Organization & Financing
Employer Questions and Answers on the Mental Health Parity Act
1. Is there a separate effective date for collectively bargained plans?
No. MHPA is effective for plan years beginning on or after January 1, 1998,
regardless of when the plan is collectively bargained.
2. If a State has its own parity law that is more liberal than MHPA (i.e., requires more favorable treatment of mental health benefits), which law takes precedence? What
effect do State mandated benefits laws have if they do not require parity but do
mandate mental health benefits?
A State law that requires more favorable treatment of mental health benefits under
health insurance coverage offered by issuers (generally, health insurance companies)
would not be preempted by the provisions of MHPA and the interim rules. Generally,
group health plans must comply with the Federal parity requirements, but issuers are
subject to State law. The combined effect of Federal and State rules will vary from
State to State. You should contact your State insurance commissioner's office for
information about parity and State laws mandating that mental health benefits be
included in the plan.
3. Does MHPA require all group health plans to provide mental health benefits?
No. Group health plans are not required to include mental health coverage in their
benefits packages. The requirements under MHPA apply only to group health plans
offering mental health benefits. Also, parity does not apply to any policies sold
in the individual market.
4. May group health plans impose other restrictions on mental health benefits and still
be in compliance with the MHPA?
Yes. The law does not affect the terms and conditions (such as cost sharing, limits
on numbers of visits or days of coverage, and requirements relating to medical
necessity) relating to the amount, duration, or scope of mental health benefits.
5. Do all group health plans offering mental health benefits have to meet the parity
requirements?
No. There are two exemptions from the parity requirements. The mental health parity
requirements do not apply to small employers who have between 2 and 50 employees or
to any group health plan whose costs increase one percent or more due to the
application of the parity requirements.
6. How does a group health plan qualify for an exemption under the one percent cost
provision?
Generally, plans must implement parity for the first plan year beginning on or after
January 1, 1998, but may claim an exemption from parity if, based on at least six
months actual data, a plan has experienced a one percent or more cost increase.
Increased costs do not include premium payments.
The exemption is not effective until 30 days after the plan notifies participants
and beneficiaries of the plan's decision to claim the one percent increased cost
exemption. Plans also must send a copy of the notice to the government.
A group health plan that is a church plan must furnish the notice to the Department
of the Treasury. A group health plan subject to Part 7 of Subtitle B of Title I of
ERISA must furnish the notice to the Department of Labor. A group health plan that
is a nonfederal governmental plan must furnish the notice to the Department of Health
and Human Services.
In addition, to claim the one percent increased cost exemption, a plan (or issuer)
must make available to participants and beneficiaries (or their representatives),
on request and at no charge, a summary of the information required to support the
exemption.
7. For how long is the exemption granted?
The group health plan exemption continues in effect (at the plan's discretion) until
September 30, 2001, even if the plan subsequently purchases a different policy from the
same or a different issuer and regardless of any other changes to the plan's benefit
structure.
8. What kind of costs can be used in making this one percent increased cost
determination?
The costs may include claims incurred during the six months period that would have
been denied under the terms of the plan absent the parity requirements as well as
administrative expenses attributable to complying with these requirements.
9. If a group health plan claims an exemption, what ensures that the cost information
is accurate?
Because the exemption is based on actual claims data and administrative expenses,
the summary information plans are required to make available will be based on data
at hand and not based on projections of costs. Plan participants and beneficiaries
have a private right to seek civil action against the plan. Any evidence that the
cost information is not accurate may be referred to the Federal agency that has
jurisdiction.
10. Who enforces the law?
The provisions of MHPA are set forth in Chapter 100 of Subtitle K of the Internal
Revenue Code, (the Code), Part 7 of Subtitle B of Title I or ERISA, and Title XXVII
of the Public Health Service Act (PHS Act). The Secretaries of the Treasury, Labor,
and Health and Human Services share jurisdiction over the MHPA provisions. These
provisions are substantially similar, except as follows:
The MHPA provisions in the Code generally apply to all group health plans other than
governmental plans, but they do not apply to health insurance issuers. A taxpayer
that fails to comply with these provisions may be subject to an excise tax under
section 4980D of the Code.
The MHPA provisions in ERISA generally apply to all group health plans other than
governmental plans, church plans, and certain other plans. These provisions also
apply to health insurance issuers that offer health insurance coverage in connection
with such group health plans. Generally, the Secretary of Labor enforces the MHPA
provisions in ERISA, except that no enforcement action may be taken by the Secretary
against issuers. However, individuals may generally pursue actions against issuers
under ERISA and, in some circumstances, under State law.
The MHPA provisions in the PHS Act generally apply to health insurance issuers that
offer health insurance coverage in connection with group health plans and to certain
State and local governmental plans. States, in the first instance, enforce the PHS
Act with respect to issuers. Only if a State does not substantially enforce any
provisions that apply to issuers under its insurance laws will the Department of
Health Human Services enforce the provisions, through the imposition of civil money
penalties. Moreover, no enforcement action may be taken by the Secretary of Health
and Human Services against any group health plan except certain State and local
governmental plans.
11. Must self-funded nonfederal governmental plans comply with MHPA?
Self-funded nonfederal governmental plans may choose to be exempted from the parity
provisions if the election complies with the requirements of the Federal regulations
at 45 CFR 146.180. An election to "out-out" of these requirements may be sent to the
following address: the Centers for Medicare and Medicaid Services, CMSO/PEIS, 7500 Security
Boulevard, Baltimore, Maryland, Attention: David Holstein, Mail Stop C4-25-02.
12. Will the names of group health plans claiming the one percent exemption be published? Can the public obtain the supporting cost data of those plans that claim the
exemption?
Nonfederal governmental plans claiming the one percent exemption will be listed on
CMS's website. Plans must make available to participants and beneficiaries (or
their representatives), on request and at no charge, a summary of the information
required to support the exemption. An individual who is not a participant or
beneficiary and who presents a notice is considered to be a representative.
13. Do all group health insurance policies have to include parity?
No, but a health insurance issuer can only sell a non-parity policy to a plan that is
exempt from the parity provisions of the law. Also, MHPA does not apply to any
policies sold in the individual market.
14. How can I learn more about the MHPA?
To view the text of the MHPA, click here.
To view a full copy of the December 22, 1997 interim rule in the Federal Register,
click here.
You can also contact the the Centers for Medicare and Medicaid Services, CMSO/PE
7500 Security Boulevard, Baltimore, MD 21244-1850; Attention: Mental Health Parity.
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