On December 19, 2003, President Bush signed legislation extending the existing Mental Health Parity Act (MHPA) provisions of ERISA and the Public Health Service Act until the end of 2004 (Public Law 108-197). The law merely extends existing law, so plans that are in compliance have no new obligations.

What MHPA Requires

MHPA applies to employer-sponsored group health plans under ERISA, and, under the Internal Revenue Code and the Public Health Service Act, to church plans and to state and local government plans that have not opted out of these provisions. MHPA requires that annual or lifetime dollar limits for mental health benefits be no lower than the dollar limits for medical and surgical benefits offered by a group health plan. The Act applies to group health plans or health insurance coverage offered by issuers in connection with a group health plan that offers both mental health and medical/surgical benefits. MHPA does not require plans to offer mental health benefits.

In addition, MHPA contains the following two exemptions:

• Small Employer Exemption The MHPA does not apply to any group health plan sponsored by a small employer (one that employs an average of between 2 and 50 employees).
• Increased Cost Exemption The increased cost exemption provides that MHPA does not apply to a group health plan or group health insurance coverage if the application of the parity provisions results in an increase in the cost under the plan or coverage of at least one percent.

To see The Segal Company's February 2002 Bulletin on MHPA, click here.

Outlook for Legislation that Would Expand MHPA's Reach

The more expansive Senator Paul Wellstone Mental Health Equitable Treatment Act of 2003, is currently under consideration in Congress. This legislation seeks to require parity with all medical coverage limits, including copayments, coinsurance and deductibles, not just annual limits. It is unclear whether Congress will take up this legislation this year.

Compliance Alert, The Segal Company’s periodic electronic newsletter summarizing important developments affecting benefit plan compliance, is for informational purposes only. It is not intended to provide authoritative guidance. On all issues involving the interpretation or application of laws and regulations, plan sponsors should rely on their attorneys for legal advice.

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