Complying with the new federal mental health parity law might be easier on benefits advisors’ clients than it could have been.
The version of the parity act included in the Emergency Economic Stabilization Act package is much more flexible than some of the versions considered earlier in the year, insurance and employer trade groups say.
Congressional leaders put the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 on a legislative rocket, by using H.R. 1424, the bill that contained it, as the vehicle for considering the Troubled Asset Repurchase Program legislation.
President Bush signed H.R. 1424 into law Oct. 3. Because so much attention was focused on economic upheaval, the TARP section of H.R. 1424, and a collection of attention-getting tax breaks included in H.R. 1424, such as an excise tax exemption for wooden arrows designed for use by children, the MHPAEA was overshadowed.
Larger employers have started to notice the new parity law, but “there’s been a lot of bigger news,” says Thomas Billet, a senior consultant in the Stamford, Conn., office of Watson Wyatt Worldwide.
The old Mental Health Parity Act of 1996 required large and midsize group health plans that cover mental health care to offer the same annual and lifetime maximums for mental health care that they offer for other types of medical care. But the 1996 law permitted plans to apply different limits on the number of office visits, days of inpatient coverage, and other utilization totals than they applied to other types of medical care, according to the Blue Cross and Blue Shield Association, Chicago.
The new MHPAEA will not require plans to cover mental health care. But, for group plans with more than 50 workers, the MHPAEA will extend the parity requirements to substance abuse treatment as well as to other types of mental health care, and it will require that deductibles, cost-sharing rules and out-of-pocket limits be at least as generous for substance abuse treatment and other forms of mental health care as they are for other types of medical care.
The MHPAEA will take effect for plan years beginning on or after Jan. 1, 2010.
Earlier this year, critics of earlier versions of the MHPAEA worried that the bill could create a very broad definition of mental illness and affect a wide range of employers.
Unlike the earlier versions of the bill, the new parity law permits a health plan to define the terms “mental illness” and substance abuse, in accordance with state and federal law, according to the National Association of Health Underwriters, Arlington, Va.
The National Federation of Independent Business, Nashville, Tenn., points out that the version of the MHPAEA adopted into law retains the current exemption for businesses employing 50 or fewer workers.
The MHPAEA also “allows exemptions if the federal parity mandates increase coverage costs by more than 2% in the first year, or 1% in subsequent years,” the NFIB says.
America’s Health Insurance Plans, Washington, ended up joining with the Blue Cross and Blue Shield Association, Chicago, and many other insurance, employer, mental health and consumer groups, such as the American Benefits Council, Washington, to support the MHPAEA.
NAHU also supported the legislation.
“We’re quite happy that it made it through,” says John Greene, a NAHU vice president.
NAHU believes that the new MHPAEA requirements are set up in such a way that the carriers can comply without significantly increasing administrative costs, Greene says.
Analysts at the Congressional Budget Office, for example, estimated in 2002 that enacting the new mental health parity law would increase health plan costs only about 0.4%.
Greene says he is hoping the MHPAEA will improve health coverage by helping employers increase productivity and get employees with mental health problems back to work more quickly.
In theory, health plans could drop mental health benefits, apply for cost-escalation exemptions, or take other steps to avoid having to comply with the MHPAEA.
In the real world, “I think it will have a big effect,” Billet says.
The MHPAEA may have holes, but it has many fewer holes than the old MHPA had, Billet says.