How a Group Plan Has to Match Mental Health Benefits to Medical Ones

Answer first: a comparison rule, not a coverage mandate

The parity regulation states its own purpose, and the phrasing is conditional throughout. Its aim is to ensure that participants and beneficiaries in a group health plan, or in health insurance coverage offered in connection with one, that offers mental health or substance use disorder benefits are not subject to more restrictive aggregate lifetime or annual dollar limits, financial requirements, or treatment limitations with respect to those benefits than the predominant limits, requirements or limitations applied to substantially all medical and surgical benefits in the same classification.

That offers is the operative condition. The rule engages where such benefits are provided; it is a comparison rule rather than a mandate to provide them.

The regulation then states an overarching design instruction. In complying with the statute and these rules, plans and issuers must not design or apply financial requirements and treatment limitations that impose a greater burden on access — that is, are more restrictive — to mental health or substance use disorder benefits than they impose on access to medical and surgical benefits in the same classification of benefits. And it adds an interpretive directive: the provisions should be interpreted in a manner consistent with that purpose.

One point of scope before going further. This is the Labor Department's copy of the rule. Parallel provisions exist in other titles of the Code of Federal Regulations, and the question of which plans are subject to which copy was not researched for this page and is not answered here.

Six classifications, and the requirement to provide meaningful benefits in each

The comparison does not happen across a plan as a whole. It happens inside categories, and the regulation says the categories it names are the only ones used.

They are: inpatient in-network; inpatient out-of-network; outpatient in-network; outpatient out-of-network; emergency care; and prescription drugs. The out-of-network classifications expressly include benefits under a plan that has no network of providers at all, and several of the classifications carry cross-references to special rules for multiple network tiers, office visits and multi-tiered prescription drug arrangements.

The regulation also requires consistency in how benefits are sorted. In determining the classification in which a particular benefit belongs, a plan or issuer must apply the same standards to medical and surgical benefits and to mental health or substance use disorder benefits.

On top of the comparison rule sits a coverage-shaped requirement inside each classification. If a plan provides any benefits for a mental health condition or substance use disorder in any classification, it must provide meaningful benefits for that condition or disorder in every classification in which medical and surgical benefits are provided.

Meaningful is then defined rather than left open. Whether benefits are meaningful is determined in comparison to the benefits provided for medical conditions and surgical procedures in the classification, and requires at a minimum coverage of benefits for that condition or disorder in each classification in which the plan provides benefits for one or more medical conditions or surgical procedures.

The regulation adds a second, sharper element. A plan does not provide meaningful benefits unless it provides benefits for a core treatment for that condition or disorder in each classification in which it provides benefits for a core treatment for one or more medical conditions or surgical procedures. A core treatment is defined as a standard treatment or course of treatment, therapy, service, or intervention indicated by generally recognized independent standards of current medical practice. Where there is no core treatment for a covered condition in a classification, the plan need not provide one there — but must still provide benefits for that condition in every classification in which medical and surgical benefits are provided.

The two-thirds test and the more-than-one-half test

For financial requirements and quantitative treatment limitations, the comparison is done with two arithmetic tests, and both are stated as fractions rather than as judgments.

The first establishes whether a type of requirement may be applied at all. A type of financial requirement or quantitative treatment limitation is considered to apply to substantially all medical and surgical benefits in a classification if it applies to at least two-thirds of all medical and surgical benefits in that classification. If it does not apply to at least two-thirds, then that type cannot be applied to mental health or substance use disorder benefits in that classification.

That is a strong rule and it is easy to miss on a first reading. Failing the two-thirds test does not merely cap the level of a requirement; it removes the type of requirement from the mental health side of that classification entirely.

The regulation attaches a counting convention. Benefits expressed as subject to a zero level of a type of financial requirement are treated as benefits not subject to that type. Benefits expressed as subject to a quantitative treatment limitation that is unlimited are treated as benefits not subject to that type of limitation.

The second test establishes the level. Where a type applies to at least two-thirds of medical and surgical benefits in a classification, the predominant level of that type is the level that applies to more than one-half of the medical and surgical benefits in that classification that are subject to the requirement.

The terms being sorted are defined. Financial requirements include deductibles, copayments, coinsurance, or out-of-pocket maximums, and expressly do not include aggregate lifetime or annual dollar limits, which are handled separately. Cumulative financial requirements are those that determine whether or to what extent benefits are provided based on accumulated amounts, and include deductibles and out-of-pocket maximums. Cumulative quantitative treatment limitations are limitations based on accumulated amounts, such as annual or lifetime day or visit limits.

Nonquantitative limits, where the comparison is about process

The other half of the rule addresses limits that are not expressed as numbers — prior authorization, medical necessity criteria, network standards, step therapy and the like — and the comparison there is about how the limit was built and applied.

