Mental Health Parity Act Provisions for Group Health Plans

Issued and entered August 23, 2000 by Frank M. Fitzgerald, Commissioner of Financial and Insurance Services
 

In 1996, Congress passed the Health Insurance Portability and Accountability Act. An amendment was added in September of 1996 titled "The Mental Health Parity Act" (MHPA) and was effective on January 1, 1998. This act provides for parity in the application of limits to certain mental health benefits and applies to group health benefits, including those funded health insurance policies currently in effect, as well as those placed in effect prior to the September 30, 2001 sunset. This bulletin describes how Michigan enforces the requirements of the MHPA with respect to commercial insurers, HMOs, and Blue Cross plans licensed to do business in Michigan.

The MHPA does not require group health insurance issuers to provide mental health benefits. However, the MHPA does place the following requirements on group health insurance issuers:

A group health plan or health insurance issuer providing both medical and surgical benefits and mental health benefits may not impose an aggregate lifetime dollar limit or annual dollar limit on mental health benefits if it does not also impose a limit on substantially all of the medical surgical benefits.

• If a plan does impose an aggregate lifetime dollar limit or annual dollar limit on substantially all medical and surgical benefits, the plan cannot impose a smaller limit on the mental health benefits.
   
• If the group health plan offers two or more benefit package options, the mental health parity requirements apply separately to each option.

TWO EXEMPTIONS FROM THESE REQUIREMENTS:

1. Small employers with at least two but not more than 50 employees.
    
2. If application of these provisions results in an increase in the cost under the plan or coverage of at least one percent for the group health plan. All plans must implement parity for at least six months to determine increased costs.  

In Michigan, when a commercial insurer, HMO or Blue Cross plan writes employer group health coverage that does not qualify for one of the above exemptions, then the coverage must meet the Mental Health Parity requirements described above. Any employer group health coverage documents submitted for prior approval to the Commissioner will not be approved unless they comply with the MHPA requirement because failure to comply with such requirements may violate the unfair trade practices sections of Michigan's Insurance Code and Blue Cross Act.

Also, a failure by an insurer, HMO or a Blue Cross plan to comply with the MHPA would constitute a violation of Chapter 20, Unfair and Prohibited Trade Practices and Fraud, of the Michigan Insurance Code of 1956 (MCL 500.2001 through 500.2093; MSA 24.12001 through 24.12093) or the Nonprofit Health Care Corporation Reform Act (MCL 550.1101 through 550.1704; MSA 24.660(101) through 24.660(704)) and invoke appropriate administrative action. Noncompliance may also result in withdrawal of approval of forms or in implementation of fines.

The MHPA does not affect the terms and conditions relating to the amount, duration, or scope of mental health benefits. For example, limits on number of visits or days of coverage, cost sharing, or requirements relating to medical necessity would not be affected by this act.

Any questions regarding this bulletin should be directed to:

Office of Financial and Insurance Services
Division of Insurance Research and Consumer Services
611 West Ottawa Street
P.O. Box 30220
Lansing, MI 48909-7720

Phone: (517) 373-2984
Toll Free (877) 999-6442