Section 632.89, Wis. Stat., applies to group health insurance policies and contracts, self-insured state governmental health plans, and individual health policies issued in Wisconsin providing coverage of nervous and mental health disorders or substance use disorders. However, this law applies to individual policies only to the extent an insurer elects to offer coverage, but it must be done on a parity basis. The law requires these policies to include coverage for inpatient, outpatient, and transitional benefits to treat nervous and mental disorders and substance use disorders.
Federal employee group plans (e.g., postal carrier's plans) and self-insured employer group plans falling within the terms of the federal Employee Retirement Income Security Act (ERISA) of 1974 are exempt from the Wisconsin law. Wisconsin law does not apply to most policies issued to a group based in another state if both the policyholder and group exist primarily for purposes other than to procure insurance, and if fewer than 25% of the insured persons are Wisconsin residents.
The federal Mental Health Parity Act (MHPA), which was enacted in 1996, provides for parity in the application of aggregate lifetime and annual dollar limits on mental health benefits with dollar limits on medical/surgical benefits. MHPA does not apply to substance use disorder benefits. MHPA’s provisions are subject to concurrent jurisdiction by the Department of Labor, the Treasury, and the Department of Health and Human Services.
The federal Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) expanded these requirements, including extending parity rules to substance use disorder benefits. Under MHPAEA, group health plans, insurance companies, and
health maintenance organizations (HMOs) offering mental health benefits may not set annual or lifetime dollar limits on mental health benefits lower than any such dollar limits for medical and surgical benefits. A plan not imposing an annual or lifetime dollar limit on medical and surgical benefits may not impose such a dollar limit on mental health benefits offered under the plan.
MHPAEA requirements apply only to self-funded and large group plans that offer mental health and substance use disorder benefits. MHPAEA does not require health plan to include these benefits, however, if the benefits are offered then insurers or self-funded plans may not impose less favorable benefit limitations for mental health and substance use disorders than are imposed for medical and surgical benefits. MHPAEA was amended by the ACA to also apply to individual health insurance coverage.
Effective January 1, 2014, the federal Affordable Care Act (ACA) requires all non-grandfathered1 individual and small employer plans (1 to 50 employees) to cover the treatment of nervous and mental disorders or substance abuse disorders as an essential health benefit (EHB). The coverage must be provided on a parity basis per MHPAEA and, as an EHB, not be subject to any annual or lifetime dollar limits.
1 A “non-grandfathered plan” is a health plan established after the ACA was enacted or a health plan changed in one or more specified ways since the law’s enactment.