Mental Health Parity: What Employers Need to Know

The Mental Health Parity and Addiction Equity Act (MHPAEA) is a federal law that requires group health plans that offer mental health and substance use disorder (MH/SUD) benefits to provide those benefits on par with medical and surgical benefits. This means plans cannot impose more restrictive financial requirements, treatment limits, or administrative practices on MH/SUD benefits than those applied to medical and surgical coverage.

Parity applies across cost-sharing (such as deductibles and copays), visit or day limits, and non-quantitative treatment limits (NQTLs), including prior authorization, medical necessity criteria, network standards, and reimbursement practices.

MHPAEA generally applies to employer-sponsored group health plans with more than 50 employees, including both fully insured and self-funded plans. In addition, small group fully insured plans are subject to mental health parity requirements under the Affordable Care Act.

Employer Considerations

While Mental Health Parity requirements are not new, enforcement activity has increased in recent years. Most health plans are already designed to comply with these rules, and no specific action is required unless an issue is identified. Employers should continue to work with their plan partners to maintain compliance and respond to any regulatory or participant requests as they arise.

Employers should be aware that mental health parity remains an area of regulatory focus, particularly around how mental health benefits are administered in practice. Federal agencies may review plan design, operational practices, and documentation during audits to ensure parity requirements are being met.

Recent Regulatory Update

Federal agencies issued updated rules in September 2024 intended to strengthen mental health parity requirements, particularly related to non-quantitative treatment limits. However, enforcement of these new rules has been temporarily paused while litigation is ongoing. In the meantime, employers are expected to continue complying with existing mental health parity requirements under prior guidance.

Prescription Drug Data Collection (RxDC) Reporting

Prescription Drug Data Collection (RxDC) reporting is a federal requirement under the Consolidated Appropriations Act, 2021. It requires health plans and health issuers to submit certain information related to prescription drug costs and healthcare spending to the federal government.

RxDC reporting is a recurring obligation and applies to both full insured, level-funded, and self-funded group health plans. In most cases, carriers and third-party administrators handle the majority of the reporting on behalf of employers, with limited employer involvement.

Employer Considerations

RxDC reporting requirements are not new, and most plans already have reporting processes in place through their carriers or vendors.

Employers may receive requests from carriers or vendors for confirmation of plan information or reporting responsibility. Employers should continue to work with their plan partners and respond to any requests as needed.

New Law Demands Prescription Drug Pricing Transparency from Pharmacy Benefit Managers

New rules are coming for pharmacy benefit managers—and they could reshape how your health plan pays for prescriptions.

The Consolidated Appropriations Act, 2026 will require PBMs to share detailed drug pricing, rebate, and compensation data with group health plans, giving employers far more insight into true prescription costs and PBM margins.

If you sponsor a health plan, now is the time to start evaluating your PBM arrangement and contracts before these transparency rules take effect in 2029.

Read more about what’s changing and what employers should be thinking about. Read the full article →

Heart Health Month

February is American Heart Month, originally proclaimed by Lyndon B. Johnson as a nationwide observance that spotlights cardiovascular disease and encourages us all to take time to check our cardiovascular health.

Question of the Month

Q. An employee and his spouse are under age 26 and covered by their respective parents’ health plans. His wife’s father will be leaving his job soon and the wife will lose coverage. Is this a qualifying event for both the employee and his wife to enroll in the employee’s group plan, or is it a qualifying event for only the wife, who would need to look for an individual plan?

A. The law permits the employee to enroll in his employer’s plan in this case due to his wife losing coverage under another employer’s group health plan. This would be a qualifying life event for the employee, and the employee is entitled to enroll himself and any dependents (including his spouse) in his employer’s plan as a result of the wife’s loss of coverage.

Answers to the Question of the Month are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.