When President Bush signed into law the $700 billion economic bailout bill Oct. 3, print, broadcast and online news outlets trumpeted the story across the country. But buried in the avalanche of coverage was news of an unrelated law contained within the bailout package that has important implications for most employers.
The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act requires companies that employ more than 50 people and provide mental illness or substance abuse treatment coverage to do so on the same terms as their physical illness coverage.
The new legislation replaces a 1996 law that required employers to offer the same annual and lifetime maximum benefits for physical and mental illness treatment but was so limited that it was almost meaningless. For example, the old law allowed plan providers to cover fewer outpatient visits and in-patient days and to set much higher co-pays and deductibles for those needing mental illness treatment. It did not require parity for substance abuse treatment coverage.
For most health plans, the law will take effect Jan. 1, 2010 (the exception is plans covered by a labor contract, for which the law takes effect when the current plan terminates). That means most employers have a year to consider their options.