Mental Health Insurance Parity
“Mental health parity” is the term used to describe the effort to create an equal health insurance system that covers mental illness in the same way it covers physical illnesses.
According to a survey conducted by the American Psychological Association (APA), the main obstacles reported by people in need of mental health services who are unable to obtain help are the strict limits imposed by their insurance carriers. These limitations extend to inpatient and outpatient mental health services, with most of these services restricted by the number of visits allowed and/or a dollar cap for services.
In 1996 Congress passed the first national legislation affecting the availability of mental health insurance. Popularly known as the Domenici-Wellstone mental health parity amendment, its formal name is the Mental Health Parity Act of 1996. This law prohibits insurers from imposing lifetime and annual benefit limits on mental health services that they do not impose on services for physical health. Before this law was passed, an insurance plan would typically cap lifetime mental health benefits at $50,000 while capping physical health benefits at $100,000.
Although the Mental Health Parity Act of 1996 was an important first step, it allows numerous exemptions and other limits on coverage for mental health patients. As a result of these loopholes, most regulation of the nation's health insurers is done through state laws. At this time, no state has full parity, although states vary widely in what they do require of private insurers in mental health coverage. You can find out what the law says in your state by contacting NAMI at 703-516-7969, or go online to
Know Your State Law
As you research your state's minimum requirements, you may encounter several unfamiliar terms used to define the type of law and the types of policies affected (individual, employee group, or HMO). Also relevant will be the types of conditions covered, as outlined above. Here are some other basic terms you will encounter.
Comprehensive Parity: Equal coverage of a broad range of mental health conditions, including substance abuse disorders, with no exempted policy types.
Broad-based Parity: Equal coverage of a broad range of mental health conditions, with some limitations or exemptions.
Limited Parity: Limits equal coverage to a specific list of mental health conditions. Allows plans to opt out due to cost increases.
Mandated if Offered: Requires that mental health coverage be equal to other medical conditions if the plan offers mental health coverage.
Mandated Offering: Requires a plan to offer an option of mental health coverage that is equal to coverage of other medical conditions.
Minimum Mandated Benefit: Mandates minimum mental health coverage that is not required to be equal to that for other medical conditions.
Unfortunately, the patchwork quality of these laws puts the onus on consumers to find out what you are entitled to under your state's law. Then you will also have to check individual private insurer's offerings to verify whether they are obeying the state law. For example, California has a Limited Parity state law affecting only employee groups of fifty or more, and excluding state employees. Coverage extends to broad-based mental health disorders and substance abuse disorders. In contrast, Connecticut has Comprehensive Parity affecting individual and group policies, and covering broad-based mental health disorders and substance abuse disorders. However, the CT law excludes mental retardation and learning disorders.
