Report Mental Health Benefits: State Laws Mandating or Regulating

Mental health services have been one significant part of medical care for a number of years. The costs, coverage and availability of such services have been the object of policy discussions and a variety of state legislation. There is not a uniform consensus about the extent to which state government should require coverage for mental health. Since the passage of federal health reform (ACA or PPACA) there is a larger role for the federal government and federal-state coordination, described below. For now, all states and D.C. have some type of enacted law but these laws vary considerably and can be divided roughly into three categories:

1. Mental Health "Parity" or Equal Coverage Laws

Parity, as it relates to mental health and substance abuse, prohibits insurers or health care service plans from discriminating between coverage offered for mental illness, serious mental illness, substance abuse, and other physical disorders and diseases. In short, parity requires insurers to provide the same level of benefits for mental illness, serious mental illness or substance abuse as for other physical disorders and diseases. These benefits include visit limits, deductibles, copayments, and lifetime and annual limits.
Parity laws contain many variables that affect the level of coverage required under the law. Some state parity laws--such as Arkansas'--provide broad coverage for all mental illnesses. Other state parity laws limit the coverage to a specific list of biologically based or serious mental illnesses. The state laws labeled full parity below provide equal benefits, to varying degrees, for the treatment of mental illness, serious mental illness and biologically based mental illness, and may include treatment for substance abuse. The newly enacted federal parity law affects insurance policies that already provide some mental health coverage; there is no federal law directly mandating parity to the same extent as state laws; also see background on unsuccessful federal parity legislation below the state table.

2. Minimum Mandated Mental Health Benefit Laws

Many state laws require that some level of coverage be provided for mental illness, serious mental illness, substance abuse or a combination thereof. They are not considered full parity because they allow discrepancies in the level of benefits provided between mental illnesses and physical illnesses. These discrepancies can be in the form of different visit limits, copayments, deductibles, and annual and lifetime limits. Some mental health advocates believe these laws offer a compromise to full parity that at least provides some level of care. Others feel that anything other than full parity is discrimination against the mentally ill. Some of these laws specify that copayments and deductibles must be equal to those for physical illness up to the required level of benefits provided. If a law does not specify, the copayment could be as much as 50 percent of the cost of the visit and require a separate deductible to be met before mental health visits will be covered.

3. Mental Health "Mandated Offering Laws"

Mandated offering laws differ from the other two types of laws in that they do not require (or mandate) benefits be provided at all. A mandated offering law can do two things. First, it can require that an option of coverage for mental illness, serious mental illness, substance abuse or a combination thereof, be provided to the insured. This option of coverage can be accepted or rejected and, if accepted, will usually require an additional or higher premium. Second, a mandated offering law can require that if benefits are offered then they must be equal.

"Essential Health Benefits" (EHB) as provided for in the Affordable Care Act (ACA) see NCSL explanation online
*Exceptions to Mandate Laws – “Barebones” Policies

Note that some state laws apply primarily to "serious mental illness" and may not assure coverage for particular individual diagnoses or circumstances. Many private market health plans include some type of mental health benefits on a voluntary commercial basis, not necessarily required by state or federal laws. Note that grief counseling may not be considered a covered benefit under some state laws, although it may be offered by insurers as part of a standard mental health benefit package. Laws in at least 38 states include coverage for substance abuse, alcohol or drug addiction.

Mental Health Benefits in the Affordable Care Act (ACA) of 2010

Federal health reform, also termed the PPACA or just ACA, contains a number of provisions which achieve two goals with respect to mental health parity:
(1) they expand the reach and applicability of the federal mental health parity requirements; and
(2) they create an "essential health benefit" or mandated benefit for the coverage of mental health and substance abuse disorder services in a number of specific insurance financing arrangements. According to a December 2011 report by the Congressional Research Service (CRS), the ACA expands the reach of federal mental health parity requirements to three main types of health plans:

• Qualified health plans as established by the ACA.
• Medicaid non-managed care benchmark and benchmark-equivalent plans.
• Plans offered through the individual market.

The ACA did not alter the federal mental health parity requirements with respect to CHIP plans, but the application of the requirements to CHIP plans, as required in law prior to the ACA, is explained here in detail. This report also analyzes the impact of the ACA on the existing small employer exemption under federal mental health parity law.

April 2015: Medicaid Rule Proposed On Providing Mental Health ‘Parity’

A "The federal law that passed in 2008 was supposed to ensure that when patients had insurance benefits for mental health and addiction treatment, the coverage was on par with what they received for medical and surgical care. But until 2015, the government had only spelled out how the law applied to commercial plans."

That changed April 7, 2015, when federal officials released a long-awaited rule proposing how the parity law should also protect low-income Americans insured through the government’s Medicaid managed care and the Children’s Health Insurance Program (CHIP) plans. The proposed regulation is similar to one released in November 2013 for private insurers. “Whether private insurance, Medicaid, or CHIP, all Americans deserve access to quality mental health services and substance use disorder services,” said Vikki Wachino, acting director at the Center for Medicaid and CHIP Services.

