Under federal law, health plans must provide certain
benefits or provide certain benefits at specified minimum levels if
the benefit is provided. These provisions, unlike state-law benefit
mandates, cover both insured and self-insured plans.
The NMHPA requires postdelivery hospitalization coverage
for at least 48 hours following a normal delivery and 96 hours following
a cesarean section. Plans are barred from offering incentives or imposing
penalties to encourage mothers to stay less time in the hospital.
A decision to leave early may be made by the mother or the mother's
healthcare provider after consulting with the mother. Copayments,
deductibles, or other cost-sharing provisions applied to postdelivery
hospitalization may not be greater than those for predelivery hospitalization.
Plans and insurers may not require a provider to obtain prior authorization
for prescribing a length of stay that does not exceed the 48- or 96-hour
minimums. Information about this coverage must be included in the
plan's summary plan description.
The Paul Wellstone and Pete Domenici Mental
Health Parity and Addiction Equity Act of 2008 (MHPAEA), which was passed by the U.S. Congress in October 2008, applies to
most employers with more than 50 employees and is designed to provide
mental health parity by making sure mental health and/or substance
use disorder benefits offered by health plans are equivalent to the
medical/surgical benefits the plans offer.
Defining basic terms. According
to the final regulations, group health plans define the terms “mental
health benefits” and “substance use disorder benefits,” but the definitions
must be in accordance with applicable federal and state laws (29 CFR 2590.712(a)). The regulations also provide that the terms must be “consistent
with generally recognized independent standards of current medical
practice.” The regulations give a few examples of resources that would
meet this requirement, including:
• The most current version of the Diagnostic and Statistical
Manual of Mental Disorders (DSM);
• The most current version of the International Classification
of Diseases (ICD); or
• State guidelines.
The general parity requirement. The
main goal of the MHPAEA is to achieve parity regarding a plan’s financial
requirements and treatment limitations. Financial requirements include
copayments, deductibles, coinsurance, and out-of-pocket expenses and
do not include aggregate lifetime or annual dollar limits (29 CFR 2590.712(a)). Treatment limitations include limits on treatment frequency (e.g.,
one therapy session per week), number of visits (e.g., 35 visits per
year to a mental health professional), days of coverage (e.g., 30-day
hospital stays), days in a waiting period, and other similar limits
on the scope or duration of treatment.
Classification of benefits. The
final regulations make clear that parity analysis must be conducted
on a classification-by-classification basis. More specifically, a
plan cannot apply “any financial requirement or treatment limitation
to mental health or substance use disorder benefits in any classification
that is more restrictive than the predominant financial requirement
or treatment limitation of that type applied to substantially all
medical/surgical benefits in the same classification” (29 CFR
The regulations divide benefits into the following six
1. Inpatient, in-network;
2. Inpatient, out-of-network;
3. Outpatient, in-network;
4. Outpatient, out-of-network;
5. Emergency care; and
6. Prescription drugs (29 CFR
The regulations do allow plans and issuers to divide
benefits furnished on an outpatient basis into two sub-classifications:
1. Office visits (e.g., physician visits); and
2. All other outpatient items and services (e.g., outpatient
surgery, facility charges for day treatment centers, laboratory charges,
and other medical items) (29
However, the regulations do not allow any other sub-classifications,
including for example, the separate classification of generalists
The final regulations also provide that if a plan (or
health insurance coverage) provides in-network benefits through multiple
tiers of in-network providers, the plan may divide its benefits furnished
on an in-network basis into sub-classifications that reflect those
network tiers (29 CFR 2590.712(c)(3)(iii)(A)). However,
such tiering must be based on reasonable factors and without regard
to whether a provider is a mental health or substance use disorder
provider or a medical/surgical provider.
