Enhanced Mental Health Parity Legislation Awaits Action During the 110th Congress's Final Days
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Guest Article

Deloitte logo

(From the September 2, 2008 issue of Deloitte's Washington Bulletin, a periodic update of legal and regulatory developments relating to Employee Benefits.)

Enhanced Mental Health Parity Legislation Awaits Action During the 110th Congress's Final Days


One piece of unfinished business awaiting Congress's return in September is proposed legislation to enhance and make permanent the existing mental health parity requirements for group health plans. House and Senate leaders reached a compromise on enhanced mental health parity legislation in June, but it has become entangled with a stalled bill to extend certain expiring tax provisions. The bill's fate will be determined during the final weeks of the 110th Congress.

Although less burdensome than previous proposals to enhance the mental health parity requirements, the compromise bill still would significantly broaden the scope of those requirements. If enacted, many employers likely would need to change their group health plan designs in order to comply.

Overview of Existing Mental Health Parity Rules

Current law generally prohibits group health plans that offer mental health benefits from imposing more restrictive aggregate lifetime or annual limits on such benefits than those applicable to medical and surgical benefits. These lifetime and annual limits refer to dollar limits, and not to caps on the numberof visits or days of coverage that may apply to mental health benefits. Also, plans may have different cost sharing requirements -- e.g., deductibles, copays or coinsurance -- for mental health benefits.

Significantly the law does not require group health plans to offer mental health benefits, but instead applies only to those plans choosing to provide such benefits. Additionally, benefits for treatment of substance abuse or chemical dependency are not subject to these mental health parity requirements.

Finally, a group health plan is exempt from the mental health parity rules if applying the rules to the plan results in a cost increase of one percent or more (the "cost increase exemption"). The mental health parity rules also do not apply to group health plans sponsored by employers with 50 or fewer employees (the "small employer exemption").

These requirements are codified in the Employee Retirement Income Security Act (ERISA § 712), the Internal Revenue Code (IRC § 9812), and the Public Health Service Act (PHSA § 2705).

How the Pending Bill Would Enhance Current Law

The compromise bill now pending before Congress would enhance existing mental health parity requirements in several important ways.

  • In addition to the current rules for lifetime and annual benefits, parity would be required with respect to all "financial requirements" -- e.g., deductibles, copays, coinsurance, etc. -- and "treatment limitations." Examples of the latter would include limitations on the frequency of visits, number of visits, or days of coverage. The standard for parity would be the predominant financial requirements or treatment limitations applicable to substantially all medical and surgical benefits.
  • The parity requirements specifically would extend to "substance use disorder benefits," meaning "benefits with respect to services for substance use disorders, as defined under the terms of the plan and in accordance with applicable Federal and State Law."
  • The parity requirements would apply with respect to out-of-network coverage for mental health benefits. Thus, group health plans would be prohibited from imposing more restrictive financial requirements and treatment limitations on out-of-network coverage for mental health and substance use disorder benefits than apply to out-of-network coverage for medical and surgical benefits.
  • The cost increase exemption would be available only if the cost of coverage increases by two percent in the first year and one percent in following years. A group health plan would have to comply with the mental health parity requirements for six months before seeking the exemption. The small employer exemption would be retained.

As is the case under current law, the compromise bill would not require group health plans to provide mental health benefits or substance use disorder benefits. The parity requirements would apply only to those group health plans that choose to offer these benefits, and that are not eligible for the small employer or increased cost exemptions. Also, the enhanced mental health parity requirements would continue to be codified in ERISA, the IRC, and the PHSA.

Outlook

The compromise mental health parity bill has been attached to the tax extenders bill that currently is being filibustered in the Senate. So far Senate Democrats have been unable to get the 60 votes needed to invoke cloture and bring the bill up for a final vote. The most recent attempt was on July 30, just before the Congress adjourned for its August recess.

Congress will return to work during the week of September 8 with much to do and little time to get it done. The top priority almost certainly will be finishing work on all 13 appropriations bills for the 2009 fiscal year, which begins on October 1. If Senate Democrats are unable to break the filibuster over the tax extenders bill they may let the package die, or split it up and try to move the pieces -- including the compromise mental health parity bill -- separately or as part of other legislation. Ultimately some or all of these pieces could end up in an omnibus appropriations bill that Congress tries to enact at the very end of the session.

Whatever happens, watch Washington Bulletin for updates on the status of the compromise mental health parity bill.


Deloitte logoThe information in this Washington Bulletin is general in nature only and not intended to provide advice or guidance for specific situations.

If you have any questions or need additional information about articles appearing in this or previous versions of Washington Bulletin, please contact: Robert Davis 202.879.3094, Elizabeth Drigotas 202.879.4985, Mary Jones 202.378.5067, Stephen LaGarde 202.879-5608, Erinn Madden 202.572.7677, Bart Massey 202.220.2104, Mark Neilio 202.378.5046, Tom Pevarnik 202.879.5314, Sandra Rolitsky 202.220.2025, Tom Veal 312.946.2595, Deborah Walker 202.879.4955.

Copyright 2008, Deloitte.


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