Does your U.S. group health plan have separate deductibles for medical benefits and mental health benefits? Even if they are the same dollar amount, new regulations provide that these plan provisions will violate federal benefit parity requirements.

Sponsors of U.S. group health plans who have been preoccupied with COBRA premium subsidies and new state COBRA requirements may have missed the October 3, 2009 effective date of new mental health and substance abuse benefit rules. (They apply as of January 1, 2010 for non-union calendar year plans.)

While U.S. law does not require employers to provide mental health or substance abuse benefits to their employees, employers who include these benefits in their U.S. medical plans are subject to a host of new requirements under the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (PDF) (the Act). The Act expanded parity requirements of 1996 legislation, which required that annual and lifetime limits for mental health benefits could not be more restrictive than the limits that applied for medical and surgical benefits, to also require parity in financial restrictions such as deductibles, co-pays, out-of-pocket maximums and treatment caps, such as visit limits, and to include substance abuse benefits.

Three federal agencies, the Departments of Labor, Treasury and Health and Human Services, have issued regulations answering some open questions and in the opinion of some, going beyond the statutory language. These regulations won’t be effective before 2011, but good faith compliance is required before then, and knowing what is in the regulations now is essential for overall compliance. Among the other surprising positions taken in the regulations are the following:

  • A covered participant must be able to use either medical/surgical benefits or mental health/substance abuse benefits to fulfill a plan deductible. (Similar rules apply to other financial requirements.)
  • Comparisons need to be made for in-patient in-network treatment, in-patient out-of-network treatment, out-patient in-network benefits, out-patient out-of-network benefits, emergency care and prescription drug coverage.
  • Parity applies to non-financial limits such as medical management (gate-keeping) as well as to financial limits.

Two exemptions from the new requirements may be available.

  • A small employer exemption applies to an employer with, on average, fewer than 50 employees in the prior calendar year. However, related companies are aggregated to make this determination.
  • A cost exemption may also be available if compliance would significantly increase an employer’s health care costs, as certified by an actuary, but it can be used only in alternating plan years.

Determinations as to whether to try to rely on these exemptions also can’t wait until 2011.