Mental Health Parity Act

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 Is Health Insurance Mandatory?

At the federal level, health insurance coverage is not mandatory. There are some states that do require individuals to have health insurance in order to avoid paying a tax penalty.

Not having health insurance coverage may save an individual money in the short term because they are not paying the insurance premium cost. However, it may put an individual at risk if they become injured or ill.

Are There Laws to Protect Consumers From Health Insurance Discrimination?

Yes, there are different rules and regulations that protect consumers from discrimination in health insurance. One of the main laws is the Affordable Care Act, also known as the ACA or Obamacare.

Under the ACA, it is illegal for insurance companies to deny individuals coverage based on pre-existing conditions. Pre-existing conditions, or pre-existing illnesses, are illnesses that individuals have before they apply for their health insurance plans.

Pre-existing conditions may also include chronic or long-term conditions. In some situations, pregnancy may also be categorized as a pre-existing condition for the purposes of health insurance policies.

Under federal laws, insurance companies are not permitted to deny individuals coverage due to their:

  • Race;
  • Color;
  • National origin;
  • Sex;
  • Age;
  • Disability.

There are also other insurance rules, regulations, and laws that may apply, including the Health Insurance Portability and Accountability Act (HIPAA) and the Employee Retirement Security Act (ERISA). Under these laws, insured and retired employees are given additional protections.

What Is the Mental Health Parity Act?

The Mental Health Parity Act is a law that is intended to end the practice that health providers engage in by offering fewer benefits on health plans for mental disorders than physical disorders.

Why Was This Law Necessary?

It is estimated that around 90% of available employee benefits packages do not provide adequate mental health benefits. Even though mental health benefits were available on employee health plans, there was a low annual dollar amount limit on expenses related to mental health.

Is There Any Limitation to This Act I Should Understand?

One of the key limitations of the act is that it applies only to health insurance plans and insurers that cover mental disorders. The act does not mandate coverage for mental disorders if no coverage is provided.

Another limitation of the act is that it does not cover businesses that have 50 or less than 50 employees. An additional limitation is that the act only covers mental illness.

It does not cover treatment for chemical dependency or substance abuse.

How Does the Act Define “Mental Health”?

The act does not define mental illness. Instead, it just provides that it applies to mental health services in individual health plans.

Whatever mental health services the plan does cover, it is required to cover them at the same level as physical health services.

Does the Act Have Loopholes?

Critics of the law have argued that it has too many loopholes and exclusions in order to be effective. Fortunately, numerous states have passed their own parity laws.

Many of these laws provide broader protections.

What Are the Pros and Cons of the Mental Health Parity Act?

There are pros and cons of the Mental Health Parity Act. One of the advantages provided under this act is that large group health plans are not permitted to impose annual or lifetime dollar limits on mental health benefits that are less favorable than those benefits imposed on medical and surgical benefits.

For example, if a plan has parity, it means that when a covered individual is provided unlimited doctor visits for a chronic condition, such as diabetes, then the employer is also required to offer unlimited mental health conditions, for example, schizophrenia or depression. Parity does not mean, however, that an individual will get good mental health coverage.

Cons of the act include that it may be too expensive. Additionally, mental health costs can vary widely, making it difficult to determine the cost.

Other arguments against the act are that an employer would demand coverage for a condition if it was the economically rational thing to do. It is important to examine whether mental health parity would be unduly experienced compared to the costs of untreated mental illnesses.

Employers, under the free market argument, provide that employers act in economically rational fashion. This means that they would demand mental health parity for insurers if mental health issues were having an impact on their bottom line.

What Is HIPAA?

It may be helpful for an individual to be aware of other laws that also apply to health insurance issues, as they often overlap. HIPAA stands for the Health Insurance Portability and Accountability Act.

It is a law that was enacted to reform healthcare in America. HIPAA has several objectives, including:

  • Protect health insurance coverage for employed Americans with pre-existing medical conditions when they change or lose their job;
  • Reduce healthcare fraud and abuse;
  • Enforce standards for health information;
  • Guarantee security and privacy of health information;
  • Protect against unauthorized uses of information;
  • Prevent disclosures of private information; and
  • Preserve the reliability of the information.

What Types of Medical Information Are Protected by HIPAA?

There are many different categories of information that are protected from dissemination under HIPAA, such as:

  • Financial Information;
  • Administrative transactions;
  • Health claim information;
  • Program eligibility information;
  • Health insurance.

Who Must Follow the HIPAA Guidelines?

There are many different medical professionals and entities that are required to abide by the guidelines that are provided by HIPAA, including:

  • Pharmacies;
  • Physicians;
  • Health insurance providers.

When Do Health Insurance Disputes Arise?

There are many different ways in which healthcare disputes may arise. Common examples of different types of health care disputes that may arise include, but are not limited to:

  • Denial of medical benefits or services;
  • Refusal to authorize an insured individual’s medical procedure or hospital visit;
  • Charges for medical services that are incorrect;
  • Cancellation of health insurance policies without notice; and
  • Refusal to carry over a policy when an individual changes jobs.

There are many different parties may be involved in a health care dispute, for example:

  • A person who is insured;
  • Provider of the insurance policy;
  • An employer;
  • A medical company;
  • Others who might be interested.

Typically, health plan disputes involve direct claims between insured individuals and their insurance companies.

What Can I Do if I Have a Health Care Plan Dispute?

Individuals who have health care plan disputes should contact their insurance companies. They should follow several basic steps.

An individual should begin by checking their insurance agreement, including their Summary of Plan Description and Evidence of Insurance Coverage. In order to ensure that the insurance policy covers a disputed claim, it is very important to check the policy.

An individual can contact customer service to request a reversal of the improper charge or an improper denial of coverage.

An individual’s insurance carrier should provide them with a denial of coverage or cancellation letter. The reason for the denial of coverage or cancellation should be provided in the letter.

By law, insurance companies are required to provide notice before they cancel an individual’s coverage. If the customer service department of the insurance company is not able to reverse the improper charge or coverage denial, the individual should write a letter to the carrier disputing the denial or cancellation.

The individual’s insurance carrier will conduct an internal investigation in order to determine whether or not they erroneously denied the individual’s coverage or erroneously canceled their policy.

Because there is no outside agency involved in the resolution of the complaint, it is often referred to as an internal review.

Should I Contact a Lawyer?

If you have any issues, questions, or concerns related to your insurance benefits and the Mental Health Parity Act, you should consult with an insurance lawyer. You should also check with your human resources department to see if your benefits conform with applicable laws.

If you believe your benefits are not adequate or your employer is not providing enough to ensure your benefits are up to legal requirements, your lawyer can help. In some cases, lawyers will take these claims on a contingency basis.

If enough employees bring up the issues, an attorney may also be more willing to take the case.


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