Mental Health Parity Act of 1996
The Mental Health Parity Act of 1996 (MHPA) [Pub. L. No. 104-204, 110 Stat. 2944 was implemented in 1998] prevents group health plans from placing annual or lifetime dollar limits on mental health benefits that are lower than annual or lifetime dollar limits for medical and surgical benefits offered under the plan. The enactment of MHPA amended ERISA (Employee Retirement Income Security Act) and the Public Health Service Act. It applies to certain group health plans for plan years beginning on or after January 1, 1998.
Keep in mind that MHPA only applies to employers that offer mental health benefits; it
doesn't mandate that employers provide mental health benefits. The MHPA applies to most group health plans with more than 50 employees. It doesn't apply to group plans with fewer than 51 employees. Further, MHPA doesn't apply to individual health insurance coverage.
What are the basics of the MHPA?
The law provides parity in the application of limits to certain mental health benefits. In general, group health plans will no longer be allowed to set annual or lifetime limits on mental health benefits that are lower than any such limits for medical and surgical benefits. A plan that doesn't impose an annual or lifetime limit on medical and surgical benefits may not impose such a limit on mental health benefits. This law, however, doesn't apply to substance abuse or chemical dependency.
For example, if your health plan has $1 million lifetime and no annual cap for physical disorders, it cannot put a $50,000 lifetime and $5,000 annual cap for mental illness coverage.
Some restrictions may be imposed on mental health benefits by group health plans and nevertheless comply with MHPA.
MHPA doesn't prohibit increasing co-payments or limiting the number of visits for mental health benefits, requiring limits on the number of covered visits (even if the plan doesn't impose similar visit limits for medical and surgical benefits) or imposing a different cost-sharing arrangement, such as higher coinsurance payments for mental health benefits.
Creation of the MHPA
Starting in the early 1990s, the costs for mental healthcare decreased dramatically. In an environment of intense competition, mental healthcare providers have lowered charges, been savvy in their negotiations, and most importantly, shifted their focus from expensive inpatient treatment to outpatient care and other alternative care settings.
The Mental Health Parity Act was created as a result of this environment. However, the law doesn't require employers to offer mental health coverage. The basic premise of this act is that if mental health coverage is provided in a patient's health plan, the annual and lifetime maximum dollar limits must be equal to those set for more traditional medical benefits.
Also, if a group health plan doesn't have dollar limits for medical benefits, limits aren't permitted for mental health benefits. A plan, however, may still impose day limits and visit limits. While mental health benefits are a popular “carve-out” benefit, recent state laws require insurance companies to include mental health and substance abuse coverage in standard insured policies.
News on Mental Health
Each year, one in five Americans experiences a mental disorder, yet according to the recent U.S. Surgeon General's report on mental health, two-thirds of the people afflicted, including half of those with a severe illness such as schizophrenia, don't seek treatment.
The report attributes lack of health insurance, as well as social stigma and ignorance about new treatments, as the major reasons why Americans fail to seek treatment for mental disorders. The Surgeon General blames disparities across the mental health field for uneven access to services. Coverage for mental health treatment varies, depending on the insurance plan, and 44 million Americans have no health insurance at all.
The complete Surgeon General's report on mental health, which is the first of its kind, can be found at www.surgeongeneral.gov.
Enforcement of the MHPA
The Secretaries of the Treasury, Labor, and Health and Human Services share joint jurisdiction over the MHPA provisions. Taxpayers that violate the act are subject to an excise tax of up to $100 per day. Additional individual recourse is available under ERISA.
For more information on MHPA contact
Almond Valley Insurance Services, Inc. or your
state office of insurance. You may also contact the Department of Labor's customer service hotline for more information. (202) 219-8776.