Treatment limitations. The regulations
provide that the parity requirements apply to both quantitative and
nonquantitative treatment limitations. A "quantitative treatment limitation"
is a limitation that is expressed numerically, such as an annual limit
of 50 outpatient visits per year (29 CFR. 2590.712(a)). A "nonquantitative treatment limitation" is a limitation that
is not expressed numerically, but otherwise limits the scope or duration
of benefits for treatment. A permanent exclusion of all benefits for
a specific condition or disorder is not a treatment limitation. Nonquantitative
treatment limitations include:
• Medical management standards limiting or excluding benefits
based on medical necessity or medical appropriateness, or based on
whether the treatment is experimental or investigative;
• Formulary design for prescription drugs;
• For plans with multiple network tiers (such as preferred
providers and participating providers), network tier design;
• Standards for provider admission to participate in a
network, including reimbursement rates;
• Plan methods for determining usual, customary, and reasonable
• Refusal to pay for higher-cost therapies until it can
be shown that a lower-cost therapy is not effective (also known as
fail-first policies or step therapy protocols);
• Exclusions based on failure to complete a course of treatment;and
• Restrictions based on geographic location, facility type,
provider specialty, and other criteria that limit the scope or duration
of benefits for services provided under the plan or coverage (29 CFR
Application of the parity requirement to nonquantitative
treatment limitations. The regulations generally prohibit
the imposition of any nonquantitative treatment limitation to mental
health or substance use disorder benefits unless certain requirements
are met. Any processes, strategies, evidentiary standards, or other
factors used in applying the nonquantitative treatment limitation
to mental health or substance use disorder benefits in a classification
must be comparable to, and applied no more stringently than, the processes,
strategies, evidentiary standards, or other factors used in applying
the limitation with respect to medical/surgical benefits in the classification
(29 CFR 2590.712(c)(4)(i)).
Availability of plan information. The criteria for medical necessity determinations made under the
plan for mental health or substance use disorder benefits must be
made available by the plan administrator or the health insurance issuer
offering the coverage to any current or potential participant, beneficiary,
or contracting provider upon request (29 CFR 2590.712(d)(1)).
The reason for any denial under the plan (or coverage)
of reimbursement or payment for services for mental health or substance
use disorder benefits must be made available by the plan administrator
or health insurance issuer to the participant or beneficiary as provided
by the ERISA claims procedure regulations (29 CFR 2590.712(d)(2)).
Small employer exemption. In general,
employers that have 50 or fewer employees are totally exempt from
the requirements of the MHPAEA (29 USC 1185a(c)(1)and 29 CFR 2590.712(f)). Employers who employed at least two employees but not more than
50 employees on business days during the preceding calendar year are
exempt from these requirements. Moreover, the parity rules do not
apply to any group health plan for any plan year if, on the first
day of the plan year, the plan has fewer than two participants who
are current employees (29 CFR 2590.712(f)(1)).
Note: For nonfederal governmental
plans, a "small employer" is an employer with 100 or fewer employees
Cost exemption. The mental health
and substance abuse parity requirements do not apply during the next
plan year to a group health plan if their application would result
in an increase for the current plan year of the actual total costs
of coverage for medical and surgical benefits and mental health and
substance use disorder benefits by an amount that exceeds the "applicable
percentage" of the actual total plan costs (29 CFR 2590.712(g)(1)). The applicable percentage is 2 percent for the first plan year
in which the new parity requirements apply and 1 percent in each subsequent
plan year (29 CFR 2590.712(g)(2)).
Notice of cost exemption. A group
health plan that elects to implement a cost exemption must promptly
notify the DOL, the appropriate state agencies, and participants and
beneficiaries in the plan of the election.
The WHCRA requires that group health plans that cover
mastectomies also cover reconstructive breast surgery following a
mastectomy. The WHCRA not only requires reconstruction of the breast
on which the mastectomy was performed, but also surgery and reconstruction
of the other breast to produce a symmetrical appearance. Also mandated
are coverage for prostheses and physical complications of mastectomy
such as lymphedemas. The law specifically leaves it to the patient
and the attending physician to determine how the covered services
are to be provided.
The WHCRA's requirements apply only to group health plans
and health insurance issuers that provide coverage for a mastectomy.
Coverage of mastectomies is not mandated. The WHCRA also does not
prohibit group health plans and health insurance issuers from imposing
deductibles or coinsurance requirements for health benefits relating
to reconstructive surgery in connection with a mastectomy as long
as such requirements are consistent with those established for other
benefits under the plan. State laws that require at least the same
level of coverage as the WHCRA are not superseded.
