On Oct. 3, 2008, President Bush signed into law the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 as part of the Emergency Economic Stabilization Act of 2008. This act will have a significant impact on employer-sponsored health plans that offer mental health or substance abuse benefits where the cost and treatment limitations of those benefits are more restrictive than those applicable to other medical and surgical benefits under the plan.
The intent of the Wellstone Act is to provide true parity between mental health/substance abuse benefits and other benefits covered under the plan. The act does not require plans to cover mental health or substance abuse, nor does it require plans to cover one if they cover the other (note, however, that state insurance laws may mandate such coverage, thereby subjecting insured plans to certain coverage requirements). In this regard it is important to note that for self-funded plans, substance use disorders and mental health conditions are defined as set forth under the terms of the plan.
The Employee Retirement Income Security Act, the Public Health Service Act and the Internal Revenue Code already contain mental health parity provisions which apply to all large group health plans, both self-funded and fully-insured.
However, the parity law only prohibits plans from applying specific lower dollar maximums (either annual or lifetime) to mental health benefits that are separate from the aggregate annual or lifetime maximum generally applicable to health benefits. The current law does not require parity with regard to other types of plan limitations such as co-pays, coinsurance, deductibles, and out-of-pocket maximums; nor does the current law apply to substance abuse benefits at all.
The Wellstone Act expands and amends the parity law in the following ways:
Substance abuse included. Extends the current parity law provisions related to annual and lifetime maximums to include substance abuse benefits, as well as extends all the other provisions of the Wellstone Act to substance abuse benefits along with mental health benefits. In this regard it is important to note that substance use disorders are defined as set forth under the terms of the plan.
Financial requirements. Requires that financial requirements under the plan with regard to deductibles, co-payments, co-insurance, and out-of-pocket expenses for mental health and substance abuse benefits covered under the plan be the same or better than the financial requirements for medical and surgical benefits under the plan.
Treatment limitations. Prohibits treatment limitations for mental health and substance abuse benefits covered under the plan to the extent that medical and surgical treatments are not also limited.
Out-of-network coverage. Requires that plans providing out-of-network coverage for medical and surgical benefits also provide out-of-network options for mental health and substance abuse benefits covered under the plan.
Availability of plan information. The criteria for determining whether mental health and substance abuse treatment is "medically necessary" must be provided to participants and contracting providers upon request.
The Wellstone Act becomes effective the first day of the plan year beginning one year after the date of enactment, which means Jan. 1, 2010, for calendar year plans.
John Hickman is partner in charge of the Health & Welfare Benefits Practice with Alston & Bird, an Atlanta, New York, Charlotte and Washington, D.C., law firm. Laurie Kirkwood, an associate with Alston & Bird co-authored this article.
