Employers may be confused as to the impact a recent ruling has on South Carolina employee benefit plans. This ruling was issued by the US Employee Benefits Security Administration (EBSA) and impacts companies who have group health insurance plans that provide benefits for mental health treatments.
What is the significance of this ruling?
The ruling extends the expiration date on the Mental Health Parity Act, also known as MHPA. This act has been a law since 1996. Originally, it was to expire on September 30, 2001, but it has been extended 5 times. The new expiration date is December, 31, 2007.
What impact does the Mental Health Parity Act have?
The Mental Health Parity Act requires that group health insurance plans have the same benefit caps for mental heath treatments that they have for surgery and other medical treatments. Before this act, insurance companies could legally have a lifetime benefit maximum for mental health treatments of $15,000 while they had a lifetime benefit maximum for surgery and other health treatments of $250,000.
Is the yearly benefit maximum affected as well?
Yes. The Mental Health Parity Act requires that both the lifetime benefit maximum and the yearly benefit maximum be the same for both health treatments and mental health treatments.
What mental heath treatments are included?
The mental health treatments covered can include visits to psychologists, psychiatrists, or licensed therapists. In addition, rehab stints for alcohol or drug dependency can be covered. Stays in mental hospitals for conditions such as post-traumatic stress disorder, schizophrenia, and depression may also be covered.
Do companies that currently do not cover mental heath treatments have to provide this coverage?
No. This law does not impact companies that currently have group health insurance plans that do not cover mental health treatments. The law only applies to group health insurance plans that do cover mental health treatments.
A ruling with an impact on 150 million employees in the U.S. has extended the Mental Health Parity Act.
The act was extended to the last day of 2007 through a law signed by the President that will continue to guarantee equal health insurance coverage for mental health as for physical health treatment.
South Carolina employee benefit plans will be affected by the extension. Thanks to the Mental Health Parity Act, or MHPA, it is illegal for group health insurance plans covering workers to put ceilings on coverage for mental health treatments at levels lower than those for medical and surgical treatments.
Mental health treatments covered are stays in psychiatric centers (mental hospitals) or the mental health sections of medical hospitals for treatments of illnesses including post-traumatic stress disorder, depression, or schizophrenia. It also includes visits to mental health professionals such as psychologists, licensed therapists, or psychiatrists. Stays in “rehab” for drug and alcohol abuse are covered.
When the law was first passed in 1996, a “sunset clause” was written in, requiring that it expire on September 31, 2001. Five amendments since that time have extended the date of expiration.
Before the enactment of MHPA, limits on mental health plan coverage might much lower than corresponding limits on surgical or medical treatment coverage. Any such disparity is illegal under MHPA. In short, group health plans must pay for mental health coverage to the same degree they cover medical care.
Because 150 million U.S. employees are covered by group health plans, the MHPA – and its recent extension – have a broad impact on the workforce.
The Employee Benefits Security Administration (EBSA) enforces the laws regulating group health plans. It has gone through a metamorphosis since its creation in 1974. At that time its mission was to enforce the Employee Retirement Income Security Act (ERISA) of 1974. Since then it has undergone several name changes, until its present title reflected its broader mandate and its upgrade to sub-cabinet level.