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Internal Revenue Code, § 9812. Parity In Mental Health And Substance Use Disorder Benefits

I.R.C. § 9812(a) In General
I.R.C. § 9812(a)(1) Aggregate Lifetime Limits
In the case of a group health plan that provides both medical and surgical benefits and mental health or substance use disorder benefits—
I.R.C. § 9812(a)(1)(A) No Lifetime Limit
If the plan does not include an aggregate lifetime limit on substantially all medical and surgical benefits, the plan may not impose any aggregate lifetime limit on mental health or substance use disorder benefits.
I.R.C. § 9812(a)(1)(B) Lifetime Limit
If the plan includes an aggregate lifetime limit on substantially all medical and surgical benefits (in this paragraph referred to as the “applicable lifetime limit”), the plan shall either—
I.R.C. § 9812(a)(1)(B)(i)
apply the applicable lifetime limit both to the medical and surgical benefits to which it otherwise would apply and to mental health and substance use disorder benefits and not distinguish in the application of such limit between such medical and surgical benefits and mental health and substance use disorder benefits; or
I.R.C. § 9812(a)(1)(B)(ii)
not include any aggregate lifetime limit on mental health or substance use disorder benefits that is less than the applicable lifetime limit.
I.R.C. § 9812(a)(1)(C) Rule In Case Of Different Limits
In the case of a plan that is not described in subparagraph (A) or (B) and that includes no or different aggregate lifetime limits on different categories of medical and surgical benefits, the Secretary shall establish rules under which subparagraph (B) is applied to such plan with respect to mental health and substance use disorder benefits by substituting for the applicable lifetime limit an average aggregate lifetime limit that is computed taking into account the weighted average of the aggregate lifetime limits applicable to such categories.
I.R.C. § 9812(a)(2) Annual Limits
In the case of a group health plan that provides both medical and surgical benefits and mental health or substance use disorder benefits—
I.R.C. § 9812(a)(2)(A) No Annual Limit
If the plan does not include an annual limit on substantially all medical and surgical benefits, the plan may not impose any annual limit on mental health or substance use disorder benefits.
I.R.C. § 9812(a)(2)(B) Annual Limit
If the plan includes an annual limit on substantially all medical and surgical benefits (in this paragraph referred to as the “applicable annual limit”), the plan shall either—
I.R.C. § 9812(a)(2)(B)(i)
apply the applicable annual limit both to medical and surgical benefits to which it otherwise would apply and to mental health and substance use disorder benefits and not distinguish in the application of such limit between such medical and surgical benefits and mental health and substance use disorder benefits; or
I.R.C. § 9812(a)(2)(B)(ii)
not include any annual limit on mental health or substance use disorder benefits that is less than the applicable annual limit.
I.R.C. § 9812(a)(2)(C) Rule In Case Of Different Limits
In the case of a plan that is not described in subparagraph (A) or (B) and that includes no or different annual limits on different categories of medical and surgical benefits, the Secretary shall establish rules under which subparagraph (B) is applied to such plan with respect to mental health and substance use disorder benefits by substituting for the applicable annual limit an average annual limit that is computed taking into account the weighted average of the annual limits applicable to such categories.
I.R.C. § 9812(a)(3) Financial Requirements And Treatment Limitations
I.R.C. § 9812(a)(3)(A) In General
In the case of a group health plan that provides both medical and surgical benefits and mental health or substance use disorder benefits, such plan shall ensure that—
I.R.C. § 9812(a)(3)(A)(i)
the financial requirements applicable to such mental health or substance use disorder benefits are no more restrictive than the predominant financial requirements applied to substantially all medical and surgical benefits covered by the plan, and there are no separate cost sharing requirements that are applicable only with respect to mental health or substance use disorder benefits; and
I.R.C. § 9812(a)(3)(A)(ii)
the treatment limitations applicable to such mental health or substance use disorder benefits are no more restrictive than the predominant treatment limitations applied to substantially all medical and surgical benefits covered by the plan and there are no separate treatment limitations that are applicable only with respect to mental health or substance use disorder benefits.
