Legal Issues of HR Concern

There are a number of new laws that effect HR and Employers’ benefits packages.  In the next few blogs, we will summarize them.

Mental Health Parity

It is estimated that over 113 million people suffer from mental, behavioral or substance related illnesses and now they will no longer be discriminated against.  After 12 years of fighting, on October 3, 2008, the Mental Health Parity Act (MHPA) was finally signed into law.  This law requires insurance companies to treat mental illness (which includes all behavioral health and substance/addiction) the same as all other illnesses whenever both are covered.  This bill actually broadens the scope of the original legislation that was initiated by the late Senator Wellstone (D-Minn.) and now retired, Senator Peter Dominici (R.-N.M.).  They began this process in 1996.  That first piece of legislation prevented insurance companies from setting annual or lifetime dollar limits on mental health care that are lower than the limits of other services.  To get around this however, insurance companies altered the limits of hospital days, outpatient sessions or co-pays.  The legislation that was signed into law on October 3, 2008 packaged in the “Bailout” bill takes it further.  Now users of mental health services must be treated in exactly the same manner as those patients suffering from physical problems.

There are however, a number of concerns that have been expressed by employers and insurance companies.  The biggest concern is how much this legislation will cost employers.  Some say that these costs will ultimately be passed along to all of us or that employers will ultimately respond by eliminating mental health coverage altogether.  According to The Safe Harbor, a health care law blog, untreated mental illness is estimated to cost employers $80 billion dollars annually.  Therefore, treating such illnesses will certainly help them.  As always it is better to have the facts so that you can then make more informed decisions.  Because the decision for employers to cover mental health is a big one and the decision NOT to cover it is even bigger and more costly.

So here are the highlights summarized.  MHPA:

• Requires employers must be in compliance by October 2009 and goes into effect January 1, 2010
• Will apply only to group health plans that provide mental health benefits
• Prohibits employer group health plans from imposing limitations on coverage for mental illnesses that they do not impose on physical illness (i.e. requires that group health plans offer the same terms for deductibles, limits on hospital stays and outpatient visits, and insurance co-payments)
• out-of-network coverage for mental health and substance abuse benefits must be provided if out-of-network coverage is provided for medical and surgical benefits
• Does have the following small employer and cost exemptions:
  • Small employer exemption for employers that employed an average of at least two and not more than 50 employees during the preceding calendar year
  • Also allows this exemption to apply to an employer with one employee during the preceding year where state insurance laws allow a ‘group’ plan to have one participant
  • A cost exemption could be invoked if costs increased 1 percent or more because of parity.
  • A cost exemption may be invoked if actual total coverage costs increase 2 percent for the first year the new act is in effect – 2010 for calendar year plans – and 1 percent for subsequent plan years

Tags: EAP, Federal Regulations, law, Mental Health, mental health law, Parity