Healthcare compliance is rarely an employer's favorite topic of conversation — but it's a conversation they won't be able to avoid over the next few years.
The Biden administration finalized a rule that expands the Mental Health Parity and Addiction Act, a law that prohibits health plans from placing restrictions on
While most of the rule goes into effect January 2026, it's clear employers will still have their work cut out for them, notes John Reade Jr., a partner at Duane Morris and part of the law firm's employee benefits and executive compensation practice group.
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"The goal of the act came out of the recognition that the Mental Health Parity and Addiction Act has never really gotten the attention it deserves," says Reade. "From an employer perspective, compliance isn't going to be easy, both administratively and financially, but the goal is to finally provide meaningful mental health benefits."
Despite the Mental Health Parity Act being in effect since 2008, mental health coverage is still not common in most plans. In fact, from 2013 to 2017, the gap between how many patients are forced to use out-of-network providers for their
The Department of Labor will put health plans to the test: The finalized rule raised the standard on the nonquantitative treatment limitation (NQTL) analysis, which has required employers to document limitations and exclusions in their coverage since 2021 under the Consolidated Appropriations Act. But now employers will have to include data that speaks to the impact of the limitations on access to mental health and medical benefits; this means many employers will have to reach out to their network administrators, third-party administrators and pharmacy benefit managers, or they won't have the data points they need to complete the analysis.
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"The comparative analysis was more conceptual, and now we've received guidance on what the analysis really needs to look like," says Reade. "The final regulations discuss some of the relevant data tests that need to be performed and confirm there are no discriminatory factors at play with respect to mental health and substance use disorders benefits under the plan."
Reade reminds employers that they will also need the plan's named fiduciaries to review the NQTL analysis and certify in writing that they acted "prudently" in selecting a third-party administrator or other qualified providers to perform and document the comparative analysis.
Reade acknowledges that this version of the Mental Health Parity Act will mean more healthcare expenses upfront, since employers will likely need to add providers to their networks and reimburse mental health providers at a higher rate than they have in the past. But he's hopeful the finalized rule will lead to a healthier, more productive workforce — and he's not alone.
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According to HR solutions provider Bussinessolver, 55% of CEOs and half of employees have experienced mental health issues in the last year. These changes won't make this number drop on its own, but it will help, says Rae Shanahan, chief strategy officer at Businessolver.
"It's a positive thing that we're at least going to attempt to address some of the access and utilization issues around mental health," she says. "Hopefully, this gives employers the opportunity to say, 'Hey, we hear you. We need to treat mental health and physical health consistently.' It gives [employers] a reason to go back to their benefit committees and plan designs and incorporate more holistic mental health support."
However, Shanahan reminds employers that they must go beyond expanded coverage if they want to see a healthier workforce. If there is still stigma around getting help for mental health issues, employees may be hesitant to take advantage of their benefits. And if employers are required to up their mental health care coverage, then they should also work to ensure utilization.
This is where company leaders can make a difference, underlines Shanahan.
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"There are more barriers to care than providers and access," she says. "Fear of how [mental health care] reflects on them as employees is a barrier to utilization. I've had eating challenges growing up. I've had depression. And when I've been open about it, employees appreciate it — it gives them a feeling of safety when they see leaders walking the walk."
Shanahan and Reade are optimistic about what mental health benefits will look like once the rule is fully in effect. However, both acknowledge that the finalized rule will likely be challenged in court, adding an air of uncertainty that typically comes with new regulations. Still, Reade recommends employers get started on complying.
"This isn't something you can comply with overnight," he says. "But ultimately, employees are happier and healthier when they get the mental health care they need, and employers can reap the benefits of a happier and healthier workforce. That's the goal, and it's certainly a noble one."