I.R.C. § 9812(a)(3)(B) Definitions
In this paragraph:
I.R.C. § 9812(a)(3)(B)(i) Financial Requirement
The term “financial requirement” includes deductibles, copayments, coinsurance, and out-of-pocket expenses, but excludes an aggregate lifetime limit and an annual limit subject to paragraphs (1) and (2).
I.R.C. § 9812(a)(3)(B)(ii) Predominant
A financial requirement or treatment limit is considered to be predominant if it is the most common or frequent of such type of limit or requirement.
I.R.C. § 9812(a)(3)(B)(iii) Treatment Limitation
The term “treatment limitation” includes limits on the frequency of treatment, number of visits, days of coverage, or other similar limits on the scope or duration of treatment.
I.R.C. § 9812(a)(4) Availability Of Plan Information
The criteria for medical necessity determinations made under the plan with respect to mental health or substance use disorder benefits shall be made available by the plan administrator in accordance with regulations to any current or potential participant, beneficiary, or contracting provider upon request. The reason for any denial under the plan of reimbursement or payment for services with respect to mental health or substance use disorder benefits in the case of any participant or beneficiary shall, on request or as otherwise required, be made available by the plan administrator to the participant or beneficiary in accordance with regulations.
I.R.C. § 9812(a)(5) Out-Of-Network Providers
In the case of a plan that provides both medical and surgical benefits and mental health or substance use disorder benefits, if the plan provides coverage for medical or surgical benefits provided by out-of-network providers, the plan shall provide coverage for mental health or substance use disorder benefits provided by out-of-network providers in a manner that is consistent with the requirements of this section.
I.R.C. § 9812(b) Construction
Nothing in this section shall be construed—
I.R.C. § 9812(b)(1)
as requiring a group health plan to provide any mental health or substance use disorder benefits; or
I.R.C. § 9812(b)(2)
in the case of a group health plan that provides mental health or substance use disorder benefits, as affecting the terms and conditions of the plan relating to such benefits under the plan, except as provided in subsection (a).
I.R.C. § 9812(c) Exemptions
I.R.C. § 9812(c)(1) Small Employer Exemption
I.R.C. § 9812(c)(1)(A) In General
This section shall not apply to any group health plan for any plan year of a small employer.
I.R.C. § 9812(c)(1)(B) Small Employer
For purposes of subparagraph (A), the term “small employer” means, with respect to a calendar year and a plan year, an employer who employed an average of at least 2 (or 1 in the case of an employer residing in a State that permits small groups to include a single individual) but not more than 50 employees on business days during the preceding calendar year. For purposes of the preceding sentence, all persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as 1 employer and rules similar to rules of subparagraphs (B) and (C) of section 4980D(d)(2) shall apply.
I.R.C. § 9812(c)(2) Cost Exemption
I.R.C. § 9812(c)(2)(A) In General
With respect to a group health plan, if the application of this section to such plan results in an increase for the plan year involved of the actual total costs of coverage with respect to medical and surgical benefits and mental health and substance use disorder benefits under the plan (as determined and certified under subparagraph (C)) by an amount that exceeds the applicable percentage described in subparagraph (B) of the actual total plan costs, the provisions of this section shall not apply to such plan during the following plan year, and such exemption shall apply to the plan for 1 plan year. An employer may elect to continue to apply mental health and substance use disorder parity pursuant to this section with respect to the group health plan involved regardless of any increase in total costs.
I.R.C. § 9812(c)(2)(B) Applicable Percentage
With respect to a plan, the applicable percentage described in this subparagraph shall be—
I.R.C. § 9812(c)(2)(B)(i)
2 percent in the case of the first plan year in which this section is applied; and
I.R.C. § 9812(c)(2)(B)(ii)
1 percent in the case of each subsequent plan year.
