insurance

Mental Health Parity

Mental Health Parity refers to laws requiring insurance plans to provide equal coverage for mental health and substance abuse treatment compared to medical and surgical benefits. This means similar deductibles, copayments, coinsurance, and treatment limitations must apply to both mental health and physical health services.

Example

“Thanks to mental health parity laws, Jessica's therapy sessions have the same $30 copay as her visits to her primary care doctor.”

Memory Tip

Parity means 'equal' - mental health treatment costs should be equal to (not more expensive than) physical health treatment.

Why It Matters

Mental health parity ensures people can access necessary psychological and psychiatric care without facing discriminatory higher costs or more restrictive limitations. This is crucial because untreated mental health conditions can lead to more serious health problems, job loss, and family disruption.

Common Misconception

Many people think mental health parity means all mental health services are fully covered or that there are no limits on treatment. However, parity only requires that mental health benefits have the same terms as medical benefits - if your plan has a $40 specialist copay and prior authorization requirements for physical therapy, the same can apply to mental health specialists and counseling.

In Practice

Susan's health plan has a $2,000 annual deductible and 20% coinsurance for specialist visits. Under mental health parity, her visits to a psychiatrist follow the same cost structure: she pays the full cost until reaching her $2,000 deductible, then pays 20% coinsurance afterward. If her plan covers 12 physical therapy sessions per year without prior authorization, it must also cover 12 mental health counseling sessions under the same terms. When her psychiatrist recommends weekly therapy at $120 per session, she pays 20% ($24) per session after meeting her deductible, the same coinsurance rate she'd pay for other specialist services.

Etymology

The term 'parity' comes from the Latin 'paritas,' meaning equality or equivalence. In insurance context, it emerged in the 1990s as advocates pushed for equal treatment of mental health conditions alongside physical ailments.

Common Misspellings

Mental Health ParitiyMental Health ParatyMental Health PairityMental Heath Parity

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Other insurance terms you should know

deductibleThe amount you pay out-of-pocket before your insurance begin…insurance premiumThe amount paid periodically to an insurance company in exch…deductibleThe amount a policyholder must pay out of pocket before insu…copayA fixed amount paid by an insured person at the time of a me…coinsuranceA cost-sharing arrangement where the insured pays a percenta…out-of-pocket maximumThe most an insured person will pay for covered healthcare s…