Industry News // Your Employee Matters

December 2008

ACT NOW TO COMPLY WITH NEW MENTAL HEALTH PARITY LAW

After more than 10 years of proposed federal legislation and debate, mental health parity became a reality on October 3, 2008 when President Bush signed the Emergency Economic Stabilization Act of 2008. The mental health parity provision within this legislation received little attention nationally, due to the overwhelming financial crisis and election campaign. Known as the Mental Health Parity and Addiction Equity Act of 2008, the new law provides:

• Although an employer’s health plan benefits need not cover any specific mental health condition, if a plan offers mental health and substance abuse coverage, there must be “parity” with other medical coverage offered.
• The Departments of Health and Human Services, Labor and Treasury are expected to issue regulations pursuant to the new law. The “parity” that will be required includes deductibles, out-of-pocket expenses, treatment limitations, and co-pays. Parity also means that if out-of-network medical benefits are offered, similar benefits must be available for mental health and substance abuse.
• The law does not supersede any state law requiring parity or ordering medical and/or mental health coverage.
• The effective date of the statute is January 1, 2009. However, the effective date of employer compliance is the first plan year that begins one year after the effective date, thus no earlier than January 1, 2010. If an employer violates the law, employees and/or their beneficiaries have the right to bring a civil action. The IRS may also impose a $100 per day tax for each beneficiary denied parity under the law.

We’ll continue to update you regarding the regulatory developments of this law and what employers need to do to comply. This article was contributed by the Worklaw Network firm of Lehr Middlebrooks & Vreeland, P.C.

Click here to read the text of the bill (pages 310-344), which is included in the massive bailout legislation.