Final Mental Health Parity Act Regulations Released

The BNA Tax and Accounting Center is the only planning resource to offer expert analysis and practice tools from the world's leading tax and accounting authorities along with the rest of the tax...

By Robert S. Kaplan, Esq., Jean C. Hemphill, Esq.,
and Edward I. Leeds, Esq.

Ballard Spahr LLP, Philadelphia, PA

The Internal Revenue Service, U.S. Department of Labor, and U.S.
Department of Health and Human Services have jointly released final
regulations and new FAQs implementing the Paul Wellstone and Pete
Domenici Mental Health Parity and Addiction Equity Act of 2008
(MHPAEA). MHPAEA provisions generally became effective for plan
years beginning on or after October 3, 2009, with interim
regulations becoming effective for plan years beginning on or after
July 1, 2010. The final rules become effective for plan years
beginning on or after July 1, 2014, and apply to both grandfathered
and non-grandfathered plans.

The final regulations largely mirror the interim regulations but
add new examples and further clarifications. They also clarify the
Patient Protection and Affordable Care Act of 2010 (ACA) expansion
of MHPAEA coverage to include individual and small group health
plans, whether or not offered on a health care exchange. The final
regulations also indicate that compliance with the MHPAEA is
required to satisfy the Essential Health Benefits (EHB)
requirements of the ACA.

The final regulations confirm that the MHPAEA does not require
group health plans to provide mental health or substance use
disorder benefits, although certain preventive health screenings
under ACA's preventive health benefit need to be included. Plans
that provide mental health and substance abuse disorder benefits,
however, may not impose financial requirements or treatment
limitations (quantitative or nonquantitative) that are more
restrictive than the predominant requirements or limitations
applied to substantially all medical and surgical benefits.

Like the interim regulations, the final regulations define
"mental disorder" by reference to the Diagnostic and Statistical
Manual of Mental Disorders (DSM), state guidelines, or other
general accepted independent standards. The final regulations do
not offer definitions of specific disorders, such as autism.

The final regulations provide further clarification and guidance
on the MHPAEA requirements, including:

  •   Confirming that the parity standards apply to
    intermediate levels of mental health or substance abuse disorder
    care received in residential treatment and intensive outpatient
  •   Retaining the six benefits classifications (in-patient
    in-network, inpatient out-of-network, outpatient in-network,
    outpatient out-of-network, emergency care, and prescription drugs),
    and requiring a classification by classification basis, but
    removing an exception in the interim regulations that allowed
    variation in benefit levels where "clinically appropriate standards
    of care" permit a difference
  •   Requiring a disclosure to plan participants upon request
    for denials of treatment on the basis of medically necessary
    determinations, indicating the reasons for denial of reimbursement
    for any mental health or substance abuse in certain
  •   Providing that parity applies to all plan standards,
    including geographic limits, facility-type limits, and network
  •   Clarifying that state law mandates that do not prevent
    the application of the MHPAEA are not preempted by the MHPAEA and
    acknowledging that a state law mandating coverage of at least
    minimum medical or surgical benefits may require plans to provide
    benefits beyond the minimum for mental health benefits to comply
    with MHPAEA
  •   Confirming that MHPAEA requirements do not apply to an
    Employee Assistance Plan (EAP) (unless significant medical care or
    treatment benefits are provided) or retiree-only plans.

For more information, in the Tax Management Portfolios, see
Cowart, 389 T.M.
, Medical Plans - COBRA, HIPAA, HRAs, HSAs and
Disability, Schwartz, 373 T.M., Employee Benefits for
Tax-Exempt Organizations, and in Tax Practice Series, see
¶5920, Health and Disability Plans..

Copyright © 2013 by Ballard Spahr LLP.