Employers and insurers offering medical plans: take note! Two important final regulations issued jointly by the IRS, DOL and HHS (the “Departments”) apply to plan years (or, in the individual market, policy years) beginning on or after July 1, 2014. For plans and policies which operate on a calendar year, there is still time (until January 1, 2015) to comply; however, plans and policies with a July 1 plan or policy year must comply now.
Mental Health and Substance Use Disorder Parity Final Regulations
Enacted in 2008, the Paul Wellstone and Pete Domenici Mental Health Parity And Addiction Equity Act (MHPAEA) requires parity between mental health or substance use disorder benefits and medical/surgical benefits with respect to financial requirements and treatment limitations under group health plans and group and individual health insurance coverage. The Departments first grappled with the MHPAEA requirements in comprehensive interim final regulations issued in 2010. The interim final regulations established six classifications of benefits for comparison and required that parity be achieved across each classification, and created methodologies for determining whether parity had been achieved. We described these complex requirements in a previous client alert.
The final regulations issued by the Departments on November 13, 2013 make a number of clarifications to the interim final regulations, which we discussed at length in this client alert, including:
- Permitting outpatient benefits to be subdivided into “office visits” and “other outpatient items and services”;
- Limiting the “lifetime and annual limit” parity rules to benefits that are not considered to be “Essential Health Benefits” for purposes of complying with the Affordable Care Act’s prohibitions of lifetime and annual limits (which you can read more about in our prior advisory here);
- Clarifying that compliance with the Affordable Care Act’s preventive service requirements (which include requirements to offer, e.g., alcohol misuse screening and counseling and depression counseling) will not, for that reason alone, require compliance with MHPAEA;
- Adding two additional examples of “non-quantitative treatment limitations”; and
- Providing a methodology for determining the increase in a plan’s costs attributable to MHPAEA (for purposes of the increased cost exemption).
Wellness Plan Final Regulations
Under the Health Insurance Portability and Accountability Act of 1996, group health plans and health insurance issuers are prohibited from discrimination against individuals in eligibility, benefits, or premiums based on a health factor, except that different premiums or other cost sharing may be applied under a compliant wellness program. In 2006, the Departments issued joint final regulations setting forth the wellness plan standards and on November 26, 2012 the Departments published proposed regulations modifying the wellness plan standards to reflect Affordable Care Act changes. We discussed these two sets of regulations here.
The final regulations issued by the Departments on June 3, 2013 make a number of substantial changes and clarifications to the prior wellness plan regulations, including:
- Retaining the “Participatory” and “Health Contingent” wellness program categories but sub-dividing the “Health Contingent” category into “Activity-Only” programs (which require an individual to perform or complete an activity related to a heath factor in order to earn a reward, but not to attain or maintain a specific health outcome) and “Outcome-Based” programs (which require an individual to attain or maintain a health outcome in order to obtain an award) and providing rules for each sub-category.
- Clarifications to the “reasonable alternative standard” that must be provided to individuals who are unable to meet the standards required under a Health Contingent program, including:
- a requirement that, if an individual’s personal physician rejects a reasonable alternative standard as medically inappropriate, the individual must be offered a second reasonable alternative standard that incorporates the physician’s recommendations; and
- a clarification that a full-year reward must be provided to individuals who meet an alternative standard mid-year, and methodologies for paying such award.
What To Do Now
Check the applicable year for all of your health plans and policies immediately! For July 1 plan or policy years, contact your advisors to make sure that your plans and policies currently comply with the new MHPAEA and wellness rules. For all other plan or policy years, work with your advisors to make sure that your plans and policies will comply with the above rules by the start of your next plan or policy year.