Know Your Rights

Fair Insurance Coverage: It’s the Law

The federal Parity Law requires equitable coverage of substance use disorder and mental health benefits in both the public and private health insurance markets.

What is Parity?

Parity in health insurance coverage means that treatment and services for behavioral health conditions are covered equally or “on par” with those for medical health conditions.

Congress passed the first parity law in 2008 mandating equal coverage for mental health and substance use disorders.

Coverage must be “on par” in the following areas:

• Hospital stays, admissions to residential treatment centers, emergency/ crisis care;
• Treatment limits;
• Insurer protocols for prior approval of services and clinical standards used to approve or deny care;
• Prescription drugs;
• In-network and out-of-network coverage;
• Co-pays, deductibles, co-insurance, and other out-of-pocket costs.

Insurers who must comply are:

• Large group health plans with more than 50 employees;
• Plans in the individual and small group markets;
• Medicaid (TennCare) managed care plans that offer coverage for mental health and/or substance use disorder benefits;
• Children’s Health Insurance Program (CHIP);
• Short-term health plans;
• Medicaid Alternative Benefit Plans, including those provided to the Medicaid expansion population (does not apply in Tennessee).

Parity laws do not apply to Medicare, Veterans Administration or TRICARE/Department of Defense health plans.

Common Parity Violations

• The health plan authorizes and covers fewer visits or days for mental health or substance use disorder care than medical/surgical care.
• Residential or partial hospital care not covered for mental health or addiction. For example, the health plan covers skilled nursing facility for a stroke but not addiction residential care for substance use disorder.
• The policy holder pays higher out-of-pocket costs for mental health or addiction care. For example, copays are higher for a mental health therapy visit than for a visit to an endocrinologist for diabetes.
• The health plan has a separate deductible for mental health or substance use disorder care in addition to the overall deductible. A deductible is the amount you are responsible for before the health plan begins to pay.
• The health plan determines that mental health or substance use disorder care is not necessary and denials care more than medical care.
• Prior approval for services is required more often for mental health or substance use disorder care than for medical care.
• Health plans require that patients undergo the least expensive mental health or addiction treatment rather than following the provider’s orders or prescriptions.
• In-network mental health or substance use providers are not available, and the health plan does not pay for the out-of-network providers in your area.

What are the laws?

Mental Health Parity and Addiction Equity Act (2008)

Does not require insurers to provide mental health or addiction benefits, but if they do, treatment limits and out-of-pocket costs must be at the same level as medical or surgical care.

Affordable Care Act (2010)

Passed by Congress, this act made mental health and substance use disorder benefits among the 10 “essential health benefits” offered by individual plans, small employer fully insured plans, and insurers who offer health plans on the Health Insurance Marketplace (Healthcare.gov). The act also requires these insurers to follow parity laws.

21st Century Cures Act (2016)

This act passed by Congress requires federal regulators to issue guidance clarifying issues about areas of the Federal Parity Law that are unclear to consumers, advocates, and insurers – such as examples of parity non-compliance, how to determine the medical necessity of treatment, etc.

Tennessee Public Chapter 1012 (2018)

Passed by Tennessee lawmakers, this bill aligns state law with the Federal Parity Law and requires the state Department of Commerce & Insurance to issue a report to lawmakers on its efforts to enforce parity laws.

Consolidated Appropriations Act (2020)

Congress passed this act amending the Federal Parity Law. Insurers and health plans are required to prove that they comply with the existing parts of the law, file annual reports, and give that proof to regulators upon request.

Tennessee Public Chapter 244 (2021)

Building on the Consolidated Appropriations Act, lawmakers in Tennessee passed legislation requiring the state Department of Commerce & Insurance to obtain reports filed with federal regulators by Tennessee health plans and provide them annually to the Tennessee Legislature.

Consumers in Tennessee will now be able to see how well their plan complies with federal parity law.

Asserting Your Rights

Filing a complaint

If you believe your health plans has improperly denied coverage or established unreasonable barriers for mental health and addiction services, you can act by filing an appeal or lodging a complaint.

• Contact your health plan’s consumer or policyholder assistance office. The information should be available on your policy coverage documents.
  • You can appeal a decision. Click here to learn more.
  • If you are enrolled in TennCare, contact your managed care organization to learn how to file an appeal. You can also file a complaint here. Be sure to note on the form that the complaint deals with a violation of federal parity laws.

• File a complaint with the Tennessee Department of Commerce and Insurance
  • For fully insured plans, individual or private plans, or non-federal government plans in Tennessee, file parity complaints here.
  • File an online complaint here. At the bottom, under the dropdown box “Reason for Complaint,” click on Other. Then type “parity violation” in the box.
  • You can also call the Insurance Division’s Consumer Insurance Services at(800) 342-4029 or (615) 741-2218.
• File a complaint with the U.S. Department of Labor/Employee Benefits Security Administration
  This office handles parity complaints involving self- insured private employer health plans. For assistance, call (866) 444-3272or visit: askebsa.dol.gov for information.
• File a complaint with the U.S. Department of Health and Human Services
• This office handles parity complaints involving state and local government employer plans that are self-insured. Complaints can be filed through the HHS parity complaint portal, by phone with the CMS Health Insurance Helpline at 877-267-2323 x 6-1565 or by email: phig@cms.hhs.gov or NonFed@cms.hhs.gov

Additional reading:

Parity Resource Guide for Addiction & Mental Health Consumers, Providers and Advocates

Mental Health Insurance Parity: State Legislative and Enforcement Activities

TennCare policies on parity