Historically, insurance plans covered treatment for behavioral health conditions (mental health and addiction) less generously than treatment for physical health conditions. Parity is about making health plans treat individuals with mental health and addiction fairly.
With the passage of The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), most health plans are now required to provide mental health and addiction benefits on a comparable basis to benefits for other medical conditions. This includes most employer-sponsored group health plans and individual health insurance coverage. Most group health plans, Medicaid managed care organizations, State Children’s Health Insurance Programs and individual health plans sold in the Health Insurance Marketplace through the Affordable Care Act (ACA) are required to follow federal parity mandates.
The ACA expanded mental health and addiction benefits and parity protections. All marketplace plans made available by the ACA cover mental health and addiction as essential health benefits and cannot deny coverage for pre-existing mental health or addiction conditions.
MHPAEA, also known as the Federal Parity Law, does not apply to the following plans: Tricare, Medicare, Medicaid fee-for-service plans, small state and local government plans with 50 or fewer employees, faith-based employee health plans, and individual and group plans that were “grandfathered” in because they were created prior to March 2010.
The Federal Parity Law requires health insurers to cover mental health substance use disorders no more restrictively than other medical conditions. Health insurance plans CANNOT limit frequency of treatment, number of visits, or days of coverage for mental health care more so than for other types of medical care. Parity laws protect parity in several types of care:
- Inpatient or hospital care must be covered equally in or outside the health plan network;
- Outpatient care in and out of network;
- Residential treatment
- Emergency care, and
- Prescription drugs.
Parity also applies to cost sharing such as co-pays, co-insurance, deductibles and out-of-pocket cost limits. Health insurance plans CANNOT require higher deductibles, co-payments or out-of-pocket expenses for mental health benefits that they do for other medical care. Health plans are required to have enough mental health and substance use outpatient providers and mental health hospitals to serve members close to home. And, provider payment rates for mental health must be on the same level as other types of care.
Finally, standards used to approve or deny treatment requests CANNOT be more strict for mental health and addiction care than for other medical care.