Mental Health Parity and Addiction Equity Act Requirement

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The Federal Mental Health Parity and Addiction Equity Act (referred to herein as Mental Health Parity or MHPA), which becomes effective October 3, 2009, requires "parity" between the financial requirements and treatment limitations applied to medical and/or surgical benefits and mental health and substance use disorder benefits. This law affects all fully insured and self-insured plans covering 51 or more employees, regardless of the number of eligible employees or actual enrolled employees. Small groups – those with fewer than 51 eligible employees – are required to comply with MHPA if they have 51 or more total employees.  
 
MHPA does not require that mental health and substance abuse benefits be offered. It only requires that if these benefits are offered, that they be on parity with medical benefits. MHPA specifically requires the following, among other things, to be in parity:  
Deductibles
Copayments
Co-insurance
Out-of-pocket expenses
Limits on frequency of treatment
Limits on number of visits
Limits on number of days of coverage
Limits on lifetime or annual benefit amounts
 
Comparison with Timothy’s Law  
In 2007, New York enacted and implemented Timothy’s Law, which required most group health insurance policies that provide inpatient benefits to provide specified benefits for mental, nervous and emotional illness. The federal MPHA expands these benefits to include substance abuse and to require that financial requirements and benefit limitations must be in parity with the medical and surgical benefits provided under the plan. In addition, like Timothy’s Law, MHPA states that health insurance plans that cover mental health and/or substance use disorder benefits must provide out-of-network coverage for these benefits if the plan provides out-of-network coverage for medical and/or surgical benefits.  
 
Effective Date  
The requirements of the new law are effective for plan years beginning on or after one year from the date the legislation was signed into law (October 3, 2008). As a result, the provisions apply to new contracts and renewals on or after October 3, 2009.  
For the purposes of implementation, Empire will assume that the group’s effective date is equivalent to its renewal date, unless the group notifies us otherwise of its ERISA plan year date. If the implementation date is other than the renewal date, Empire may adjust rates effective as of the date the new benefits are implemented.
For collective bargaining agreement plans, the effective date is the later of January 1, 2010, or the date the collective bargaining agreement expires.
 
The accumulation method for the plan's benefits (in other words, whether Calendar Year Benefits or Non Calendar Year/Plan Year Benefits) is not relevant in determining the effective date for the Parity benefits.  
MHPA also states that health insurance plans that cover mental health and/or substance use disorder benefits must provide out-of-network coverage for these benefits if the plan provides out-of-network coverage for medical and/or surgical benefits. 
 
Small Groups  
Small groups with more than 50 total employees, this would include all employees working more than 20 hours per week, are responsible for providing these benefits. Riders to small group health plans will be available for purchase.  
 
FAQs for Employers are here 
 

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