As an employer, you may have questions about how a recent ruling will impact Colorado employee benefit plans. This ruling was issued by the Employee Benefits Security Administration, also known as EBSA. EBSA is a federal agency, and its role is to monitor pension and health insurance law compliance by businesses. Most businesses are covered by EBSA.
The recent ruling pertains to how group health insurance plans handle benefits for mental health treatments. Although this ruling was released quietly, it can have a significant impact. The ruling pertains to the Mental Health Parity Act, also known as MHPA. This act was extended through the end of 2007. MHPA became a law originally in 1996. At the time, it was to expire at the end of September, 2001. Instead of expiring, though, the law has been extended 5 times.
This law requires that group health insurance plans place the same limits on mental health coverage that they place on other medical treatments. Insurance companies used to be able to set a maximum lifetime benefit for medical treatments and surgery at one amount and then set a lifetime benefit maximum for mental health treatments at a lower amount. MHPA requires that these amounts be the same.
For instance, if a group health insurance plan has a lifetime maximum benefit for surgery or other medical treatments of $250,000, the lifetime maximum benefit for mental health treatments also has to be $250,000. This rule also applies to the benefit amounts allowed per year. The coverage amount allowed for medical treatments must be the same as the amount allowed for mental health treatments.
The mental health treatments covered by the heath insurance plan can include stays in a drug or alcohol rehab and stays in mental hospitals for illness such as schizophrenia or depression. Visits to psychiatrists, psychologists, and licensed therapists are also included.
Mental health has been put on a par with other medical conditions.
This will have effects across the board for employees covered by Colorado employee benefit plans.
Groups health insurance plans can no longer put a limit on mental health treatments that are far lower than those put on other medical treatments.
This is because the Mental Health Parity Act, also known as the MHPA, has been extended through December 31, 2007 under a law signed by the president.
A sunset clause that was included in the original bill allowed the bill to expire on Sept 31, 2001. But due to amendments, 5 times in all, the expiration date has been extended.
Before the Mental Health Parity Act, employees could expect limits on medical treatments up to $100,000 or more per year. But if an employee found themselves in need of treatment for a mental health problem, they would have found that the limits might be as low as $5,000 – $10,000, or even lower.
The Mental Health Parity Act now makes this illegal. This law means that mental health must be funded in the same way and to the same limits as other medical conditions.
What can these new funding limits be used for?
They can be used for all manner of mental health treatments. These might include time spent in rehab clinics for alcohol or drug related dependency, or regular visits to a psychologist, psychiatrist or other licensed therapists.
If you have to stay in hospital to be treated for depression or mental health ailments these will be covered too. These might include schizophrenia or post-traumatic stress disorder.
The Mental Health Parity Act will have a far reaching effect on workers throughout the United States. There are over 150 million workers throughout the US that are covered by group health insurance plans. The law means that they no longer have to struggle with obtaining treatment due to cost.