit limit) is permissible, the parity analysis must be applied for that type of financial requirement or treatment limitation within a coverage unit for each of the six classifications of benefits separately. A coverage unit refers to the way in which a plan groups individuals for purposes of determining benefits, or premiums or contributions (for example, self-only, family, employee plus spouse). Under MHPAEA, the six classifications of benefits(1) are:

  1. Inpatient in-network;
  2. Inpatient out-of-network;
  3. Outpatient in-network;
  4. Outpatient out-of-network;
  5. Emergency care;
  6. Prescription drugs.

If a type of financial requirement or quantitative treatment limitation applies to substantially all medical/surgical benefits in a classification (for example, if a copay applies to substantially all medical/surgical benefits), then it may be permissible for that requirement or limitation (the copay) to apply to mental health or substance use disorder benefits. Generally, a financial requirement or treatment limitation is considered to apply to substantially all medical/surgical benefits if it applies to two-thirds or more of the medical/surgical benefits for the same classification and coverage unit. This two-thirds calculation is based on the dollar amount of all plan payments for medical/surgical benefits expected to be paid for the year (or portion of the plan year after a change in plan benefits that affects the applicability of the financial requirement or quantitative treatment limitation).

The predominant level of a type of requirement or limitation applicable to medical/surgical benefits within a classification is the most restrictive level of the requirement or limitation that can be imposed on mental health or substance use disorder benefits within that classification. There is a detailed test for determining the predominant level which is discussed in the next FAQ. If, for example, for self-only coverage a $10 copay is the predominant level of copay that applies to substantially all inpatient in-network medical/surgical benefits, that is the most restrictive copay that can apply to inpatient in-network mental health or substance use disorder benefits. With respect to the prescription drug classification, there is a special rule for multi-tiered prescription drug benefits.(2)

The analysis may be complicated depending on your plan’s design. If you are not sure if the requirements or limitations that apply to your mental health or substance use disorder benefits are permissible, contact the Department of Labor at www.askebsa.dol.gov or 1-866-444-3272.

Q6: If as determined under MHPAEA, it is permissible for my plan to impose a copay on my inpatient, in-network mental health or substance use disorder benefits, is there any restriction on the amount of copay that can apply?

Yes. The predominant level of a type of requirement or limitation applicable to medical/surgical benefits within a classification is the most restrictive level of the requirement or limitation that can be imposed on mental health or substance use disorder benefits within that classification.

Generally, the predominant level will apply to more than one-half of the medical/surgical benefits in that classification subject to the requirement or limitation. If there is no single level that applies to more than one-half of medical/surgical benefits in the classification, the plan can combine levels until the combination of levels applies to more than one-half of medical/surgical benefits subject to the requirement or limitation in the classification.(3) The least restrictive level within the combination is considered the predominant level. The determination of the portion of medical/surgical benefits in a classification subject to a financial requirement or treatment limitation is based on the dollar amount of all plan payments for medical/surgical benefits in the classification expected to be paid under the plan for the plan year.

The analysis may be complicated depending on your plan’s design. If you are not sure if the requirements or limitations that apply to your mental health or substance use disorder benefits are permissible, contact the Department of Labor at www.askebsa.dol.gov or 1-866-444-3272.

Q7: Can my plan impose a higher “specialist” financial requirement with respect to mental health and substance use disorder benefits?

A plan may not create sub-classifications for generalists and specialists to determine separate predominant financial requirements and treatment limitations that apply to substantially all medical/surgical benefits. However, if the predominant level of a type of financial requirement that applies to substantially all medical/surgical benefits in a classification is the one charged for a medical/surgical specialist, then that “specialist” financial requirement can be applied for all mental health or substance use disorder benefits within that classification. On the other hand, if the predominant level of a type of financial requirement that applies to substantially all medical/surgical benefits in a classification is the one charged for a medical/surgical generalist, then the financial requirement charged for all mental health or substance use disorder benefits within that classification cannot be higher than the “generalist” financial requirement for medical/surgical benefits.

Q8: If a plan previously had separate deductibles for medical/surgical benefits and mental health or substance use disorder benefits, how should those deductibles be combined now?

While plans can no longer have separate deductibles, they do have flexibility in how they choose to combine these deductibles. For example, if a plan previously had a $500 deductible on medical/surgical benefits, and a $500 deductible on mental health or substance use disorder benefits, the plan could now choose to have a combined $750 deductible for all benefits. As long as there is no separate deductible that applies only to mental health or substance use disorder benefits, the plan can set the combined deductible at whatever amount it chooses.

Q9: What are nonquantitative treatment limitations?

