The Affordable Care Act will create one of the largest expansions of mental health and substance use disorder coverage in a generation. Here’s what you need to know about mental health benefits.
Mental health parity became a benefits compliance issue in 1996, with the passage of the Mental Health Parity Act of 1996 (MHPA). This federal law prohibited health plans that covered mental health services from placing lower aggregate lifetime and annual dollar limits on these benefits than on medical/surgical services. Plans could still restrict coverage of mental health services in other ways—for example, placing a limit on the number of covered visits.
The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) expanded on the MHPA. It prohibits group health plans and self-insured entities from limiting mental health service coverage with more restrictive features such as co-pays, deductibles or visit limits, and it also extends protections to treatments for substance use disorders. As with the MHPA, it does NOT require any plan to provide mental health/substance use disorder benefits; it simply requires plans that provide them to cover them at the same level as medical/surgical benefits.
The MHPAEA applies to large group health plans; it does not apply to small group health plans. (The Employee Retirement and Income Security Act [ERISA] and the Internal Revenue Code define a small group health plan as one that has 50 or fewer workers. Until 2016, states may have different definitions of small groups for purposes of state insurance laws.)
In November 2013, the Departments of Health and Human Services, Labor and the Treasury jointly issued a final rule implementing the MPHAEA. It creates specific consumer protections, including:
• Applying parity to intermediate levels of care received in residential treatment or intensive outpatient settings;
• Clarifying the scope of transparency required by health plans, including plan participants’ disclosure rights;
• Clarifying that parity applies to all plan standards, including geographic limits, facility-type limits and network adequacy; and
• Eliminating the “clinically appropriate standards of care” exception to parity requirements, which clinical experts advised was not necessary and is confusing and open to abuse.
The ACA Expands the MHPAEA
The Affordable Care Act (ACA) builds upon the requirements of the MHPAEA. The ACA requires health plans to cover mental health and substance use disorder services as one of ten “essential health benefits” (EHB) categories. Under the EHB rule, non-grandfathered individual and small group health plans must comply with these parity regulations as of January 1, 2014. “Grandfathered” plans are plans that were in place when the Affordable Care Act was enacted that have not been changed in certain specified ways. Health plans that must comply with the EHB requirements cannot put lifetime limits on these benefits.
Mental Illness, Substance Abuse and Your Bottom Line
The World Health Organization says that mental illness results in more disability in developed countries than any other group of illnesses, including cancer and heart disease. About 25 percent of all U.S. adults have a mental illness, and nearly 50 percent will develop at least one mental illness during their lifetime, reports the U.S. Centers for Disease Control. This creates a substantial economic burden, estimated at about $300 billion in 2002. Mental illness is also associated with chronic medical diseases such as cardiovascular disease, diabetes, and obesity.
Mental health professionals now recognize the psychological and physiological links between substance abuse and mental illness, classifying “substance use disorder” as a mental illness. Estimates of the total costs of substance abuse in the U.S., including productivity and health- and crime-related costs, exceed $600 billion annually. This includes approximately $193 billion for illicit drugs, $193 billion for tobacco, and $235 billion for alcohol.
Covering mental health services can help employers promote employee well-being and protect their bottom line. In addition to insurance coverage, employers can offer an employee assistance program (EAP). EAPs provide voluntary, free and confidential assessments, short-term counseling, referrals, and follow-up services to employees who have personal and/or work-related problems. They can address a variety of mental and emotional problems, such as alcohol and other substance abuse, stress, grief, family problems and psychological disorders. EAP counselors can also consult with managers and supervisors to address employee and organizational challenges. Many EAPs help organizations prevent and cope with workplace violence, trauma and other emergency response situations.
For more information on mental health/substance use disorder benefits and EAPs, please contact us at 212-842-3700.