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Employer Questions and Answers about the Mental Health Parity Act

Questions:

1. Is there a separate effective date for collectively bargained plans?
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?
3. Does MHPA require all group health plans to provide mental health benefits?
4. May group health plans impose other restrictions on mental health benefits and still be in compliance with the MHPA?
5. Do all group health plans offering mental health benefits have to meet the parity requirements?
6. How does a group health plan qualify for an exemption under the one percent cost provision?
7. For how long is the exemption granted?
8. What kind of costs can be used in making this one percent increased cost determination?
9. If a group health plan claims an exemption, what ensures that the cost information is accurate?
10. Who enforces the law?
11. Must self-funded nonfederal governmental plans comply with MHPA?
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?
13. Do all group health insurance policies have to include parity?
14. How can I learn more about the MHPA?

Answers:

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. Please see section on nonfederal governmental plans for more detail.

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?

View a full copy of the December 22, 1997 interim rule in the Federal Register.

View only the Department of Health and Human Services's mental health parity regulations.

Contact PHIG by E-mail at PHIG@cms.hhs.gov

Or by U.S. Mail at: Centers for Medicare & Medicaid Services, CMSO/PHIG S3-16-16, 7500 Security Boulevard, Baltimore, MD 21244-1850; Attention: Mental Health Parity.