Mental health parity describes the equal treatment of mental health conditions and substance use disorders in insurance plans. When a plan has parity, it means that if you are provided unlimited doctor visits for a chronic condition like diabetes then they must offer unlimited visits for a mental health condition such as depression or schizophrenia.
However, parity doesn't mean that you will get good mental health coverage. Comprehensive parity requires equal coverage, not necessarily "good" coverage. If the health insurance plan is very limited, then mental health coverage will be similarly limited even in a state with a strong parity law or in a plan that is subject to federal parity.
How to Know if a Plan Must Follow Parity
In 2008, Congress passed the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA) to ensure equal coverage of treatment for mental illness and addiction. In November 2013, the federal government released rules to implement the law. Before this law, mental health treatment was typically covered at far lower levels in health insurance policies than physical illness.
Whether or not a plan is covered by federal parity law depends on the kind of health plan a person is enrolled in and even its size.
Health plans that must follow federal parity include:
- Group health plans for employers with 51 or more employees.
- Most group health plans for employers with 50 or fewer employees unless they have been “grandfathered," which means it was created before the federal parity laws went into effect.
- The Federal Employees Health Benefits Program.
- Medicaid Managed Care Plans (MCOs).
- State Children’s Health Insurance Programs (S-CHIP).
- Some state and local government health plans.
- Any health plans purchased through the Health Insurance Marketplaces.
- Most individual and group health plans purchased outside the Health Insurance Marketplaces unless “grandfathered.”
Health plans that do not have to follow federal parity include:
- Medicare (except for Medicare's cost-sharing for outpatient mental health services do comply with parity).
- Medicaid fee-for-service plans.
- “Grandfathered” individual and group health plans that were created and purchased before March 23, 2010.
- Plans who received an exemption based on increase of costs related to parity.
If you are unsure about what type of plan you have, ask your insurance carrier or agent, your plan administrator, or your human resources department.
State Parity Laws
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 conditions, then the federal requirement of equal coverage will trump the “weaker” state law.
Benefits and Services That Must Be Covered Equally
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.
- Inpatient in-network and out-of-network
- Outpatient in-network and out-of-network
- Intensive outpatient services
- Partial hospitalization
- Residential treatment
- Emergency care
- Prescription drugs
- Maximum out-of-pocket limits
- Geographic location
- Facility type
- Provider reimbursement rates
- Clinical criteria used to approve or deny care
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.
Signs a Health Plan May Be Violating Parity Requirements
- Higher costs or fewer visits for mental health services than for other kinds of health care.
- Having to call and get permission to get mental health care covered, but not for other types of health care.
- Getting denied mental health services because they were not considered “medically necessary,” but the plan does not answer a request for the medical necessity criteria they use.
- Inability to find any in-network mental health providers that are taking new patients, but can for other health care.
- The plan will not cover residential mental health or substance use treatment or intensive outpatient care, but they do for other health conditions.
If you think your plan has violated parity requirements, you can talk with your plan. The reason for denials of coverage must be made available by your insurance company upon request. If your treatment is denied and you disagree, you should contact your plan's customer relations division right away. You may file a written formal appeal (ask your plan for details) or use NAMI's template letters if your informal attempts are not successful.