LEGAL UPDATE: End of Mental Health Parity Opt-Out for Self-funded, Non-Federal Governmental Health Plans

The Consolidated Appropriations Act, 2023 (CAA), which was signed into law on Dec. 29, 2022, sunsets the ability of self-funded, non-federal governmental health plans to opt out of the parity requirements for mental health and substance use disorder benefits under the Mental Health Parity and Addiction Equity Act (MHPAEA).

On June 7, 2023, the Centers for Medicare and Medicaid Services (CMS) issued a bulletin describing the sunset date for MHPAEA’s opt-out election for self-funded, non-federal governmental health plans.

Opt-Out Elections

Sponsors of self-funded, non-federal governmental health plans may opt out of complying with the following benefit mandates:

• Minimum hospital stays and coverage requirements for newborns and mothers under the Newborns’ and Mothers’ Health Protection Act;
• Coverage for reconstructive surgery following mastectomies under the Women’s Health and Cancer Rights Act; and
• Coverage of dependent students on medically necessary leaves of absence (Michelle’s Law).

Prior to the CAA, self-funded, non-federal governmental health plans could also elect to opt out of compliance with MHPAEA’s requirements.

The opt-out election for self-funded, non-federal governmental plans is not automatic. To receive an exemption, health plans must submit their elections to CMS through the federal Health Insurance Oversight System (HIOS). An election applies for a single plan year or, in the case of a plan provided pursuant to a collective bargaining agreement (CBA), for all plan years covered by the agreement.

Sunset Dates

The CAA eliminated the option for self-funded, non-federal governmental plans to apply for a new exemption from MHPAEA, effective Dec. 29, 2022. Plans with existing MHPAEA opt-out elections that expire on or after June 27, 2023, cannot renew them.

However, as detailed in CMS’ bulletin, there is a special sunset rule for self-funded, non-federal governmental plans that are subject to multiple CBAs of varying lengths and have MHPAEA opt-out elections expiring on or after June 27, 2023.

These plans may renew their MHPAEA opt-out elections until the date on which the term of the last CBA expires. CMS’ bulletin explains the process for these plans to extend their MHPAEA exemptions. This process includes providing CMS with documentation of the effective dates and terms of CBAs, receiving approval from CMS and then electronically submitting an MHPAEA opt-out renewal in HIOS.

PLEASE NOTE: The information contained in this notice is not legal advice and should not be relied upon or construed as legal advice. This letter is for general informational purposes only and does not purport to be complete or cover every situation. Please consult your own legal advisors to determine how these laws affect you.

Important Dates:

The CAA sunsets the MHPAEA opt-out election for self-funded, non-federal governmental health plans, effective as follows:

• No new elections for MHPAEA exemptions can be made on or after Dec. 29, 2022 (the date of the CAA’s enactment);
• Existing MHPAEA exemptions that expire on or after June 27, 2023, cannot be renewed; and
• Plans that are subject to multiple CBAs of varying lengths can extend existing MHPAEA exemptions until the term of the last CBA expires.

If you have any questions or would like additional information, please complete the form below: