As part of the Emergency Economic Stabilization Act of 2008, signed by President Bush on October 3, 2008, Congress included provisions relating to mental health parity which amend the Employee Retirement Income Security Act of 1974 (ERISA), the Public Health Service Act, and the Internal Revenue Code. In broad brush, these provisions mandate that any group health plan that provides both medical and surgical benefits as well as mental health or substance use disorder benefits make the latter no more restrictive than the former. In other words, when offered, mental health benefits must be treated the same as physical health benefits. More specifically, mental health and substance use disorder benefits must be accompanied by the same financial, cost sharing, and treatment limitation requirements that most often accompany substantially all other medical and surgical benefits under the plan. This means the same copayment, deductible, coinsurance, and out-of-pocket expense schemes must apply, and the same scope or duration of treatment must be ensured (i.e., number of visits or days of coverage). In addition, out-of-network coverage must be extended to mental health or substance use disorders if it extends to medical or surgical benefits.

Beyond guaranteeing basic parities, the Act contains certain notice and oversight functions. First, it requires the criteria for medical necessity determinations and the reason for any denial of reimbursement or payment for services made under the plan with respect to mental health or substance use disorder benefits to be made available by the plan administrator. Second, the Secretary of Health and Human Services must track group health plan compliance and report findings to certain congressional committees as well as publish guidance and information to help interested parties understand and abide by the Act and continue to follow applicable state laws. Finally, the Comptroller General is required to report to Congress on rates, patterns, and trends in coverage and exclusion of specific mental health and substance use disorder diagnoses by health plans and health insurance.

Almost all group health plans are covered under the Act. However, exempted are those plans that can demonstrate a greater than 2% increase in overall costs of coverage during the first plan year and a greater than 1% increase for each subsequent plan year. Exemptions apply for only one plan year and must be based on calculations certified by a qualified and licensed actuary after compliance with the Act for at least the first six months of the plan year. In addition to the cost exemption, “small employers” may also elect to be exempted. This includes those employers with an average of 50 or fewer employees. The Act further requires that the Secretary of Health and Human Services, appropriate state agencies, and participants and beneficiaries in the plan be notified of all exemptions.

The Secretaries of Labor, Health and Human Services, and the Treasury are charged to issue regulations carrying out the amendments in the Act not later than seven years after the date of enactment. In general, the amendments apply to group health plans for plan years beginning after October 3, 2009 regardless of whether regulations have been issued. In the case of group health plans maintained pursuant to one or more collective bargaining agreements, the amendments shall not apply to plan years beginning before the date on which the last of the collective bargaining agreements relating to the plan terminates or January 1, 2009, whichever is later.

Advocates of the Act have claimed that it will facilitate a vast improvement in health care coverage and mental health outcomes for many millions of Americans. It is also seen as a step forward in reducing the stigma associated with mental illness. The practical result for employers is likely to involve extensive changes to workplace benefits. For example, the Congressional Budget Office estimates premium increases of an average of about two-tenths of a percent. Furthermore, it is likely that the law will lead to more aggressive management of mental health benefits and the integration of mental health coverage with medical and surgical benefits. However, it may cause certain group health plans to drop mental health coverage altogether. For those that offer coverage but not parity, the Internal Revenue Service may impose a tax of $100 per day per beneficiary and aggrieved individuals may bring civil lawsuits to obtain benefits.

*Ms. Orr is a law clerk at Larkin Hoffman Law Firm.