Mental Health Parity Act: How the Bailout Might Help You

Americans have been very aware of the recent volatility in the economy. But what you may not realize is that the $700 billion rescue package that was passed in early October included an act that will benefit those Americans who are struggling with addiction and/or mental illness.  The official name of the new law is the “Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008” and is named after early proponents of the act, both of whom had relatives with mental illness.

What is the Mental Health Parity Act?

The law requires that health plans treat physical and mental health the same, with the same benefits, treatment limits, and co-payments; insurers cannot have special limits and rules that apply specifically to mental illnesses and disorders. The legislation represents the culmination of twelve years of work on the part of both politicians and advocates for individuals with mental illness.  This would include treatment for substance abuse disorders, in addition to mental illnesses such as schizophrenia, bipolar disorder, and depression.  The law is scheduled to go into effect in about a year.

Why was the act supported?

·        All proponents hope the act will reduce the stigma of mental illness, which may also have been helped by the fact that many veterans of Afghanistan and Iraq have developed mental illness and/or experienced mental trauma.

·        Research continues to demonstrate biological reasons for many severe mental illnesses, and treatments are available.

·        Proponents of the act noted the annual costs to society.  Alcohol and drug abuse, specifically, can cost over $400 billion a year.

Who will benefit?

According to Representative Patrick J. Kennedy from Rhode Island, the legislation will help about 113 million Americans.  If you work for a large employer and your health plan covers both physical and mental ailments, you may benefit from the new law.

Are there any exceptions?

·        If a business sees more than a 2% or 1% increase in the total cost of coverage in the first and subsequent years, respectively, they can file for an exemption in the following year.

·        A non-federal-government employer that self-funds healthcare for its employees (i.e., does not provide healthcare through an insurance company) will be able to opt out.

·        Employers with fewer than 50 employees will be exempt from the act.