Congress Passes Mental Health Insurance Parity Law

Last week, the United States Congress passed, and President Bush signed into law, the Emergency Economic Stabilization Act of 2008 (EESA). Included in the EESA was the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (Act), which requires employers and health insurers to provide parity between their mental health coverage and their physical/medical coverage. The substance of, and idea behind, the Act has had widespread support from many mental health entities, health care organizations and members of Congress for more than 12 years.

The Act is designed to end the insurance coverage disparity facing persons with addictions and mental illnesses. Mental health coverage now includes treatment for substance abuse and addiction treatment, as well as treatment for a range of mental illnesses. Some of the highlights of the Act are that it:

• Requires parity of coverage for medical treatment and mental health treatment in business health care plans, which provide mental health and substance abuse treatment. Although parity is required between mental and medical coverage, employers may choose which mental health disorders to include in their plans. The covered disorders then must have the same level of coverage as medical illnesses.
• Requires parity in copayments, deductibles, out-of-pocket expenses and provider limitations for mental health treatments to mirror those for medical treatment.
• Requires parity in treatment limits, such as caps on frequency and number of visits, limits on days of coverage, and similar limits on the scope and duration of mental health treatment.
• Applies to health care plans of employers with more than 50 employees.
• Applies to persons in need of drug abuse and alcohol treatment, as well as to persons with a mental illness.
• Requires a health plan, which allows for out-of-network coverage for medical problems, to also offer such out-of-network coverage for mental health and substance abuse problems.
• Provides that the Act applies to all health care plans after October 3, 2009.

The Act does not require business health insurance plans to provide coverage for mental health or addiction treatment. However, employers and insurers are barred from imposing any limits or caps on mental health care in existing policies that are not applied to other health related conditions. The Act, thus, ends the practice of setting higher copayments and limiting mental health treatment for persons covered by business insurance plans in the U.S.

Businesses with less than 50 employees are exempt from the new regulations. The Act does not affect state laws that require stronger consumer protections. The Act requires the Department of Labor and the Department of Health and Human Services to issue regulations for the Act within one year.