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The Mental Health Parity Act (MHPA), signed into law on September 26, 1996,
requires that annual or lifetime dollar limits on mental health benefits be
no lower than any such dollar limits for medical and surgical benefits
offered by a group health plan or health insurance issuer offering coverage
in connection with a group health plan.
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MHPA applies to group health plans for plan years beginning on or after
January 1, 1998 and contains a sunset provision that provides that the
parity requirements do not apply to benefits for services furnished on or
after September 30, 2001.
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The law:
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Generally requires parity of mental
health benefits with medical/surgical benefits with respect to the
application of aggregate lifetime and annual dollar limits under a
group health plan
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Provides that employers retain
discretion regarding the extent and scope of mental health benefits
offered to workers and their families (including cost sharing, limits
on numbers of visits or days of coverage, and requirements relating to
medical necessity)
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The law, however, does not apply to benefits for
substance abuse or chemical dependency.
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The law also contains the following two exemptions:
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Small employer exemption. MHPA does
not apply to any group health plan or coverage of any employer who
employed an average of between 2 and 50 employees on business days
during the preceding calendar year, and who employs at least 2
employees on the first day of the plan year
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Increased cost exemption. MHPA does
not apply to a group health plan or group health insurance coverage if
the application of the parity provisions results in an increase in the
cost under the plan or coverage of at least one percent
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