labor lawAdivision of labor law center

Mental and physical health insurance coverage limits will remain equal until the end of 2007 thanks to an important law’s extension signed by the President. The more-than 150 million workers in the U.S. covered by group health insurance packages are affected.

The extension involves New Jersey employee benefit plans. The law is called the Mental Health Parity Act (MHPA). Before it was originally signed into existence in 1996, health insurance plans could legally have large discrepancies in their coverage limits for physical or mental health treatments. For example, physical health treatment coverage limits might be $100,000 yearly, but mental health limits could be one-tenth or even one-twentieth of that. Such discrepancies are no longer legal.

Before the MHPA a group health insurance plan might skimp on coverage for mental health treatments compared to medical/surgical coverage. For example, limits on medical treatment might be $100,000, while mental health plans might have considerably lower limits - $5,000 to $10,000, for example.

Thanks to MHPA, that approach is now illegal. Under MHPA, a health insurance plan must maintain equal levels for mental health treatment as for any other, such as surgery.

Mental health treatments that are typically covered include visits to a mental health professional – a licensed therapist, a psychiatrist, or a psychologist. Coverage is likely to include time in rehabilitation facilities for drug and alcohol issues. In addition, the plans may also include coverage for stays in either mental health psychiatric centers (mental hospitals) or the mental health section of a medical hospital.

The law has a major impact because in excess of 150 million workers in the U.S. are covered by group health insurance programs.

When the original MHPA was signed into law in 1996, a “sunset clause” was written in. That means the bill was designed to run out on September 1 of 2001. However, since then amendments to the law have extended the expiration date five times.