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Parity Law

What you need to know about mental health coverage

When it comes to our well-being, mental health is just as important as physical health. Unfortunately, insurers haven't always seen it that way. In the past, many health insurance companies provided better coverage for physical illness than they did for mental health disorders.

A law passed in 2008, the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (also known as the mental health parity law or federal parity law) requires coverage of services for mental health, behavioral health and substance-use disorders to be comparable to physical health coverage. Yet many people still aren't aware that the law exists or how it affects them. In fact, a 2014 APA survey found that more than 90 percent of Americans were unfamiliar with the mental health parity law.

This guide helps you learn what you need to know about mental health coverage under the mental health parity law.

What does the law do?

The federal parity law requires insurance companies to treat mental and behavioral health and substance use disorder coverage equal to (or better than) medical/surgical coverage. That means that insurers must treat financial requirements equally. For example, an insurance company can't charge a $40 copay for office visits to a mental health professional such as a psychologist if it only charges a $20 copay for most medical/surgical office visits. The parity law also covers non-financial treatment limits. For instance, limits on the number of mental health visits allowed in a year were once common. The law has essentially eliminated such annual limits. However, it does not prohibit the insurance company from implementing limits related to “medical necessity.”

What health plans does the law affect?

The federal parity law generally applies to the following types of health insurance:

  • Employer-sponsored health coverage, for companies with 50 or more employees.
  • Coverage purchased through health insurance exchanges that were created under the health care reform law also known as the Affordable Care Act or “Obamacare.”
  • Children's Health Insurance Program (CHIP).
  • Most Medicaid programs. (Requirements may vary from program to program. Contact your state Medicaid director if you are not sure whether the federal parity law applies to your Medicaid program.)

Some other government plans and programs remain exempt from the parity law. Medicare, unlike Medicaid, for instance, is not subject to the federal parity law. And some state government employee plans (including ones that cover teachers and employees of state universities, for instance) may opt out of the parity requirements.

 

 

 

 



The Americans With Mental Disabilities Defense League
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