Old Law, New Impact: The Mental Health Benefit Parity Requirement
The Mental Health Parity and Addiction Equity Act (MHPAEA) has been on the books for years. Yet some employers are about to feel the law’s impact for the first time. That’s because mental health and addiction services are one of the Affordable Care Act’s (ACA’s) 10 mandated essential health benefits (EHBs) that small group plans must offer if they fall under the act’s purview. Thus, such “nongrandfathered” small group plans that kick in on or after July 1, 2014, must now comply with the MHPAEA.
The MHPAEA, enacted back in 2008, doesn’t oblige employers to provide mental health and addiction services benefits. Rather, it requires only that such benefits, if offered, be comparable to those applicable to medical/surgical plans. More specifically, the MHPAEA requires:
… group health plans and health insurance issuers to ensure that financial requirements (such as co-pays, deductibles) and treatment limitations (such as visit limits) applicable to mental health or substance use disorder (MH/SUD) benefits are no more restrictive than the predominant requirements or limitations applied to substantially all medical/surgical benefits.
This is according to a Department of Labor (DOL) summary of the law. Final DOL regulations regarding the MHPAEA were published in late 2013.
EHBs and benchmark plans
As mentioned, the ACA names 10 EHBs that applicable small insured group plans must include in their coverage. These are:
- Ambulatory patient services,
- Prescription drugs,
- Emergency care,
- Mental health services,
- Rehabilitative and habilitative services,
- Preventive and wellness services,
- Laboratory services,
- Pediatric care, and
- Maternity and newborn care.
Under the MHPAEA, as with standard medical/surgical benefits, plans can’t impose a lifetime or annual dollar cap on mental health and substance benefits — though benefits may be limited in other ways. Similarly, the ACA caps employees’ out-of-pocket expenditures on mental health benefits, along with other EHBs. The ACA’s 2015 limits are $6,600 for self-only coverage (up from $6,350 last year) and $13,200 for family coverage (up from $12,700 in 2014).
Guidance issued jointly by the three federal agencies with oversight of ACA compliance last year made it clear that, in 2015, for nongrandfathered small group plans, those out-of-pocket limits apply to all EHBs. Plans can, however, satisfy that requirement based on either:
- Aggregate employee claims for all EHBs used, or
- Separate out-of-pocket maximums for individual EHBs that add up to the overall limits.
In other words, you could, in effect, create an incentive for employees to take advantage of one or more EHBs (including mental health / substance abuse services) by establishing a low out-of-pocket maximum for some EHBs and a higher one for others.
Offering a carefully balanced yet affordable array of health benefits has always been the goal of most employers. But the interaction between the MHPAEA and the ACA offers a strong indication of how the federal government wants many nongrandfathered small group plans to handle mental health and addiction services benefits. If your plan falls into this category, your benefits advisor can, as mentioned, help you interpret and comply with the mental health benefit parity requirement.