I.R.C. § 9812(c)(2)(C) Determinations By Actuaries
Determinations as to increases in actual costs under a plan for purposes of this section shall be made and certified by a qualified and licensed actuary who is a member in good standing of the American Academy of Actuaries. All such determinations shall be in a written report prepared by the actuary. The report, and all underlying documentation relied upon by the actuary, shall be maintained by the group health plan for a period of 6 years following the notification made under subparagraph (E).
I.R.C. § 9812(c)(2)(D) 6-Month Determinations
If a group health plan seeks an exemption under this paragraph, determinations under subparagraph (A) shall be made after such plan has complied with this section for the first 6 months of the plan year involved.
I.R.C. § 9812(c)(2)(E) Notification
I.R.C. § 9812(c)(2)(E)(i) In General
A group health plan that, based upon a certification described under subparagraph (C), qualifies for an exemption under this paragraph, and elects to implement the exemption, shall promptly notify the Secretary, the appropriate State agencies, and participants and beneficiaries in the plan of such election.
I.R.C. § 9812(c)(2)(E)(ii) Requirement
A notification to the Secretary under clause (i) shall include—
I.R.C. § 9812(c)(2)(E)(ii)(I)
a description of the number of covered lives under the plan involved at the time of the notification, and as applicable, at the time of any prior election of the cost-exemption under this paragraph by such plan;
I.R.C. § 9812(c)(2)(E)(ii)(II)
for both the plan year upon which a cost exemption is sought and the year prior, a description of the actual total costs of coverage with respect to medical and surgical benefits and mental health and substance use disorder benefits under the plan; and
I.R.C. § 9812(c)(2)(E)(ii)(III)
for both the plan year upon which a cost exemption is sought and the year prior, the actual total costs of coverage with respect to mental health and substance use disorder benefits under the plan.
I.R.C. § 9812(c)(2)(E)(iii) Confidentiality
A notification to the Secretary under clause (i) shall be confidential. The Secretary shall make available, upon request and on not more than an annual basis, an anonymous itemization of such notifications, that includes—
I.R.C. § 9812(c)(2)(E)(iii)(I)
a breakdown of States by the size and type of employers submitting such notification; and
I.R.C. § 9812(c)(2)(E)(iii)(II)
a summary of the data received under clause (ii).
I.R.C. § 9812(c)(2)(F) Audits By Appropriate Agencies
To determine compliance with this paragraph, the Secretary may audit the books and records of a group health plan relating to an exemption, including any actuarial reports prepared pursuant to subparagraph (C), during the 6 year period following the notification of such exemption under subparagraph (E). A State agency receiving a notification under subparagraph (E) may also conduct such an audit with respect to an exemption covered by such notification.
I.R.C. § 9812(d) Separate Application To Each Option Offered
In the case of a group health plan that offers a participant or beneficiary two or more benefit package options under the plan, the requirements of this section shall be applied separately with respect to each such option.
I.R.C. § 9812(e) Definitions
For purposes of this section:
I.R.C. § 9812(e)(1) Aggregate Lifetime Limit
The term “aggregate lifetime limit” means, with respect to benefits under a group health plan, a dollar limitation on the total amount that may be paid with respect to such benefits under the plan with respect to an individual or other coverage unit.
I.R.C. § 9812(e)(2) Annual Limit
The term “annual limit” means, with respect to benefits under a group health plan, a dollar limitation on the total amount of benefits that may be paid with respect to such benefits in a 12-month period under the plan with respect to an individual or other coverage unit.
I.R.C. § 9812(e)(3) Medical Or Surgical Benefits
The term “medical or surgical benefits” means benefits with respect to medical or surgical services, as defined under the terms of the plan, but does not include mental health or substance use disorder benefits.
I.R.C. § 9812(e)(4) Mental Health Benefits
[Struck. Pub. L. 110-343, Div. C, Sec. 512(c)(4).]