Notice requirements. Both group
health plans and group health insurers are required to give participants
and beneficiaries notice of the availability this mandate upon enrollment
and annually thereafter.
Michelle’s Law prohibits group health plans from terminating
the health coverage of a college, university, or trade school student
who is a “dependent child” solely because the student takes a medically
necessary leave of absence. If Michelle’s Law applies, the group health
plan must provide the same benefits as if the student had not taken
a leave for 1 year after the first day of the leave (or if earlier,
the date coverage would otherwise have terminated under the terms
of the plan or health insurance coverage).
Group health plans and health insurers that offer group
or individual coverage that covers dependents must allow coverage
of dependents on a parent’s plan until the dependent’s 26th birthday.
There is no requirement to make coverage available to a grandchild
even if that child’s parent is covered as a dependent.
Regulations defining which dependents are eligible for
coverage specify that a plan or insurer must define "dependent" for
purposes of eligibility for dependent coverage of children in terms
of a relationship between a child and the plan participant (IRS Reg. Sec.
54.9815-2714T). Thus, a plan may not deny or restrict coverage
for a child who has not attained age 26 based on the presence or absence
of the child's financial dependency (upon the participant or any other
person), residency with the participant or with any other person,
student status, employment, or any combination of those factors. In
addition, a plan may not deny or restrict coverage of a child based
on eligibility for other coverage.
Keeping track of the coverage eligibility of dependents
has always been a problem for employers. Employers should obtain all
the information needed for determining dependents’ coverage eligibility
and keep it up to date to minimize paying for ineligible dependents.
Many states have existing laws that require insured plans to provide
similar or more expansive coverage of dependents. These provisions
still apply to insured plans in those states.
Age distinctions. The terms of a
group health plan or health insurance coverage providing dependent
coverage of children cannot vary based on age (except for children
who are age 26 or older).
Both coverage under an employer-provided health plan
and amounts paid or reimbursed under such a plan for medical care
expenses of an employee’s child who has not attained age 27 as of
the end of the employee’s taxable year are excluded from the employee’s
gross income under IRC Sec. 105(b) and IRC Sec. 106. An employer may assume an employee’s
taxable year is the calendar year.
For this purpose, a child is the son, daughter, stepson,
or stepdaughter of the employee, including those who are legally adopted
or lawfully placed with the employee for legal adoption and “eligible
foster children,” defined as individuals who are placed with an employee
by an authorized placement agency or by judgment, decree, or court
order. This provision applies to a child of the employee even if the
child is not the employee’s dependent within the meaning of IRC Sec. 152(a).
Thus, the age limit, residency, support, and other tests described
in IRC Sec. 152(c) do not apply to a child for this purpose.
The ACA prohibits group health plans (including grandfathered
plans) and health insurance issuers that offer group health plans
from establishing lifetime dollar limits on the “essential health
benefits” provided by the plan (29 CFR 2590.715-2711). This means that plans
may not, for example, place a cap on the lifetime dollar amount of
coverage for emergency services or preventive care, because those
benefits are considered essential under the ACA.
The ACA lists the following categories that must be considered
essential health benefits:
• Ambulatory patient services;
• Emergency services;
• Maternity and newborn care;
• Mental health and substance use disorder services;
• Prescription drugs;
• Rehabilitative and habilitative services and devices;
• Laboratory services;
• Preventive and wellness services; and
• Pediatric services, including oral and vision care.
Additionally, annual dollar-amount limits on essential
benefit coverage are prohibited. Lifetime and annual limits may continue
for benefits that are not “essential,” provided that such limits are
permitted under state and federal law.
Insurers and group health plans must provide coverage
without cost sharing for preventive services (26 CFR 54.9815-2713); this provision does not apply to grandfathered plans. Related
regulations provide that, generally, a group health plan or a health
insurer offering group health insurance coverage must provide coverage
for all of the following items and services without any cost-sharing
requirements (such as a copayment, coinsurance, or deductible) for
the items or services:
• Evidence-based items or services that have a rating of
A or B in the current recommendations of the United States Preventive
Services Task Force for the individual involved;
• Immunizations for routine use in children, adolescents,
and adults that have in effect a recommendation from the Advisory
Committee on Immunization Practices of the Centers for Disease Control
and Prevention (CDC) for the individual involved (for this purpose,
a recommendation from the Advisory Committee on Immunization Practices
of the CDC is considered in effect after it has been adopted by the
Director of the CDC, and a recommendation is considered to be for
routine use if it is listed on the Immunization Schedules of the CDC);
• For infants, children, and adolescents, evidence-informed
preventive care and screenings provided for in comprehensive guidelines
supported by the Health Resources and Services Administration (HRSA); and
• For women, if not included by the first item above, evidence-informed
preventive care and screenings provided for in comprehensive guidelines
supported by the HRSA.
