Parity, mentioned in both the Mental Health Parity and Addiction Equity Act of 2008 and in the Affordable Care Act is a concept that is often misunderstood. In an effort to relieve some of this confusion, today we are going to breakdown what parity is and is not, who it applies to and what the purpose of parity is.
What Is Parity?
Parity is defined as equal or equivalent, at symmetry, not favoring one over another, or fairly matched.
What Does Parity Do?
Parity makes sure that if mental health or substance use disorder benefits are being offered, they are being offered equal to medical/surgical benefits.
To help understand this, here are a couple examples if your insurance plan is offering mental health or substance use disorder benefits:
- If your health insurance plan offers out of network medical/surgical benefits, it must then provide out of network mental health and substance abuse benefits.
- If there is not a limit on the number of days or number of visits on medical/surgical benefits, there can’t be a limitation on mental health or substance use disorder benefits.
What Doesn’t Parity Do?
The Mental Health Parity and Addiction Equity Act of 2008 and the Affordable Care Act do not require employers to offer mental health or substance use condition benefits.
Who Does Parity Apply To?
Parity applies to a couple different groups based on the implementation date of the Mental Health Parity and Addiction Equity Act of 2008 and the Affordable Care Act.
The Mental Health Parity and Addiction Equity Act of 2008, effective October 3, 2009, states that health insurance benefits for people who receive insurance through their employer, who insure over 50 people, and choose to offer both mental health or substance use condition benefits must be on parity with the medical/surgical benefits. Parity is also applicable to Medicaid Managed Care Plans. Medicaid Managed Care and Medicaid Managed Care benefits vary from state to state. For more information on Medicaid in your state use healthcare.gov’s insurance and coverage finder.
Through the Affordable Care Act, an estimated 40 million Children’s Health Insurance Program (CHIP) enrollees will have parity as of 2010. Like Medicaid, CHIP and CHIP benefits vary from state to state. For more information on CHIP check out healthcare.gov.
Starting January 1, 2014 the Affordable Care Act also expands parity to people purchasing small employer group insurance plans (employers who have 2- 50 employees) through the State Health Insurance Exchanges and to the newly eligible Medicaid recipients through the Medicaid benchmark health plans. The Affordable Care Act also will extend parity to individual insurance plans.
What’s the Purpose of Parity?
The purpose of parity is to address the discrimination and inequality that historically has existed in insurance policies regarding mental health or substance use disorder benefits.