I.R.C. § 9812(e)(4) Mental Health Benefits
The term “mental health benefits” means benefits with respect to services for mental health conditions, as defined under the terms of the plan and in accordance with applicable Federal and State law.
I.R.C. § 9812(e)(5) Substance Use Disorder Benefits
The term “substance use disorder benefits” means benefits with respect to services for substance use disorders, as defined under the terms of the plan and in accordance with applicable Federal and State law.
I.R.C. § 9812(f) Application Of Section
[Struck. Pub. L. 110-343, Div. C, Sec. 512(c)(5).]
Added by . Pub. L. 105-34, title XV, Sec. 1531(a)(4), Aug. 5, 1997, 111 Stat. 788; Amended by Pub. L. 107-147, title VI, Sec. 610, Mar. 9, 2002, 116 Stat. 21; Pub. L. 108-311, title III, Sec. 302(a), Oct. 4, 2004, 118 Stat. 1166; Pub. L. 109-151, Sec. 1(c), Dec. 30, 2005, 119 Stat. 2886; Pub. L. 109-432, div. A, title I, Sec. 115(a), Dec. 20, 2006, 120 Stat. 2922; Pub. L. 110-245, Sec. 401(a), June 17, 2008, 122 Stat. 1624; Pub. L. 110-343, div. C, title V, Sec. 512(c), (g), Oct. 3, 2008, 122 Stat. 3765; Pub. L. 115-141, Div. U, title IV, Sec. 401(a)(349), Mar. 23, 2018, 132 Stat. 348.)
BACKGROUND NOTES
AMENDMENTS
2018 - Subsec. (a)(3)(B)(i). Pub. L. 115-141, Div. U, Sec. 401(a)(349), amended clause (i) by substituting a period for the comma at the end.
2008 - Sec. 9812. Pub. L. 110-343, Div. C, Sec. 512(g), amended the heading of Sec. 9812 by substituting “Parity In Mental Health And Substance Use Disorder Benefits” for “Parity In The Application Of Certain Limits To Mental Health Benefits”.
Sec. 9812. Pub. L. 110-343, Div. C, 512(c)(6), (7), amended Sec. 9812 by substituting “mental health and substance use disorder benefits” for “mental health benefits” each place it appears in subsec. (a)(1)(B)(i), (a)(1)(C), (a)(2)(B)(i), and (a)(2)(C), and by substituting “mental health or substance use disorder benefits” for “mental health benefits" in any other provision.
Subsec. (a)(3)-(5). Pub. L. 110-343, Div. C, Sec. 512(c)(1), amended subsec. (a) by adding par. (3), (4), and (5).
Subsec. (b)(2). Pub. L. 110-343, Div. C, Sec. 512(c)(2), amended par. (2). Before amendment it read as follows:
“(2) in the case of a group health plan that provides mental health benefits, as affecting the terms and conditions (including cost sharing, limits on numbers of visits or days of coverage, and requirements relating to medical necessity) relating to the amount, duration, or scope of mental health benefits under the plan, except as specifically provided in subsection (a) (in regard to parity in the imposition of aggregate lifetime limits and annual limits for mental health benefits).”
Subsec. (c)(1). Pub. L. 110-343, Div. C, Sec. 512(c)(3)(A), amended par. (1). Before amendment, it read as follows:
“(1) Small Employer Exemption.—This section shall not apply to any group health plan for any plan year of a small employer (as defined in section 4980D(d)(2)).”
Subsec. (c)(2). Pub. L. 110-343, Div. C, Sec. 512(c)(3)(B), amended par. (2). Before amendment, it read as follows:'
“(2) Increased Cost Exemption.— This section shall not apply with respect to a group health plan if the application of this section to such plan results in an increase in the cost under the plan of at least 1 percent.”
Subsec. (e)(4)-(5). Pub. L. 110-343, Div. C, Sec. 512(c)(4), struck par. (4) and added par. (4) and (5). Before being struck, par. (4) read as follows:
“(4) Mental Health Benefits.— The term “mental health benefits” means benefits with respect to mental health services, as defined under the terms of the plan, but does not include benefits with respect to treatment of substance abuse or chemical dependency.”
