Mental-health legislation in effect for most in 2010
Small employers exempt
Financial Parity: Basically, plans that offer mental health or substance abuse coverage must offer coverage equal to that offered for medical conditions in terms of copayments, deductibles, and coinsurance.
Treatment Parity: Plans are prohibited from applying separate treatment limitations for mental health or substance abuse-related expenses.
Network Parity: In the case of a plan or coverage that provides medical and surgical benefits and mental heath or substance use disorder benefits, if the plan or coverage provides coverage for medical or surgical benefits provided by out-of-network providers, the plan or coverage shall provide coverage for mental health or substance use disorder benefits provided by out-of network-providers.
Under the legislation there is both a small-employer exemption as well as a cost-increase exemption.
First, employers who average between two and 50 employees on business days during the preceding calendar year are exempt from the legislation. Second, the new legislation also provides that group health plans are not required to comply with the legislation if the application of the legislation results in an increase of the actual total costs of coverage of 2% or more during the first plan year and 1% in subsequent plan years.
It should be noted, however, that an employer may elect to continue to apply mental health and substance use disorder parity with respect to the group health plan involved regardless of any increase in total costs. The determination as to increases in actual costs for purposes of the cost increase exemption must be made and certified by a qualified and licensed actuary and must be in a written report prepared by the actuary. The underlying documentation and report must be maintained by the group health plan for six years after the notification of the exemption.
A group health plan that qualifies for the cost increase exemption and elects to implement the exemption, must notify the appropriate state agencies and participants and beneficiaries in the plan.
The legislation does not define "mental health" or "substance use disorder" treatment benefits, deferring instead to the definitions of such terms in each plan and the requirements of state and federal law. The mental health parity legislation is effective generally for group health plans for plan years beginning after the date that is one year after the date of enactment of the legislation; thus, for most plans, the effective date will be Jan. 1, 2010.
Barry Senterfitt is a managing shareholder at Greenberg Traurig, LLP, Austin, Texas.
Janet Farrer is an associate at Greenberg Traurig LLP, Austin, Texas.
This column is written for informational purposes only and should not be construed as legal advice.