The Mental Health Parity and Addiction Equity Act

If you or someone close to you struggles with mental illness or substance abuse disorders, then you need to know about the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008.  The law requires large group health insurance plans to offer the same amount of coverage for mental health and substance abuse that they provide for physical illnesses.  It is designed to end insurance discrimination against those who suffer from mental illness and substance abuse disorders, and it recognizes both the gravity of mental illness and the inextricable relationship between mental and physical health.

What does the Mental Health Parity and Addiction Equity Act do?

The law does not compel health plans to provide mental health and substance abuse benefits, but if they do, they must not impose restrictions on these benefits that are any more stringent than those placed on benefits for other chronic diseases.  In addition, if a plan that includes mental health and substance abuse benefits offers out-of-network coverage for medical or surgical benefits, they must also provide out-of-network coverage for mental health and substance abuse services.  In the past, many insurance plans had required higher co-payments for mental health services or enforced narrower limits on the number of visits or the length of hospital stays, and the new law directly prohibits this.

Who needs to know about the parity law?

Surprisingly, even though the requirements of this bill took effect in January 2010 and new regulations became effective in 2011, a recent survey by the American Psychology Association concluded that fewer than 7% of Americans are aware of the Mental Health Parity Act.  The study further suggested that many Americans do not seek help for mental illness or substance abuse problems because they are concerned about the cost and do not know how to locate the right mental health professional.  Over 100 million Americans are covered by the Mental Health Parity and Addiction Equity Act because they are part of large group employer-funded insurance plans or are covered by Medicaid; millions of these individuals suffer from mental illness or addiction.  Everyone benefits when mental health and substance abuse patients receive needed treatment.  According to the Substance Abuse and Mental Health Services Administration, such treatment can lower medical costs by 26% and emergency room visits by 36%.

Who is exempt?

Individual plans and small health plans (with fewer than 51 insured individuals) are not required to conform to the Mental Health Parity Act.  Additionally, employers may request an exemption from the parity law if they can demonstrate that their costs have increased by 2% due to the requirements of the law.

History of the Mental Health Parity Act

The bill was signed into law after over a decade of political struggle.  It is named for the late Senator Paul Wellstone, whose brother had mental illness, and for Senator Pete Domenici, whose daughter has schizophrenia.  Supporters of the bill also included members of Congress who had been treated for depression and drug and alcohol addiction.  Other proponents include the American Psychological Association.