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Mental Health Parity and the Affordable Care Act

FAQ Clarifies How the MHPAEA Applies to Individual & Small Group Market Coverage

The Affordable Care Act builds on the Mental Health Parity and Addiction Equity Act (MHPAEA) and provides that mental health and substance use disorder services are one of ten “essential health benefits” (EHB) categories. Under the EHB rule, non-grandfathered health plans in the individual and small group markets are required to comply with the requirements of the parity regulations to satisfy the requirement to provide EHB.

In addition, the Affordable Care Act extends the protections of the MHPAEA to the entire individual market, both with respect to grandfathered and non-grandfathered coverage. Therefore, as explained in a recent FAQ:

  • For non-grandfathered small group market coverage: For plan yearsbeginning on or after January 1, 2014, all non-grandfathered small group market coverage that is not otherwise subject to a previously announced transitional policy (allowing certain small businesses to renew existing group coverage for 2014 that does not comply with the requirement to cover EHB) must include coverage for mental health and substance use disorder benefits.
    • In addition, such coverage must continue to comply with the federal parity requirements set forth in the interim final regulations, until thefinal regulations become applicable for plan years beginning on or after July 1, 2014 (which, for calendar year plans, is January 1, 2015).
  • For grandfathered small group market coverage: Grandfathered small group market coverage is not required to comply with either the EHB provisions or the MHPAEA.
  • For non-grandfathered individual market coverage: For policy yearsbeginning on or after January 1, 2014, all non-grandfathered individual market coverage that is not otherwise subject to the previously announced transitional policy must include coverage for mental health and substance use disorder benefits.
    • In addition, such coverage must comply with the federal parity requirements set forth in the interim final regulations, until the final regulations become applicable for plan years beginning on or after July 1, 2014 (which, for calendar year plans, is January 1, 2015).
  • For grandfathered individual market coverage: Grandfathered individual health insurance coverage is not subject to the EHB requirements and therefore is not required to cover mental health or substance use disorder benefits. However, to the extent mental health or substance use disorder benefits are covered under the policy, coverage must complywith the federal parity requirements set forth in final regulations for policy years beginning on or after July 1, 2014 (which, for calendar year policies, is January 1, 2015).
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