Mental Health Parity and Addiction Equity Act (MHPAEA)

The Mental Health Parity and Addiction Equity Act (MHPAEA) is a federal law requiring group health care plans to offer mental health and/or substance abuse (MH/SUD) benefits on par with the medical and surgical benefits offered. This legislation does not require health plans to offer mental health and/or substance abuse (MH/SUD) benefits, but if such benefits are offered, they must be no less restrictive than the medical/surgical benefits in the plan.

How Does the MHPAEA Work?

The MHPAEA was originally enacted to prevent health insurers from placing more treatment limitations (such as number of visits) or financial requirements (such as amount of co-pay) on services related to mental health and substance abuse. Prior to the MHPAEA, a health plan might  offer an unlimited number of medically necessary appointments with a dermatologist but only cover five psychiatrist appointments per year. With the MHPAEA in place, health plans should cover psychiatric services in the same way they cover other necessary health care services.

The MHPAEA affects several aspects of health coverage, including financial requirements such as co-pays and deductibles and treatment limitations such as number of visits and types of treatment. If a group health plan includes both MH/SUD and medical/surgical benefits, the MH/SUD benefits “must be no more restrictive than the predominant financial requirements or treatment limitations that apply to substantially all medical/surgical benefits.” This simply means the same financial requirements and treatment limitations of more than half of the medical services covered should be applied toward mental health services.

The following examples may help illustrate how the MHPAEA looks in practice:

• Co-pays: If the co-pay on an insurance plan is $25 for most of the medical services covered by a plan, then the co-pay for a mental health or substance abuse service should not cost any more than $25. For example, a person who pays $25 to see a gynecologist or primary care physician could expect to pay $25 to see a psychiatrist.
• Deductibles: When it comes to deductibles, the MHPAEA requires MH/SUD services and medical/surgical services to combine to contribute toward one plan deductible instead of toward two separate deductibles. If a person who has a $500 deductible spends $200 for psychotherapy sessions and $200 for medical lab tests, both should contribute toward the same $500 deductible.
• Types of Treatment: If a plan covers both outpatient and inpatient medical and surgical services, it should also cover inpatient and outpatient care for MH/SUD services. A person who needs inpatient heart surgery should also be covered for admittance to an inpatient drug and alcohol treatment facility. In addition, the maximum inpatient days covered for most medical/surgical inpatient services should also apply toward mental health and substance abuse services.

History of the MHPAEA

Before the MHPAEA of 2008 became law, there was the Mental Health Parity Act (MHPA) of 1996, which was introduced by legislators Pete Domenici and Paul Wellstone after decades of advocacy work to gain parity in health care. This legislation required all group health plans offering mental health care benefits and covering 50 or more employees to apply equal lifetime and annual dollar limits to mental health coverage and medical/surgical coverage. In other words, insurers must spend the same amount on mental health and substance abuse coverage as on medical/surgical coverage.

Though the MHPA legislation was an accomplishment, its limited scope encouraged many to continue working for more. In 2001, a directive from President Clinton allowed the Office of Personnel Management to enforce comprehensive health parity in the Federal Employees Health Benefits Program. This impacted 8.5 million federal employees, retirees, and dependents and also included coverage for all diagnoses listed in the American Psychiatric Association’s Diagnostic and Statistical Manual (DSM). Additionally, a recommendation for parity was given in President George W. Bush’s New Freedom Commission on Mental Health (2003).

Not much progress was made in the field of parity legislation during the years leading up to the passage of the Mental Health Parity and Addiction Equity Act of 2008. Nonetheless, contributing factors like advocacy groups, extensive research, legislators’ personal experiences with mental health and substance abuse, and detailed evidence about the costs of parity led to the eventual enactment of the more comprehensive MHPAEA of 2008.

MHPAEA and the Affordable Care Act

The Patient Protection and Affordable Care Act (PPACA), also known as Obamacare, was passed in 2010. This act expanded and extended the reach of the MHPAEA even further.

The PPACA impacted the MHPAEA by:

• Extending the MHPAEA to individual markets and qualified health plans, thus significantly increasing the number of health plans affected by the regulations of the MHPAEA
• Extending the MHPAEA’s impact on health insurance plans, as it requires all qualifying health plans to cover ten Essential Health Benefits (EHB) categories. These categories include things like ambulatory services, emergency care, and prescription drugs. In addition, the ACA listed mental health and substance abuse services as one of the ten benchmark categories. Therefore, although the MHPAEA does not force health insurance plans to offer MH/SUD coverage, plans must provide MH/SUD coverage in order for them to be PPACA-approved.
• Expanding on the MHPAEA by prohibiting insurers from refusing to cover people with mental health or substance abuse history and from charging higher premiums due to such a history

Although the application of the MHPAEA was extended by the PPACA, there are still a few exceptions to the law. MHPAEA does not apply to small businesses who employ fewer than 51 employees. Additionally, MHPAEA’s requirements do not apply to plans offered to state and local government employees, when certain administrative steps are taken (such as sending notice to enrollees). Finally, MHPAEA does not apply to retiree-only plans.

References: 

1. Barry, C. L., Huskamp, H. A., & Goldman, H. H. (2010, September). A Political History of Federal Mental Health and Addiction Insurance Parity. The Milbank Quarterly, 88(3). doi:10.1111/j.1468-0009.2010.00605.x
2. Fact Sheet: The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) (n.d.). In Department of Labor Employee Benefits Security Administration. Retrieved from http://www.dol.gov/ebsa/newsroom/fsmhpaea.html
3. Implementation of the Mental Health Parity and Addiction Equity Act (MHPAEA) (n.d.). In Substance Abuse and Mental Health Services Administration. Retrieved from http://www.samhsa.gov/health-financing/implementation-mental-health-parity-addiction-equity-act
4. Information on Essential Health Benefits (EHB) Benchmark Plans. (n.d.). In The Center for Consumer Information & Insurance Oversight. Retrieved from https://www.cms.gov/cciio/resources/data-resources/ehb.html
5. Mental Health Parity (n.d.). In Department of Labor Employee Benefits Security Administration. Retrieved from http://www.dol.gov/ebsa/mentalhealthparity
6. The Mental Health Parity and Addiction Equity Act (n.d.). In Centers for Medicare and Medicaid Services. Retrieved from https://www.cms.gov/CCIIO/Programs-and-Initiatives/Other-Insurance-Protections/mhpaea_factsheet.html
7. Parity Implementation Coalition (n.d.). In Mental Health America. Retrieved from http://www.mentalhealthamerica.net/sites/default/files/final%20detailed%20summary.pdf
8. Tobacco Control Legal Consortium. (2011, June). The Mental Health Parity and Addiction Equity Act and the Affordable Care Act: Implications for Coverage of Tobacco Cessation Benefits. In Public Health Law Center. Retrieved from http://publichealthlawcenter.org/sites/default/files/resources/tclc-fs-MHPAEA-tobcessationbenefits-2011.pdf

Last Updated: 04-8-2016