Services for Consumers - Health Insurance

Mental Health Parity

What is Mental Health Parity?

Mental health parity means that your insurance benefits for mental health or substance use disorders are treated equally to your other health benefits. When an insurance plan has parity, it means, for example, 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.

Parity requires health plans that cover Mental Health or Substance Use Disorder services to provide the same level of coverage for those services as is provided for physical health care services, with respect to the following:

  • annual and lifetime limits on coverage;
  • financial requirements: deductibles, copayments, coinsurance, out-of-pocket expenses;
  • treatment limitations: limits on the frequency of treatment, number of visits, days of coverage, or other similar limits on the scope or duration of treatment; and
  • availability of coverage for benefits provided by out-of-network providers.

No More Stringently

A phrase that is frequently used when discussing Mental Health Parity is “no more stringently.” This means that coverage that limits Mental Health or Substance Use (or Misuse) benefits must be comparable to, and not applied more strictly, or no more stringently than, limits for medical benefits. This includes the processes and standards used to apply the limit.

Is my Plan Expected to Provide Parity?

All fully insured health plans sold to individuals, small employer groups, and large employer groups must include benefits for mental health and substance use disorder services. These benefits must be provided at the same level as benefits provided for physical illness, or in "parity."

Self-funded health plans (commonly provided by large employers) aren’t required by law to cover Mental Health or Substance Use Disorder services. If they do include this coverage, it must be provided in parity with benefits for physical illness.

Sometimes it’s hard to tell whether your health plan is fully insured or self-funded. They both are commonly administered by health insurance companies and insurance cards look very similar. If you don’t know, you can check with your insurer, agent, or your employer to find out whether your plan is self-funded or not.

Health plans that must follow federal parity include the following:

  • Group health insurance plans for employers with 51 or more employees.
  • Most group health insurance 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 in 2009.
  • The Federal Employees Health Benefits Program.
  • 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 the following:

  • Medicare (except for Medicare's cost-sharing for outpatient mental health services do comply with parity).
  • “Grandfathered” individual and group health insurance plans that were created and purchased before March 23, 2010.
  • Self-funded small private employer plans that have 50 or fewer employees.
  • Self-funded non-Federal governmental plans that have 50 or fewer employees.
  • Large self-funded non-Federal governmental plans that opt-out of the requirement.
  • Plans who received an exemption based on increase of costs related to parity.

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
  • Co-pays
  • Deductibles
  • Maximum out-of-pocket limits

Quantitative and Non-Quantitative Treatment Limits

Federal and state law requires that parity is required with respect to plan limits on the frequency of treatment, the number of visits, or the days of coverage. If benefits are not applied in this manner, it can be determined that there are quantitative treatment limits placed on mental health and substance use treatment benefits. An example of this may be if an insurance plan has different cost-sharing requirements for mental health or substance use disorder treatments as well.

Laws also say that parity must also exist with respect to other ways that a plan may administer the scope or duration of benefits. If parity does not exist, the plan may be placing non-quantitative treatment limits on the mental health or substance use disorder benefits in ways that may be reflected in the following:

  • Geographic location
  • Facility type
  • Provider reimbursement rates
  • Clinical criteria used to approve or deny care

Clinical criteria are 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.

Non-quantitative treatment limits may include 1 2:

  • medical management standards based on medical necessity or a decision that a treatment is experimental or investigational that is applied differently than standards for medical/surgical benefits;
  • utilization review standards that are applied more stringently than medical/surgical benefits;
  • formulary design;
  • for plans with multiple network tiers, network tier design;
  • standards for provider admission to participate in a network, including reimbursement rates;
  • plan methods for determining usual, customary, and reasonable charges;
  • step therapy protocols or fail-first policies;
  • exclusions based on failure to complete a course of treatment; and
  • restrictions based on geographic location, facility type, provider specialty, and other criteria that limit the scope or duration of benefits for covered services.

Complaints

If a patient or provider believes a health plan is violating the law or isn’t administering the health plan according to the contract, they should file a complaint with the North Carolina Department of Insurance. You can use our online portal or call for consumer assistance at (855) 408-1212.

Federal Laws

Resources

1 https://aspe.hhs.gov/report/substantial-improvements-mental-health-and-substance-use-disorder-coverage-response-mental-health-parity-and-addiction-equity-act-2008
2 https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/MHAPEAChecklistWarningSigns.pdf