Federal CMS Guidance Regarding Mental Health Parity Requirements in CHIP, Medicaid and Group Insurance

The Federal Centers for Medicare & Medicaid Services (CMS) issued a State Health Official letter on November 4, 2009 regarding the mental health parity requirements under the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA). The letter provides general guidance on implementation of section 502 of CHIPRA, Public Law 111-3, which imposes mental health and substance use disorder parity requirements on all Children’s Health Insurance Program (CHIP) State plans under title XXI of the Social Security Act (the Act). This letter also provides preliminary guidance to the extent that mental health and substance use disorder parity requirements apply to State Medicaid programs under title XIX of the Act.

In summary the letter addresses specific requirements in the measure as follows:

1. Qualifying financial requirements and treatment limitations applied to mental health or substance use disorder benefits may be no more restrictive than those applied to medical surgical benefits.
2. No separate qualifying criteria may be applied to mental health or substance use disorder benefits.
3. When out-of-network coverage is available for medical surgical benefits, it must also be available for mental health or substance use disorder benefits.

Medicaid and Group Health Insurance:

Requirements from the Paul Wellstone and Pete Dominici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) became effective for group health insurance plans on October 3rd of 2009. These same requirements will only apply to Medicaid insofar as the state’s Medicaid agency contracts with one or more managed care organizations (MCOs) or Prepaid Inpatient Health Plans (PIHPs). In these cases the MCOs or PIHPs must be in compliance. A state Medicaid plan is not subject to these requirements otherwise. The MHPAEA applies to all CHIP programs and became effective April 1 of 2009. State CHIP plans are deemed in compliance if they provide coverage of Early and Periodic, Screening, Diagnosis and Treatment (EPSDT) benefits.

States Requiring Legislative Action for Compliance

The letter also specifies that if a state requires legislation in order to be in compliance with the requirements, a state will not be found to be in violation before its next legislative session as long as it notifies the Secretary of HHS and she concurs that legislation is needed. They ask that states in the circumstances submit a letter to the Center for Medicaid and State Operations to that effect as soon as possible and include information as follows:

1. the provisions in question,
2. the reason the state requires legislative action for compliance, and
3. the date the state will begin implementing the provision.

Expanded Mental Health Coverage Rules - November 2013

In a move aimed at boosting mental health treatment, Health and Human Services Secretary Kathleen Sebelius on Nov. 8, 2013 announced new rules that put teeth in the 2008 mental health equity law. The Mental Health Parity and Addiction Equity Act, signed by President George W. Bush, requires doctors and insurers to treat mental illness the same as physical illness. Sebelius made the announcement to applause at the Rosalynn Carter Symposium on Mental Health Policy in Atlanta. The move "finally puts mental health and behavioral health on equal footing," Sebelius said.

On paper, the law made mental health more accessible, but there has been virtually no enforcement of it, said Dr. Jeffrey Lieberman, president of the American Psychiatric Association and a Columbia University psychiatrist. "Up to now, the law has not been complied with," Lieberman said. "Companies have only sort of adhered to it." Insurance companies often cover mental illness in a more limited fashion than physical illness. Now the rule will require insurers to charge similar co-payments regardless if the treatment is for physical or mental health. Deductibles and doctor visits would also be equitable, and there would be parity in outpatient services and residential treatment.

"Many private insurers gave nothing. Some provided benefits, but they were limited and inadequate," Lieberman said. The law, the new rules and provisions of Obamacare combined will ensure mental and physical illness would be covered similarly. America's Health Insurance Plans (AHIP), the professional association that represents the health insurance industry, said it has long supported the act and has worked to implement its requirements in an affordable and effective way.

Federal Parity Amendment

In 1996 a federal parity amendment was signed into law as part of the VA-HUD appropriations bill. The law, otherwise known as the Mental Health Parity Act of 1996 (Public Law 104-204), prohibits group health plans that offer mental health benefits from imposing more restrictive annual or lifetime limits on spending for mental illness than are imposed on coverage of physical illnesses. This law expired on September 30, 2001 due to a "sunset" provision, but was extended through December 31, 2002 when President Bush signed Public Law 107-116. The Mental Health Parity Act of 1996 offers limited parity for the treatment of mental health disorders. The statute does not require insurers to offer mental health benefits, but states that if mental health coverage is offered, the benefits must be equal to the annual or lifetime limits offered for physical health care. It also does not apply to substance use disorders, and businesses with fewer than 26 employees are exempt.

State Laws and Separate Federal Requirements:

The state laws noted below generally do not apply to federally funded public programs such as Medicaid, Medicare, the Veterans Administration, etc. In addition, "self-funded" health insurance plans, often sponsored by the largest employers, usually are entirely exempt from state regulation because they are preempted by the federal ERISA law.

ARCHIVE NOTE: Some of the individual state statute summaries and links are a "snapshot" of enacted state legislation, and may not reflect more recent amendments, nor the latest interaction between state mandates and the federally-approved Essential Health Benefits (EHB) for each state. Until an update is completed, this table is useable as an historical record, not as a legal source of current requirements.