Small Business: Guide to the Mental Health Parity Law

If you provide group health benefits to the employees of your small business, you may be surprised to learn you are required by law to provide similar benefits for mental health under the Mental Health Parity Act. The Mental Health Parity Act of 1996 requires everyone providing a group health plan and health insurance to ensure treatment limitations and benefits applicable to mental health or substance abuse disorders are no more restrictive than similar benefits and limitations to all medical benefits.

Important Regulation Features

The following is a brief list of important features of Mental Health Parity Act regulation:

  • It does not apply to employers with anywhere from 2 to 50 employees. 
  • The categories for consistent application of benefits include: inpatient in-network, outpatient in-network, inpatient out-of-network, outpatient out-of-network, emergency, and prescription drug.
  • Services are broken down into quantitative and non-quantitative groups. A quantitative limit may be applied, such as a visit limit or a day limit. Non-quantitative programs include step therapy or medication management. A group health plan cannot impose a non-quantitative treatment limitation with respect to MH/SUD benefits.
  • The Mental Health Parity Act was expanded to include the Addiction Equity Act, ensuring all benefits for substance abuse services are included in the act.

Separate Deductibles

In general, the rule with deductibles allows for separate deductibles for mental health and physical health, as long as the deductibles for mental health treatment are no more restrictive or costly than those for comparable physical health services. This can be a confusing rule, but it basically means the following: You may provide one deductible for medical and surgical treatments and a separate deductible for all mental and substance abuse treatments. However, the deductibles should be comparable. You cannot have a more restrictive deductible for the mental health coverage you offer.

Individual Co-Pays

The co-pay you provide your employees for mental health benefits may be different from the co-pay you provide for medical treatments. However, the rules governing how the copay is applied must be the same. For example, if your employees can apply a co-pay toward an annual maximum on their medical coverage, the same should be true with their mental health coverage. This is an important feature because co-pays are often much higher on mental health coverage. Deductibles may also be very high, rendering the cost of receiving mental health treatment high, even with insurance coverage. Therefore, the annual maximum should be put in place in order to make sure equal treatment is being given for both physical and mental conditions.

Scopes of Service

The services offered by your group health insurance plan cannot be more restrictive for mental health benefits than for medical health benefits. For example, if your employees will have the option of seeing a specialist with a referral for a medical condition, the same option should be present with a mental condition. If prescription medication for treatment of medical conditions is covered, it must also be covered for treatment of mental or substance abuse conditions. Generally speaking, the scope of service of your mental health plan, on the whole, should mimic that of your medical benefits.

blog comments powered by Disqus