Mental Health Parity Act

Mental Health Parity Act

Acronym	MHPA
Citations
Codification
Legislative history
Signed into law by President Bill Clinton on September 26, 1996
Major amendments
None
Relevant Supreme Court cases
None

The Mental Health Parity Act (MHPA) is legislation signed into United States law on September 26, 1996 that requires that annual or lifetime dollar limits on mental health benefits be no lower than any such dollar limits for medical and surgical benefits offered by a group health plan or health insurance issuer offering coverage in connection with a group health plan. MHPA was largely superseded by rider legislation on the Troubled Asset Relief Program (TARP), signed into law by President George W. Bush in October 2008.

Scope

The MHPA applies to group health plans for plan years beginning on or after January 1, 1998. The original sunset provision (providing that the parity requirements would not apply to benefits for services furnished on or after September 30, 2001) has been extended six times. The current extension runs through December 31, 2007. Insurers promptly were able to "circumvent" the consumer protections arguably intended in the legislation by imposing maximum numbers of provider visits and/or caps on the number of days an insurer would cover for inpatient psychiatric hospitalizations. In essence, the law had little or no effect on mental health coverage by group insurance plans. The rider on TARP prohibits all group health plans that offer mental health coverage from imposing any greater limit on co-pays, co-insurance, numbers of visits, and/or number of days covered for hospital stays due to mental health conditions. The rider legislation was the culmination of a long campaign fought by Sen. Paul Wellstone (D-MN) and his successors to enact mental health parity at the federal level. The new law's requirements will be phased in over several years. Still unsure is whether non-"biologically-based" mental illnesses such as PTSD and eating disorders are mandated to be covered by the new law.

Requirements

Generally the act requires parity of mental health benefits with medical and surgical benefits with respect to the application of aggregate lifetime and annual dollar limits under a group health plan

It provides that employers retain discretion regarding the extent and scope of mental health benefits offered to workers and their families, including cost sharing, limits on numbers of visits or days of coverage, and requirements relating to medical necessity.

Exemptions

The law does not apply to benefits for substance abuse or chemical dependency. The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) addresses addiction coverage issues.

The law also contains the following two exemptions.

Small employer

The MHPA does not apply to any group health plan or coverage of any employer who employed an average of between 2 and 50 employees on business days during the preceding calendar year, and who employs at least two employees on the first day of the plan year

Increased cost

The MHPA does not apply to a group health plan or group health insurance coverage if the application of the parity provisions results in an increase in the cost under the plan or coverage of at least one percent

References

• MHPA fact sheet