WORKPLACE LAW -
Mental Health Parity
Question:
I know that part of the recent financial bailout included something to do with health care coverage, but I’m not sure what. Is this something that will impact employers? And if so, could you please explain the new law?
Answer:
As most everyone is probably aware, on October 3, 2008, President Bush signed the $700 billion financial rescue package related to the recent financial market crisis. Part of that measure requires covered employers that provide health plans to their employees to include coverage of mental illness and substance abuse on the same basis as the employer provides coverage for physical conditions. These new provisions go into effect on October 3, 2009, with a different effective date for collective bargaining agreements.
The Mental Health Parity and Addiction Equity Act of 2008, (HR 6983), which has been sought by advocates for approximately 12 years now, cleared the House by 263 to 171. The Senate subsequently passed the Act 74-25, and President Bush immediately signed the Act into law. The Act has been heralded as “a new era of healthcare for those with mental illnesses,” and is being widely praised for ending discrimination against mental health patients by making mental health care more accessible and affordable for those individuals who have medical insurance. While the Act does not require employers or insurance companies to provide mental health care coverage, it does require employers and insurers who are already providing mental health benefits to now cover those benefits at the same rate as physical ailments.
Some of the key provisions of the new measure include the following:
- The Act applies to group health plans of 51 or more employees;
- The new requirements apply to self-insured employer health plans;
- The Act forbids employers and insurers from placing stricter limits on mental health care (for example, imposing higher copayments, or limiting the number of outpatient visits) than on other health conditions;
- The Act requires that insurance plans that offer out-of-network coverage for medical conditions also must provide out-of-network coverage for mental conditions;
- It leaves in place state parity measures; and
- It requires that the Departments of Labor, Health and Human Services, and the Treasury issue related regulations within one year.
The crucial point of the new legislation, however, is that health care plans must now provide the same coverage for mental disorders as they do for other medical illnesses, which is a requirement that most group health plans do not currently meet.
Federal officials said the law would improve coverage for 113 million people, including 82 million in employer-sponsored plans that are not currently subject to state regulation.
Some employer groups have criticized the Act, observing that the legislation imposes a benefit mandate on large employers who are working hard to maintain benefits. While many legislators and commentators view this as a balanced compromise, some commentators believe the Act has the potential over time to erode large employers’ ability to provide coverage to their workers and dependents.
While the changes to most health care plans will arguably be extensive, the cost impact that these changes will have is still unclear. Advocates of the Act say that its financial impact on insurers is estimated to be about $1.20 per member per month, while the Congressional Budget Office has estimated the Act's cost to the federal government at $3 billion to $4 billion in lost tax revenue over 10 years due to an expected drop in salaries in response to employers having to pay more in benefits (i.e., employers will lower salaries, resulting in a drop in payroll taxes).
As mentioned previously, the law goes into effect October 3, 2009. However, because coverage under many insurance policies is tied to the calendar year, most consumers with calendar-year plans won't see an actual change in their health care plans until January 1, 2010.
- - - - - - - - - - - - - - - - - - - - - - - - - -
Back to Menu- Work Place Law 2008 Articles