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Health Insurance Reform for Consumers

The Mental Health Parity Act

The Mental Health Parity Act of 1996 (MHPA) is a federal law that may apply to two different types of coverage:

1)  Large group self-funded group health plans (CMS has jurisdiction over self-funded public sector (non federal governmental) plans while the Department of Labor 866-444-3272 has jurisdiction over private sector self-funded group health plans.);

2)  Large group fully insured group health plans.

Contact your state's insurance department to find out about whether additional protections apply to your coverage if you are in a fully insured group health plan or have individual market (non-employment based) health coverage.

Medicare and Medicaid are not issuers of health insurance.  They are public health plans through which individuals obtain health coverage.  Contact your specific Medicare or Medicaid contractor to discuss your level of benefits.

Employment related group health plans that provide benefits through insurance are known as fully insured group health plans. Employment related group health plans that pay for coverage directly, without purchasing health insurance from an issuer, are called self-funded group health plans.  Contact your plan administrator to find out if your group coverage is fully insured or self-funded. 

The MHPA may prevent your large group health plan from placing annual or lifetime dollar limits on mental health benefits that are lower - less favorable - than annual or lifetime dollar limits for medical and surgical benefits offered under the plan. MHPA does NOT apply to small group health plans or health insurance coverage in the individual (non-employment based) market, but you should check to see if your state law requires mental health parity in other cases. (Visit www.ncsl.org, on the right hand side of the page enter "mental health parity" then select "State Laws Mandating or Regulating Mental Health Benefits" in order to view State specific information.) MHPA applies to most group health plans with more than 50 workers. According to Federal Standards, MHPA does NOT apply to group health plans sponsored by employers with fewer than 51 workers.

For example, if your large group health plan has a $1 million lifetime limit on medical and surgical benefits, it cannot put a $100,000 lifetime limit on mental health benefits. The term "mental health benefits" means benefits for mental health services defined by the health plan or coverage.


Under current law, large group health plans may impose some restrictions on mental health benefits and still comply with the law.  MHPA does not prohibit large group health plans from:

•  Covering mental health services within network only, even though the plan will pay for out of network services for medical/surgical benefits (although with higher out-of-pocket cost to the subscriber);      

•  Increasing co-payments or limiting the number of visits for mental health benefits;

•  Imposing limits on the number of covered visits, even if the plan does not impose similar visit limits for medical and surgical benefits; and

•  Having different cost-sharing arrangements, such as higher coinsurance payments for mental health benefits, as compared to medical and surgical benefits.

•  Although the law requires "parity," or equivalence, with regard to dollar limits, MHPA does NOT require large group health plans and their health insurance issuers to include mental health coverage in their benefits package.  The law's requirements apply only to large group health plans and their health insurance issuers that include mental health benefits in their benefits packages.

Some additional information:

•  A visit limit coupled with a usual, customary, and reasonable (UCR) charge is not the equivalent of an annual or lifetime dollar limit.  As a result, it is not a violation of the MHPA requirements.  Payments made by the plan on the basis of UCR charges will vary from one case to the next. What is not permitted is a limit on the number of visits, together with a fixed dollar limit per visit, for example, 60 visits annually at $50 per visit (totaling $3,000), unless the medical-surgical coverage is the same.

•  You may be in a network plan that has an annual limit for mental health benefits received out-of-network, with no limits for out-of-network medical and surgical benefits.  MHPA allows this as long as there is parity between medical and surgical benefits and mental health benefits received in the network.

•  A large group health plan (or health insurance coverage     offered in connection with a group health plan) is not subject to MHPA if the application of its provisions to the plan raise costs by at least 1%.


If your large group health plan has separate dollar limits for mental health benefits, the dollar amounts that your plan has for treatment of substance abuse or chemical dependency are NOT counted when adding up the limits for mental health benefits and medical and surgical benefits to determine if there is parity.

An example of a coverage provision that violates MHPA is as follows: Your plan has a limit of 60 visits per year for mental health benefits, along with a fixed dollar limit of $50 per visit - a total annual dollar limit of $3,000. It places no similar limits on medical and surgical benefits. MHPA does NOT allow this inequality to exist for large group health plans covered by the law.

For additional information, you may e-mail us at phig@cms.hhs.gov.


Note:  There are three exceptions to the MHPA requirements:

• MHPA requirements do not apply to small employers who have between 2 and 50 employees;

• Large group health plans that can demonstrate that compliance with MHPA increases their cost by at least one percent can notify their beneficiaries that MHPA does not apply to their coverage; and

• A non federal government employer that provides self-funded group health plan coverage to its employees (coverage that is not provided through an insurer) may elect to exempt its plan (opt-out) from most requirements of Title XXVII of the Public Health Service (PHS) Act, with the exception of requirements pertaining to the certification and disclosure of an individual's creditable coverage under the plan.



MHPA Helpful Tips (PDF, 86KB) *NEW*

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Page Last Modified: 06/02/2008 11:22:46 AM
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