A plan may provide coverage for services in addition
to those recommended and may deny coverage for services that are not
recommended. A complete list of the current recommended preventive
services is available at http://www.healthcare.gov
Women's preventive services guidelines. HHS has issued guidelines on women's preventive services supported
by HRSA. Nongrandfathered plans and issuers are required to provide
coverage without cost sharing consistent with these guidelines. The
additional women’s preventive services that must be covered without
cost-sharing requirements include:
• Well-woman visits, including an annual well-woman preventive
care visit for adult women to obtain the recommended preventive services,
and additional visits if women and their providers determine they
• Gestational diabetes screening for women 24 to 28 weeks
pregnant and those at high risk of developing gestational diabetes;
• Human papillomavirus (HPV) DNA testing for women who
are 30 years of age or older every 3 years, regardless of pap smear
• Annual sexually transmitted infection (STI) counseling
and HIV screening and counseling;
• Contraception and contraceptive counseling, including
access to all Food and Drug Administration-approved contraceptive
methods, sterilization procedures, and patient education and counseling (this requirement does not apply to women
who are participants or beneficiaries in group health plans sponsored
by religious employers);
• Breastfeeding support, supplies, and counseling; and
• Interpersonal and domestic violence screening and counseling.
Cost-sharing requirements and office visits. Because an office visit where preventive services are provided may
include other services, the regulations provide the following clarifications
of the cost-sharing requirements when a recommended preventive service
is provided during an office visit:
• If a recommended preventive service is billed separately
(or is tracked as individual encounter data separately) from an office
visit, a plan or insurer may impose cost-sharing requirements with
respect to the office visit.
• If a recommended preventive service is not billed separately
(or is not tracked as individual encounter data separately) from an
office visit and the primary purpose of the office visit is the preventive
service, a plan or insurer may not impose cost-sharing requirements
for the office visit.
• If a recommended preventive service is not billed separately
(or is not tracked as individual encounter data separately) from an
office visit and the primary purpose of the office visit is not the
preventive service, a plan or insurer may impose cost-sharing requirements
for the office visit (26 CFR 54.9815-2713).
Out-of-network providers. The regulations
make clear that a plan that has a network of providers is not required
to provide coverage for recommended preventive services delivered
by an out-of-network provider and may also impose cost-sharing requirements
for recommended preventive services delivered by an out-of-network
provider. However, if a plan or issuer does not have a provider in
its network that can provide the recommended preventive services,
the plan or issuer must cover the item or service when performed by
an out-of-network provider and may not impose cost sharing with respect
to the item or service.
Reasonable medical management. The
regulations provide that a plan or issuer can use reasonable medical
management techniques to determine the frequency, method, treatment,
or setting for recommended preventive services to the extent such
details are not specified in the relevant recommendation or guideline.
Insurers and plans must limit any waiting periods for
coverage to 90 days (26 CFR 54.9815-2708). The regulations define
a “waiting period” as the period that must pass before coverage for
an individual, who is otherwise eligible to enroll under the terms
of a group health plan, can become effective. If an individual enrolls
as a late enrollee or a special enrollee, any period before such late
or special enrollment is not a waiting period.
Eligibility. Under the regulations,
in general, for individuals to be eligible to enroll under the terms
of a group health plan, they must have met the plan’s substantive
eligibility conditions. Such eligibility conditions include, for example:
• Being in an eligible job classification;
• Achieving job-related licensure requirements specified
in the plan’s terms; or
• Satisfying a reasonable and bona fide employment-based
However, the regulations make clear that nothing in this
section requires a plan sponsor to offer coverage to any particular
individual or class of individuals (e.g., part-time employees). The
regulations just prohibit requiring otherwise eligible individuals
to wait more than 90 days before coverage is effective.