A plan may not impose any nonquantitative treatment limitation with respect to mental health or substance use disorder benefits in any classification that is more restrictive, as written or in operation, than the predominant nonquantitative treatment limitation applied to substantially all medical and surgical benefits in the same classification.

The operative test is comparability and stringency. A plan may not impose such a limitation unless, under the terms of the plan as written and in operation, any processes, strategies, evidentiary standards, or other factors used in designing and applying it to mental health or substance use disorder benefits in the classification are comparable to, and are applied no more stringently than, those used in designing and applying the limitation to medical and surgical benefits in the classification.

Two of those words are defined at length. Factors are all information, including processes and strategies but not evidentiary standards, that a plan considered or relied upon to design a nonquantitative treatment limitation or to determine whether or how it applies. The regulation's examples include provider discretion in determining a diagnosis or the type or length of treatment; clinical efficacy of a proposed treatment or service; licensing and accreditation of providers; claim types with a high percentage of fraud; quality measures; treatment outcomes; severity or chronicity of condition; variability in the cost of an episode of treatment; high cost growth; variability in cost and quality; elasticity of demand; and geographic location.

Evidentiary standards are any evidence, sources, or standards a plan considered or relied upon in designing or applying a factor, including specific benchmarks or thresholds. The regulation says they may be empirical, statistical, or clinical, and names third-party sources such as recognized medical literature, professional standards and protocols including comparative effectiveness studies and clinical trials, published research studies, payment rates for items and services, and clinical treatment guidelines; internal plan or issuer data such as claims or utilization data or network-adequacy criteria; and benchmarks or thresholds such as measures of excessive utilization, cost levels, time or distance standards, or network participation percentage thresholds.

The regulation also prohibits building a limitation on a discriminatory basis. For purposes of determining comparability and stringency, a plan may not rely upon discriminatory factors or evidentiary standards to design a nonquantitative treatment limitation imposed on mental health or substance use disorder benefits, and it supplies a test keyed to whether the information, evidence, sources or standards on which the factor or standard is based are biased in the way the regulation goes on to describe.

The written comparative analysis, and what a plan has to be able to produce

A separate section turns the nonquantitative rule into a documentation obligation, and this is the part that has the most practical consequence.

Where a group health plan provides both medical and surgical benefits and mental health or substance use disorder benefits, and imposes any nonquantitative treatment limitation on the latter, the plan or issuer must perform and document a comparative analysis of the design and application of each such limitation. Each analysis must comply with the content requirements and be made available to the Secretary on request in the manner the section specifies.

The scope is per-limitation rather than per-plan. There is an analysis for each nonquantitative treatment limitation applicable to mental health or substance use disorder benefits.

In addition, each plan or issuer must prepare and make available to the Secretary on request a written list of all nonquantitative treatment limitations imposed under the plan or coverage. The regulation says that list must be provided to the named fiduciaries of the plan, who are required to include a certification as part of each comparative analysis.

The content requirements begin with identification. The analysis must identify the limitation, including the specific terms of the plan or other relevant terms regarding it, the policies or guidelines, internal or external, in which it appears or is described, and the applicable sections of any other relevant documents, such as provider contracts, that describe it.

The effect of that combination is worth naming plainly. A plan cannot satisfy this by pointing at a policy manual; it has to be able to say where each limitation lives across its own documents and its vendor contracts, and a named fiduciary has to certify the analysis.

How conditions get classified, and where the boundaries come from

One definitional feature of this rule deserves separate attention, because it removes a lever a plan would otherwise have.

Medical and surgical benefits means benefits with respect to items or services for medical conditions or surgical procedures as defined under the terms of the plan and in accordance with applicable federal and state law — but any condition or procedure defined by the plan as being or as not being a medical condition or surgical procedure must be defined consistent with generally recognized independent standards of current medical practice.

Mental health benefits carries the same structure and then goes further. Any condition defined by the plan as being or as not being a mental health condition must be defined consistent with generally recognized independent standards of current medical practice — and to be consistent with those standards, the definition must include all conditions covered under the plan, except for substance use disorders, that fall under any of the diagnostic categories listed in the mental, behavioral and neurodevelopmental disorders chapter, or equivalent chapter, of the most current version of the international classification, or that are listed in the most current version of the diagnostic manual.

So the plan does not get to draw the boundary of what counts as a mental health condition by itself. The boundary is set by external classification systems, and the plan's own definition must include everything falling inside them that the plan covers.

The regulation then fixes what most current means, and it does so with a date written into the text. Each of the two definitions states which edition was the most current version as of November 22, 2024, and provides that a subsequent version published or adopted after that date will be considered the most current version beginning on the first day of the plan year that is one year after the date the subsequent version is published or adopted. Those are the regulation's own words about its own timing, quoted here rather than translated into a claim about which edition governs at any particular moment.

Where the external standards do not address whether something is a medical condition, a surgical procedure, or a mental health condition, the regulation lets plans define it in accordance with applicable federal and state law.