New Revisions to Mental Health Parity Act

New revisions to the Mental Health Parity Act of 1996 ("Act") take effect on January 1, 2010, for most group health plans.  Historically the Act prohibited group health plans from applying lower lifetime dollar limits to mental health benefits than were applied to medical and surgical benefits.  For example, if a group health plan did not impose lifetime limits on substantially all medical and surgical benefits, then it could not impose any limits on mental health benefits offered under the plan.

The new revisions expand on these protections.  If a plan provides mental health benefits, the financial requirements and treatment limitations for mental health coverage and substance abuse disorder benefits may not be more restrictive than the most frequent financial requirements and treatment limitations applied to substantially all medical and surgical benefits covered under the plan.  Financial requirements include deductibles, co-payments, co-insurance, and out-of-pocket expenses.  Treatment limitations include limits on the frequency of treatment, number of visits, and days of coverage. 

In addition, if a group health plan provides out-of-network coverage for medical and surgical benefits, then the group health plan must also provide out-of-network coverage for mental health and substance abuse disorders. 

The Act applies to group health plans with 51 or more employees in the prior calendar year.  Small employers (those with 50 or fewer employees) are exempt.  There is also a limited exemption for plans that experience an increase of at least 2% in actual total costs in the first plan year that the revisions take effect (or an increase of 1% annually thereafter).  This rise in costs must be documented by an actuary and the exemption request filed with the Secretary of Labor.