Parity 101

The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA) was passed in 2008 to end discriminatory health care practices against those with mental illness and/or addiction. The statute provides that plans cannot apply financial requirements or treatment limitations to mental health or substance use disorder (MH/SUD) benefits that are more restrictive than as applied to medical/surgical benefits. Plans also cannot apply separate treatment limitations only to MH/SUD benefits. Most notably, the law aims to remedy both the financial (“quantitative”) and non-financial (“non-quantitative”) ways that plans limit access to addiction and mental health care, more so than plans do for other physical conditions. Individuals with mental illness and/or addiction, their families, professionals in the field and employers all worked together to pass the law.
Final implementing regulations went into full effect starting January 1, 2015 for all plans covered by MHPAEA. These regulations provide greater clarity on how plans must apply the non-quantitative treatment limit requirements and what specific information and which documents must be given to patients, providers and their advocates.

The parity statute applies to:

  • Employer-funded plans with more than 50 insured employees
  • Medicaid managed-care plans
  • CHIP (Children’s Health Insurance Program)
  • The Affordable Care Act (ACA) expanded MHPAEA’s protections to:
    • Non-grandfathered employer plans with fewer than 51 employees (small group plans)
    • Non-grandfathered individual market plans
    • Medicaid Alternative Benefit Plans (Medicaid expansion benefit)
    • Plans offered through the health insurance exchanges

As enacted in 2008, MHPAEA did not require a plan to offer mental health and/or substance use disorder (MH/SUD) benefits; but if the plan chose to do so, it must offer the MH/SUD benefits on par with (equal to) the other medical/surgical benefits it covers. For example, if a plan allowed an individual to have as many appointments with an immunologist as he or she needs but only covers five appointments with a psychiatrist, this would violate the parity law. A list of common violations of the parity law is available here.

The ACA expanded MHPAEA’s protections. As a result, qualified health plans (individual and small group health plans offered in and outside the health insurance exchanges) and the benefits offered to the Medicaid expansion population must include MH/SUD benefits as an essential health benefit, and thereby, must comply with the parity law.

Short-term health plans (health insurance plans of a duration of less than 12 months, with possible extensions of up to 36 months) do not have to comply with MHPAEA.