Parity is the recognition of mental health conditions and substance use disorders as equal to physical illness. Before this law, mental health treatment was typically covered at far lower levels in health insurance policies than physical illness. Federal parity will help ensure fair and equal coverage of mental health and substance use disorders for people in large self-insured plans, which include more than 82 million Americans, as well as insurance purchased through health insurance marketplaces.
Federal parity does not require plans to offer coverage for mental health or substance use disorders, but if these conditions are covered, than the new law requires coverage that is equal to coverage for other health conditions. Health insurance plans are also allowed to decide which mental health and substance use disorders, if any, they will cover. State-regulated group health plans must continue to follow state requirements to provide coverage of specific (or all) mental health and/or substance use disorders. Check to see whether your state has a parity law at www.nami.org/stateparity .
Health plans that MUST follow federal parity include:
Health plans that DO NOT have to follow federal parity include:
Federal parity allows health insurance plans to seek an exemption from parity requirements for a period of one year if they can document that having to follow the law results in costs going up more than 2 percent in the first year or 1 percent after that. An analysis must demonstrate that increased costs were directly related to parity. If an exemption is granted, a plan must come back into compliance with parity after one year.
This cost exemption is a new option for state-regulated large group plans. However, the administrative costs of obtaining and using this cost increase exemption are expected to exceed any potential savings to a health plan from using this exemption.
If a plan has to follow federal parity law, then the following must be covered equally when it comes to treatment limits and payment amounts:
Federal parity also applies to clinical criteria used by health insurers to approve or deny mental health or substance use treatment. The standard for medical necessity determinations—whether the treatment or supplies are considered by the health plan to be reasonable, necessary, and/or appropriate—must be made available to any current or potential health plan member upon request. The reason for denials of coverage must also be made available upon request.
If a state has a stronger state parity law, then health insurance plans regulated in that state must follow those laws. For example, if state law requires plans to cover mental health conditions, then they must do so, even though federal parity makes inclusion of any mental health benefits optional.
Federal parity replaces state law only in cases where the state law “prevents the application” of federal parity requirements. For example, if a state law requires some coverage for mental health disorders, then the federal requirement of equal coverage will trump the “weaker” state law.
States are responsible for parity in health insurance plans bought through state or federally facilitated Health Insurance Marketplaces. Go here for a list of State Health Insurance Departments.
The Federal Center for Medicaid and Medicare Services (CMS) can also enforce parity if states do not enforce the law. If you have concerns about your insurance plan’s not following parity, contact the CMS help line at 1 (877) 267-2323, extension 6-1565 or email email@example.com.
The U.S. Department of Labor has authority over enforcing parity in self-insured plans. To find out more, call the Department of Labor’s toll free number at 1 (866) 444-3272 or contact a benefit advisor in one of the Department’s regional offices, www.askebsa.dol.gov.
For parity to achieve its goals, it is important for mental health advocates to work closely with their state insurance divisions. Together, advocates can promote education about parity and compliance with parity requirements, monitor results, help handling of consumer complaints, increase transparency and responsibility, and expand needed consumer protections.
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