The Mental Health Parity and Addiction Equity Act (MHPAEA) became law in 2008 but wasn't "given teeth" until Congress passed the Consolidated Appropriations Act, 2021 (CAA, 2021), which requires employers to evaluate their compliance with the MHPAEA and ensure they provide equal coverage limits for mental health/substance use disorder benefits and medical/surgical benefits. Last April, the Department of Labor (DOL) issued guidance to help plan sponsors and administrators comply with the stepped-up compliance requirements.

Employers that sponsor physical health and mental health coverage are on notice that they can face DOL enforcement actions and be sued by employees if they fail to provide equal coverage for mental health issues.

Mental health parity rules are directed at both insurance carriers and employer-sponsored group health plans. Fully insured employer-sponsored plans, however, often rely on their insurance carriers and trust that their administration is appropriately following the rules. For self-funded plans, employers rely on third-party administrators (TPAs) and, if drug coverage is carved out, pharmacy benefits managers (PBMs).

To stay compliant, employers should ensure that mental and physical health coverage offered are equivalent.