Nonquantitative treatment limitations include: medical management standards limiting or excluding benefits based on medical necessity or medical appropriateness, or based on whether the treatment is experimental or investigative; formulary design for prescription drugs; standards for provider admission to participate in a network, including reimbursement rates; plan methods for determining usual, customary, and reasonable charges; refusal to pay for higher-cost therapies until it can be shown that a lower-cost therapy is not effective (also known as fail-first policies or step therapy protocols); and exclusions based on failure to complete a course of treatment. This is an illustrative, non-exhaustive list.

Q10: How does MHPAEA provide for parity with respect to nonquantitative treatment limitations?

Under MHPAEA, a plan may not impose a nonquantitative treatment limitation with respect to mental health or substance use disorder benefits in any classification (such as inpatient, out-of-network) unless under the terms of the plan as written and in operation, any processes, strategies, evidentiary standards, or other factors used in applying the limitation to mental health or substance use disorder benefits in the classification are comparable to and applied no more stringently than the processes, strategies, evidentiary standards or other factors used in applying the limitation with respect to medical/surgical benefits in the classification, except to the extent that recognized clinically appropriate standards of care may permit a difference.

Q11: My mental health benefits were denied. What information am I entitled to receive from my plan under MHPAEA?

Under MHPAEA, the criteria for medical necessity determinations made under a group health plan (or health insurance coverage offered in connection with the plan) with respect to mental health or substance use disorder benefits must be made available by the plan administrator or the health insurance issuer to any current or potential participant, beneficiary, or contracting provider upon request. In addition, under the Employee Retirement Income Security Act (ERISA), documents with information on the medical necessity criteria for both medical/surgical benefits and mental health or substance use disorder benefits are plan documents, and copies must be furnished within 30 days of your request.(4) Additionally, the individual (or a provider or other individual acting as a patient’s authorized representative) may request these documents consistent with the Department of Labor claims procedure regulation (and, if the plan is a non-grandfathered health plan, the external review requirements added by the Patient Protection and Affordable Care Act would apply).(5)

Q12: Are there plans that are exempt from MHPAEA?

Yes. While MHPAEA applies to most employment-based group health coverage, there are a few important exceptions. Specifically, MHPAEA does not apply to small employers who have fewer than 51 employees.(6) There is also an increased cost exception available to plans that follow guidance issued by the Departments.(7) Additionally, plans for State and local government employees that are self-insured may opt-out of MHPAEA’s requirements if certain administrative steps are taken (such as sending notice to enrollees).(8) Finally, MHPAEA does not apply to retiree-only plans.(9)

Q13: Who enforces MHPAEA?

The Departments of Labor, the Treasury, and Health and Human Services, as well as the States, all have important roles with respect to MHPAEA implementation. The Departments are working with plans, issuers, and their service providers to help them understand and come into compliance with MHPAEA and to ensure participants and beneficiaries receive the benefits they are entitled to under the law.

Employees with questions about MHPAEA, including complaints about compliance by their employment-based group health plans, can contact the Department of Labor at www.askebsa.dol.gov or 1-866-444-3272. The Department of Labor will work with the other Federal Departments and the States, as appropriate, to ensure MHPAEA violations are corrected.

Q14: Where can I find more information about the protections available under MHPAEA?

Additional information and FAQs regarding MHPAEA are available on the Department of Labor’s MHPAEA webpage at www.dol.gov/ebsa/mentalhealthparity. You may also contact a benefit advisor in one of our regional offices at www.askebsa.dol.gov or by calling toll free at 1-866-444-3272.

Footnotes

  1. For more information regarding the outpatient in-network and outpatient out-of-network classifications, see the FAQ at www.dol.gov/ebsa/faqs/faq-mhpaea.html.
  2. See 29 CFR 2590.712(c)(3)(iii).
  3. For this purpose the plan may combine the most restrictive levels first, with each less restrictive level added to the combination until the combination applies to more than one-half of the benefits subject to the financial requirement or treatment limitation.
  4. See 29 U.S.C.1024(b)(4), 1132(c)(1).
  5. See 29 CFR 2560.503-1 and 2590.715-2719. See also www.dol.gov/ebsa/healthreform for consumer information on internal claims and appeals, external review of health plan decisions, and grandfathered health plans under the Patient Protection and Affordable Care Act.
  6. For more information on the small employer exception, see Q8 of the FAQs available at www.dol.gov/ebsa/faqs/faq-aca5.html.
  7. For more information on MHPAEA’s increased cost exemption, see Q11 of the FAQs available at www.dol.gov/ebsa/faqs/faq-aca5.html.
  8. If you are an employee of a State or local government and would like to know if your employment-based plan has opted out, contact HHS at 877-267-2323, ext. 61565 or at phig@cms.hhs.gov.
  9. See 75 FR 34538 at 34539 (June 17, 2010) for more information on special rules for retiree-only plans.