Mental Health Parity and Addiction Equity

The Mental Health Parity and Addiction Equity Act requires insurance groups that offer coverage for mental health or substance use disorders to provide the same level of benefits that they do for general medical treatment.

Final Parity Rule Issued

On Friday, November 8, the Departments of Health and Human Services, Labor and the Treasury issued the final rule to implement the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act.

The final rule includes specific additional consumer protections, such as:

  • Ensuring that parity applies to intermediate levels of care received in residential treatment or intensive outpatient settings
  • Clarifying the scope of the transparency required by health plans, including the disclosure rights of plan participants, to ensure compliance with the law
  • Clarifying that parity applies to all plan standards, including geographic limits, facility-type limits and network adequacy
  • Eliminating an exception to the existing parity rule that was determined to be confusing, unnecessary and open to abuse

View the Final Parity Rule (PDF | 655 KB)

View the Final Parity Rule Fact Sheet

What is the Federal Parity Law?

Millions of Americans with mental health or substance use disorders do not have adequate insurance protection against the costs of treatment for mental and substance use disorders. The Mental Health Parity and Addiction Equity Act (MHPAEA) makes it easier for those Americans to get the care they need by prohibiting certain discriminatory practices that limit insurance coverage for behavioral health treatment and services.

How the Mental Health Parity and Addiction Equity Act Works

The Mental Health Parity and Addiction Equity Act (MHPAEA) requires many insurance plans that cover mental health or substance use disorders to offer coverage for those services that is no more restrictive than the coverage for medical/surgical conditions. This requirement applies to:

  • Copays, coinsurance, and out-of-pocket maximums
  • Limitations on services utilization, such as limits on the number of inpatient days or outpatient visits that are covered
  • The use of care management tools
  • Coverage for out-of-network providers
  • Criteria for medical necessity determinations

MHPAEA does not require insurance plans to offer coverage for mental illnesses or substance use disorders in general, or for any specific mental illness or substance use disorder.  It also does not require plans to offer coverage for specific treatments or services for mental illness and substance use disorders.  However, coverage that insurance plans do offer for mental and substance use disorders must be provided at parity with coverage for medical/surgical health conditions.

ACA Extension of Parity Requirements

The Affordable Care Act (ACA) significantly extends the reach of MHPAEA's requirements. Starting in 2014, the ACA will require all small group and individual market plans created after March 23, 2010 to comply with federal parity requirements. Qualified Health Plans offered through the Health Insurance Marketplaces in every state must include coverage for mental health and substance use disorders as one of the ten categories of Essential Health Benefits, and that coverage must comply with the federal parity requirements set forth in MHPAEA.

NOTE: With regards to parity, a small group plan is defined as an employment-based plan that includes no more than 50 employees. A large group plan is an employment-based plan that includes 51 or more employees. An individual plan is one that someone purchases directly from an insurance company, and is not employment-based. Small group plans created before March 23, 2010 will be "grandfathered," and will not be subject to the requirements of MHPAEA.

The Department of Health and Human Services (HHS) has also released guidance explaining how federal parity requirements will be applied to the Children's Health Insurance Program (CHIP), Medicaid managed-care organizations, and, in states that expand Medicaid, to Alternative Benefit Plans.

Who Must Provide Equal Coverage

Federal parity laws apply to:

  • Employer-funded plans with more than 50 insured employees
  • Non-grandfathered employer-funded plans with 50 or fewer employees
  • Individual market plans
  • Medicaid managed-care programs
  • CHIP (Children’s Health Insurance Program)
  • Medicaid Alternative Benefit Plans and benchmark equivalent plans

The federal Office of Personnel Management has also issued guidance to apply the requirements of MHPAEA to coverage offered through the Federal Employees Health Benefit Program.

Employer Exemptions

  • Some plans may request an exemption from the law. If an employer-based plan can demonstrate that the requirements of the parity law have increased its health care costs by two percent in the first year that MHPAEA applies to the plan, or by at least one percent in subsequent years, they may ask to be exempt for the following year.
  • Self-insured non-federal government employee plans can opt out of the federal parity law.

Other Limits to Parity

The requirements of parity do not apply to:

  • Small employer plans created before March 23, 2010 (these will be “grandfathered,” and therefore exempt from the requirements of parity)
  • Church-sponsored plans and self-insured plans sponsored by state and local governments
  • Retiree-only plans
  • TriCare
  • Medicare
  • Traditional Medicaid (fee-for-service, non-managed care)

Availability of Plan Information Requirements

MHPAEA requires that plans make certain information available with respect to mental health and substance use disorder benefits.

Insurers typically make decisions to cover or deny coverage for specific mental health and substance use disorder services based on whether that service is “medically necessary” for the patient. These insurers must share the criteria that they use to make these medical necessity determinations with any current or potential participant, beneficiary, or contracting provider upon request.

MHPAEA also provides that insurers must explain the reason for any denial of reimbursement or payment for services for mental health and substance use disorder benefits to the participant or beneficiary upon request, or as otherwise required.

Enforcing the Law

A number of state and federal agencies share oversight and enforcement of parity. Enforcement varies based on the type of insurance plan.

State insurance commissioners oversee individual and employer-funded plans of less than 51 insured employees, as well as fully-insured large group plans. However, if HHS makes a finding that the State has failed to "substantially enforce" the federal law, HHS can exercise secondary enforcement authority.

NOTE: Under a "fully-insured" plan, enrollees pay premiums to an insurance company that must pay for the cost of covered health care services. In contrast, a "self-funded" or "self-insured" plan is one where the employer sets aside funds to pay for the full cost of employees' health care. These plans typically hire an insurance company to help with claims processing. Cost-sharing requirements such as deductibles, copays, and coinsurance may apply under both types of plans.

The Department of Labor and the IRS generally have enforcement authority over self-insured private sector employment-based plans that are subject to ERISA. HHS has direct enforcement authority with respect to self-funded non-Federal governmental plans.

Employees with questions about MHPAEA or complaints about compliance by their employment-based group health plans can contact any of the Departments. The Departments will work together and, to the extent an insurer is involved, will work with the States, as appropriate, to ensure MHPAEA violations are corrected.

State Parity Laws

Some state laws provide even stronger consumer protections than the federal parity requirements. In those cases, MHPAEA permits the state to enforce those stricter requirements of the state parity law, generally through the state's insurance commissioner.

Consumer Questions or Complaints

Contact information for federal agencies is below. Consumers should also contact their state insurance commissioner or the appropriate health insurance oversight authority in their state.

General Questions and Comments

Department of Health & Human Services
Centers for Medicare & Medicaid Services
Health Insurance Helpline
1-877-267-2323 Extension 6-1565

Department of Labor
1-866-444-3272

Questions about Self-Funded State and Local Plans and Church Plans

Department of Health & Human Services
Centers for Medicare & Medicaid Services
Health Insurance Helpline
1-877-267-2323 Extension 6-1565

Plans Overseen by State Insurance Commissioners

State insurance commissioners are the best source of information for questions regarding plans that they oversee.

Questions About Health Reform

Resources for Further Information

Full Text of MHPAEA

General Summaries on Parity

SAMHSA Webinar on Parity

Frequently Asked Questions - U.S. Department of Labor

Reports and Research Papers

Last Updated: 01/10/2014