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Mental health benefits: Know federal, state parity laws

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in Employee Benefits Program,Human Resources

When Congress reconvenes, one of the hottest issues will be whether to add new teeth to a five-year-old federal mental-health parity law.

Under the law, companies offering mental health coverage can't set annual or lifetime dollar limits on workers' mental health benefits that are lower than the limits for physical care. But there are big loopholes: You can still set higher co-payments and deductibles for mental health care, and you can cap the number of annual visits to psychiatrists. Plus, companies with fewer than 50 workers are exempt.

As late as December 1999, 14 percent of all employers still were not complying with the federal Mental Health Parity Act, which took effect on Jan. 1, 1998.

Of those who did comply, two-thirds had tightened some other feature of their mental health benefits, the General Accounting Office reported last year. And 87 percent of those complying with the law said at least one other feature of their health plan is more restrictive for mental health benefits than for medical and surgical coverage.

That federal law is set to expire on Sept. 30, but don't expect any relief from the requirements.

In fact, legislation is rolling through Congress to close those loopholes and require companies to offer "full parity" between mental and physical benefits. It would still exempt employers with fewer than 50 workers, and if you don't offer mental health benefits now, the bill wouldn't require you to start offering them.

A Senate committee approved the bill, S. 543, on Aug. 1. It now goes to the full Senate.

Business lobbyists are objecting that full parity would increase costs, forcing some employers to drop mental health benefits and discouraging others from adding them. If it's passed, the change would cost companies offering mental health benefits an extra $1.32 per enrollee per month, according to an analysis of the bill by PricewaterhouseCoopers. To check the status of S. 543, go to http://thomas. loc.gov.

States all over the map

The truth is, your company may already be required to offer full parity. More than 30 states require some degree of mental-health parity, and some state laws are stricter than current federal law.

Fifteen states have statutes mirroring the federal law. But of all the states with mental health parity laws,

26 cover only severe disorders, said Andrew Sperling, deputy executive director for public policy at the National Alliance for the Mentally Ill (NAMI). Utah covers catastrophic mental illness only.

Most states exempt businesses with fewer than 50 or 25 employees, and many include an exemption if premiums would soar. The federal law does not extend to treatment for alcohol and substance abuse, but some states require coverage if those conditions are diagnosed along with a mental illness.

More states are eyeing parity laws, with five passing statutes last year. The latest: Illinois, which passed a limited parity bill this summer that will take effect Jan. 1, 2002.

 

Parity laws:

Info on the Web

For details on state parity laws, visit the National Alliance for the Mentally Ill (NAMI) Web site at www.nami.org/ campaign/statepar.htm.

For details on the federal parity law, visit www.hcfa.gov/medicaid/hipaa/ content/mhpa.asp.

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