Know Your Rights

In 2008, the Mental Health Parity and Addiction Equity Act (MHPAEA) law was passed, with the aim to better regulate health insurance coverage of mental health and substance use disorder needs, and with the hope of improving the chances of those with mental health and substance use disorders to receive the care they need without the detriments of higher costs and stigma. The law requires insurance providers to treat coverage for services for mental health and substance use needs in the same way they treat physical medical needs. In other words, insurance providers may not be more restrictive or apply more stringent coverage rules for mental health or substance use services. For example, this means that if most co-pays for medical or surgical office visits are not usually more than $30, then co-pays for office visits to mental health professionals should be around the same amount. This law also applies to non-financial treatment limits, meaning there cannot be annual limits to the number of mental health visits allowed in a year. What is important to remember, however, is that insurers can impose limits that regulate what is a “medical necessity” in terms of treatment coverage. Medicare.gov defines “medically necessary” as “healthcare services or supplies needed to diagnose or treat an illness, injury, condition, disease, or its symptoms and that meet accepted standards of medicine.” For example, you may be interested in your plan’s criteria for medically necessary treatment for inpatient substance use disorder in an approved facility; the criteria for this will vary based on your plan, so it is important to understand what your insurance will cover.

What the MHPAEA currently applies to

The MHPAEA is generally applied to group health plans and group insurance coverage, but the Affordable Care Act (ACA) amended the law in 2013 to include individual health insurance coverage and non-grandfathered individual and small group health plans. This also includes plans through the state and federal health insurance Exchanges, so mental health and substance use disorder services are considered one of the ten essential health benefit categories that must meet parity requirements. Below is a general list of plans the parity law applies to:

• Any insurance plan offered through the Marketplace or State Exchanges
• Large employer-funded plans (with more than 51 insured employees)
• Small employer-funded plans (with 50 or fewer employees, unless “grandfathered*”)
• Individual market plans
• Federal Employees Health Benefits Program
• Most Medicaid Managed Care Plans (MCOs)
• Children’s Health Insurance Program (CHIP)
• Medicaid Alternative Benefit Plans and benchmark equivalent plans

*Note: A grandfathered health plan is one that was purchased before March 23, 2010, sold by insurance companies, agents, or brokers – not through the health insurance Marketplace. The ACA may not provide the protections and rights allotted to other plans after this date. Some plans may lose this status if significant changes are made which decrease benefits or increase consumer costs. It must be disclosed if a health plan considers itself a grandfathered plan, and new members may be added to a grandfathered plan even after the date the primary subscriber joined.

What the MHPAEA currently does not apply to

There are some plan types the MHPAEA does not apply to, which include: 

• Grandfathered plans (individual or group, including small employer health plans)
• Self-insured non-federal government employee plans
• Church-sponsored plans
• Retiree-only plans
• Medicare (except for outpatient mental health services available through Part B)
• Traditional Medicaid (fee-for-service, non-managed care)
• Some employers may also be able to request exemptions from the parity law after they provide evidence of the requirements having increased the healthcare costs by 2 percent in the first year the parity law applies to the plan, or by at least 1 percent in the following years.

Understanding and enforcing compliance with the MHPAEA is essential to ensure that those with mental health and substance use disorders are treated fairly. The Department of Labor has a helpful self-compliance tool geared toward those organizing and implementing group health plans, plan sponsors, plan administrators, and others identify if their health plan or health insurance issuer is complying with the MHPAEA, which can be found here.