Subsec. (f). Pub. L. 110-343, Div. C, Sec. 512(c)(5), struck subsec. (f). Before being struck, it read as follows:
“(f) Application Of Section.— This section shall not apply to benefits for services furnished--
“(1) on or after September 30, 2001, and before January 10, 2002,
“(2) on or after January 1, 2004, and before the date of the enactment of the Working Families Tax Relief Act of 2004,
“(3) on or after January 1, 2008, and before the date of the enactment of the Heroes Earnings Assistance and Relief Tax Act of 2008, and
“(4) after December 31, 2008.”
Subsec. (f)(2)-(4). Pub. L. 110-245, Sec. 401(a), amended subsec. (f) by striking “and” at the end of par. (2); by striking par. (3); and by adding new par. (3) and (4). Before being struck, par. (3) read as follows:
“(3) after December 31, 2007.”.
2006 - Subsec. (f)(3). Pub. L. 109-432, Sec. 115(a), amended par. (3) by substituting “2007” for “2006”.
2005 - Subsec. (f)(3). Pub. L. 109-151, Sec. 1(c), amended par. (3) by substituting “December 31, 2006” for “December 31, 2005”.
2004 - Subsec. (f)(1). Pub. L. 108-311, Sec. 302(a)(1), amended par. (1) by striking “and” at the end.
Subsec. (f)(2)-(3). Pub. L. 108-311, Sec. 302(a)(2), amended subsec. (f) by striking par. (2) and adding new par. (2) and (3). Before amendment, par. (2) read as follows:
“(2) after December 31, 2003.”
2002 - Subsec. (f). Pub. L. 107-147, Sec. 610, amended subsec. (f). Prior to amendment it read as follows:
“(f) Sunset.-- This section shall not apply to benefits for services furnished on or after September 30, 2001.”
EFFECTIVE DATE OF 2018 AMENDMENT
Amendments by Pub. L. 115-141, Div. U, Sec. 401(a)(349), effective March 23, 2018.
EFFECTIVE DATE OF 2008 AMENDMENTS
Amendments by Sec. 512(c) of Pub. L. 110-343, Div. C, effective with respect to group health plans for plan years beginning after the date that is 1 year after the date of enactment of this Act [Enacted: Oct. 3, 2008], regardless of whether regulations have been issued to carry out such amendments by such effective date, except that the amendments made by subsections (c)(5), relating to striking of certain sunset provisions, shall take effect on January 1, 2009. Sec. 512(e)(2) of Pub. L. 110-343, Div. C, as amended by Pub. L. 110-460, Sec. 1, provided the following special rule:
“SPECIAL RULE FOR COLLECTIVE BARGAINING AGREEMENTS.—In the case of a group health plan maintained pursuant to one or more collective bargaining agreements between employee representatives and one or more employers ratified before the date of the enactment of this Act, the amendments made by this section shall not apply to plan years beginning before the later of—
“(A) the date on which the last of the collective bargaining agreements relating to the plan terminates (determined without regard to any extension thereof agreed to after the date of the enactment of this Act), or
“(B) January 1, 2010.
“For purposes of subparagraph (A), any plan amendment made pursuant to a collective bargaining agreement relating to the plan which amends the plan solely to conform to any requirement added by this section shall not be treated as a termination of such collective bargaining agreement.”
Amendment by Sec. 512(g) of Pub. L. 110-343, Div. C, effective on the date of the enactment of this Act [Enacted: Oct. 3, 2008].
Amendments by Sec. 401(a) of Pub. L. 110-245 effective on the date of the enactment of this Act [Enacted: June 17, 2008].
EFFECTIVE DATE OF 2006 AMENDMENT
Amendment by Sec. 115(a) of Pub. L. 109-432 effective on the date of the enactment of this Act [Enacted: Dec. 20, 2006].