Eligibility conditions based solely on the lapse of a
time period are permissible for no more than 90 days. Other conditions
for eligibility under the terms of a group health plan are generally
permissible unless the condition is designed to avoid compliance with
the 90-day waiting period limitation.
Variable-hour employees. If a group
health plan conditions eligibility on an employee regularly having
a specified number of hours of service per period (or working full-time),
in some cases, it may not be possible to determine whether a newly
hired employee is reasonably expected to regularly work that number
of hours per period (or work full-time). In this situation, the plan
may take a reasonable period of time to determine whether the employee
meets the plan’s eligibility condition. This “reasonable period of
time” cannot exceed 12 months and must begin on any date between the
employee’s start date and the first day of the first calendar month
following the employee’s start date.
Except in cases in which a waiting period that exceeds
90 days is imposed in addition to a measurement period, the time period
for determining whether such an employee meets the plan’s eligibility
condition will not be considered to be designed to avoid compliance
with the 90-day waiting period limitation if coverage is made effective
no later than 13 months from the employee’s start date plus, if the
employee’s start date is not the first day of a calendar month, the
time remaining until the first day of the next calendar month.
Cumulative service requirements. If a group health plan or health insurance issuer conditions eligibility
on an employee having completed a number of cumulative hours of service,
the eligibility condition is not considered to be designed to avoid
compliance with the 90-day waiting period limitation if the cumulative
hours-of-service requirement does not exceed 1,200 hours.
Limitation on orientation periods. An orientation period is permitted only if it does not exceed 1 month.
For this purpose, 1 month is determined by adding 1 calendar month
and subtracting 1 calendar day, measured from an employee’s start
date in a position that is otherwise eligible for coverage. For example,
if an employee’s start date in an otherwise eligible position is May
3, the last permitted day of the orientation period is June 2.
Counting days. Under this section,
all calendar days are counted beginning on the enrollment date, including
weekends and holidays. A plan or issuer that imposes a 90-day waiting
period may, for administrative convenience, choose to permit coverage
to become effective earlier than the 91st day if the 91st day is a
weekend or holiday.
A health insurance issuer that offers health insurance
coverage in the individual or small group market must ensure that
the coverage includes the essential health benefits package (as discussed
Nongrandfathered plans must provide coverage of certain
costs of clinical trials. Thus, a group health plan will not be allowed
• Deny (or limit or impose additional conditions on) the
coverage of routine patient costs for items and services furnished
in connection with participation in the trial, or
• Discriminate against the individual on the basis of the
individual’s participation in a trial.
Nongrandfathered group health plans must provide patient
• Allow plan participants to choose any participating primary
• Allow participants or beneficiaries to choose a pediatrician
as a child's primary care provider.
• Do not require prior authorization or referrals for visits
to an obstetrician/gynecologist.
• Treat an obstetrician/gynecologist as a primary care
• Provide coverage of emergency care services without prior
authorization and with the same cost sharing both in and out of network
Designation of a primary care provider. If a group health plan or a health insurer issuer offering group
health insurance coverage requires or provides for designation of
a participating primary care provider, the plan or insurer must permit
each participant or beneficiary to name any participating primary
care provider who is available to accept the participant or beneficiary.
The plan or insurer must inform each participant of the provision
on designation of a primary care provider.
Designation of a pediatrician as a primary
care provider. If a group health plan or a health insurer
issuer offering group health insurance coverage requires or provides
for the designation of a participating primary care provider for a
child by a participant or beneficiary, the plan or insurer must permit
the participant or beneficiary to name a physician (allopathic or
osteopathic) who specializes in pediatrics as the child’s primary
care provider if the provider participates in the plan or insurer's
network and is available to accept the child. The plan or insurer
must inform each participant of the provision on designation of a
pediatrician as the child’s primary care provider.
