Mandated substance abuse benefits in disability insurance policies

Issued and entered April 26, 1982 by Nancy A. Baerwaldt, Commissioner of Insurance

1. Section 3425 of the Insurance Code, MCLA 500.3425; MSA 24.13425, which was enacted as part of Public Act 429 of 1980, requires insurers offering disability insurance policies in Michigan to provide coverage for intermediate and outpatient care for substance abuse in all group and individual hospital, medical, and surgical expense-incurred disability insurance policies issued or renewed on or after January 1, 1982.

2. Subsection 3425(5) requires coverage, at a minimum, for up to $1,500 per individual per year. The minimum benefit level is effective beginning January 1, 1982, and is to be adjusted each year by March 31, beginning in 1982, in accordance with the annual average percentage increase or decrease in the U.S. Consumer Price Index for the 12 month period ending the preceding December 31. As described in Bulletin 81-18, the index to be used is the Consumer Price Index for All Urban Consumers -- Revised. Some insurers have requested further clarification as to which index to use. Insurers should use the Consumer Price Index for All Urban Consumers (CPI-U), U.S. City Average, for All Items.

3. Using the current index, the annual average for 1980 was 246.8 and for 1981 was 272.4, which represents an increase of 10.4%. Applying this 10.4% increase to the $1500 initial minimum benefit results in a substance abuse benefit increase of $156, or a new minimum benefit of $1656.

4. The Office of Substance Abuse Services in the Michigan Department of Public Health licenses facilities providing substance abuse treatment in Michigan. Questions regarding licensing requirements or the licensing status of particular programs should be directed to:

Kenneth Eaton, Administrator
Office of Substance Abuse Services
Department of Public Health
3500 North Logan
Lansing, MI 48909

5. Please refer to Bulletin 81-18 for further information on Public Act 429 of 1980.