EFFECTIVE DATE OF 2005 AMENDMENT
Amendment by Sec. 1(c) of Pub. L. 109-151 effective on the date of the enactment of this Act [Enacted: Dec. 30, 2005].
EFFECTIVE DATE OF 2004 AMENDMENTS
Amendments by Sec. 302(a) of Pub. L. 108-311 effective on the date of the enactment of this Act [Enacted: Oct. 4, 2004].
EFFECTIVE DATE OF 2002 AMENDMENT
Amendment by Sec. 610 of Pub. L. 107-147 effective for plan years beginning after December 31, 2000.
COVERAGE OF TESTING FOR COVID–19
Section 6001 of Pub. L. 116-127 provided:
“SEC. 6001. COVERAGE OF TESTING FOR COVID–19.
“(a) IN GENERAL.—A group health plan and a health insurance issuer offering group or individual health insurance coverage (including a grandfathered health plan (as defined in section 1251(e) of the Patient Protection and Affordable Care Act)) shall provide coverage, and shall not impose any cost sharing (including deductibles, copayments, and coinsurance) requirements or prior authorization or other medical management requirements, for the following items and services furnished during any portion of the emergency period defined in paragraph (1)(B) of section 1135(g) of the Social Security Act (42 U.S.C. 1320b–5(g)) beginning on or after the date of the enactment of this Act:
“(1) In vitro diagnostic products (as defined in section 809.3(a) of title 21, Code of Federal Regulations) for the detection of SARS–CoV–2 or the diagnosis of the virus that causes COVID–19 that are approved, cleared, or authorized under section 510(k), 513, 515 or 564 of the Federal Food, Drug, and Cosmetic Act, and the administration of such in vitro diagnostic products.
“(2) Items and services furnished to an individual during health care provider office visits (which term in this paragraph includes in-person visits and telehealth visits), urgent care center visits, and emergency room visits that result in an order for or administration of an in vitro diagnostic product described in paragraph (1), but only to the extent such items and services relate to the furnishing or administration of such product or to the evaluation of such individual for purposes of determining the need of such individual for such product.
“(b) ENFORCEMENT.—The provisions of subsection (a) shall be applied by the Secretary of Health and Human Services, Secretary of Labor, and Secretary of the Treasury to group health plans and health insurance issuers offering group or individual health insurance coverage as if included in the provisions of part A of title XXVII of the Public Health Service Act, part 7 of the Employee Retirement Income Security Act of 1974, and subchapter B of chapter 100 of the Internal Revenue Code of 1986, as applicable.
“(c) IMPLEMENTATION.—The Secretary of Health and Human Services, Secretary of Labor, and Secretary of the Treasury may implement the provisions of this section through sub-regulatory guidance, program instruction or otherwise.
“(d) TERMS.—The terms ‘‘group health plan’’; ‘‘health insurance issuer’’; ‘‘group health insurance coverage’’, and ‘‘individual health insurance coverage’’ have the meanings given such terms in section 2791 of the Public Health Service Act (42 U.S.C. 300gg–91), section 733 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1191b), and section 9832 of the Internal Revenue Code of 1986, as applicable.”
ASSURING COORDINATION
Pub. L. 110-343, Div. C, Sec. 512(f), provided that:
“(f) Assuring Coordination.—The Secretary of Health and Human Services, the Secretary of Labor, and the Secretary of the Treasury may ensure, through the execution or revision of an interagency memorandum of understanding among such Secretaries, that—
“(1) regulations, rulings, and interpretations issued by such Secretaries relating to the same matter over which two or more such Secretaries have responsibility under this section (and the amendments made by this section) are administered so as to have the same effect at all times; and
“(2) coordination of policies relating to enforcing the same requirements through such Secretaries in order to have a coordinated enforcement strategy that avoids duplication of enforcement efforts and assigns priorities in enforcement.”
EFFECTIVE DATE
Applicable with respect to group health plans for plan years beginning on or after January 1, 1998.