Access to obstetrical and gynecological care. A group health plan or a health insurer issuer offering group health
insurance coverage may not require authorization or referral by the
plan, insurer, or any person (including a primary care provider) if
a female participant or beneficiary seeks coverage for obstetrical
or gynecological care provided by a participating healthcare professional
who specializes in obstetrics or gynecology. The plan or insurer must
inform each participant of the provision on access to obstetrical
and gynecological care. The plan or insurer may require such a professional
to agree to follow its policies and procedures, including procedures
regarding referrals and obtaining prior authorization and providing
services pursuant to a treatment plan (if any) approved by the plan
A healthcare professional who specializes in obstetrics
or gynecology is any individual (including a person other than a physician)
who is authorized under applicable state law to provide obstetrical
or gynecological care.
Obstetrician/gynecologist as primary care provider. A group health plan or a health insurer issuer offering group health
insurance coverage must treat a participating health care professional
who specializes in obstetrics or gynecology the same as a primary
care provider when providing obstetrical and gynecological care and
the ordering related obstetrical and gynecological items and services.
The obstetrical or gynecological provider may be required to notify
the primary care healthcare professional or the plan or insurer of
his or her treatment decisions.
Notice of right to designate a primary care
provider. If a group health plan or insurer requires the
designation of a primary care provider, the plan or insurer must provide
a notice informing each participant of the provision on naming a primary
care provider and the participant's rights in this regard. The notice
must be included whenever the plan or insurer provides a participant
with a summary plan description or other similar description of benefits
under the plan or coverage.
regulations provide model language for use to satisfy this notice
requirement. The model language can be located on the DOL’s website
Coverage of emergency services. If
a group health plan or insurer provides coverage of any emergency
room services for an emergency medical condition, it must cover:
• A medical screening examination that is within the capability
of the emergency department of a hospital, including ancillary services
routinely available to the emergency department to evaluate the condition, and
• Any further medical examination and treatment that is
within the capabilities of the staff and facilities available at the
hospital needed to stabilize the patient and to stabilize the emergency
A plan or insurer must provide coverage for emergency
services as follows:
• Without the need for any prior authorization determination,
even if the emergency services are provided on an out-of-network basis;
• Without regard to whether the healthcare provider furnishing
the emergency services is a participating network provider;
• If the emergency services are provided out of network,
without imposing any administrative requirement or limitation on coverage
that is more restrictive than the requirements or limitations that
apply to emergency services received from in-network providers;
• If the emergency services are provided out of network,
by complying with permitted cost-sharing requirements described below; and
• Without regard to any other term or condition of the
coverage, other than the exclusion of or coordination of benefits;
an affiliation or waiting period permitted by law; or applicable cost
Cost-sharing requirements for emergency services. Any copayment amount or coinsurance rate for out-of-network emergency
services may not exceed the cost-sharing requirement for in-network
services. However, a participant or beneficiary may be required to
pay, in addition to the in-network cost sharing, the excess of the
amount the out-of-network provider charges over the amount the plan
or insurer is required to pay.
A group health plan or insurer is required to provide
emergency services benefits in an amount equal to the greatest of
the three following amounts:
• The amount negotiated with in-network providers for the
emergency service furnished, excluding any in-network copayment or
coinsurance imposed on the participant or beneficiary. If there is
more than one amount negotiated with in-network providers for the
emergency service, the amount is the median of these amounts, excluding
any in-network copayment or coinsurance imposed.
• The amount for the emergency service calculated using
the same method the plan generally uses to determine payments for
out-of-network services (such as the usual, customary, and reasonable
amount), excluding any in-network copayment or coinsurance imposed
with respect to the participant or beneficiary. This amount is determined
without reduction for out-of-network cost sharing that generally applies
under the plan or health insurance coverage with respect to out-of-network
• The amount that would be paid under Medicare Part A or
B for the emergency service, excluding any in-network copayment or
coinsurance imposed with respect to the participant or beneficiary.
Other cost sharing. Any cost-sharing
requirement other than a copayment or coinsurance requirement (such
as a deductible or out-of-pocket maximum) may be imposed for emergency
services provided out of network if the cost-sharing requirement generally
applies to out-of-network benefits. A deductible may be imposed on
out-of-network emergency services only as part of a deductible that
generally applies to out-of-network benefits. If an out-of-pocket
maximum generally applies to out-of-network benefits, that out-of-pocket
maximum must apply to out-of-network emergency services.