FAQS ABOUT AFFORDABLE CARE ACT 
IMPLEMENTATION (PART XVIII) AND MENTAL 
HEALTH PARITY IMPLEMENTATION 
January 9, 2014 
 
Set out below are additional Frequently Asked Questions (FAQs) regarding implementation of 
the market reform provisions of the Affordable Care Act, as well as FAQs regarding 
implementation of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction 
Equity Act of 2008 (MHPAEA), as amended by the Affordable Care Act.  These FAQs have 
been prepared jointly by the Departments of Labor, Health and Human Services (HHS), and the 
Treasury (collectively, the Departments).  Like previously issued FAQs (available at 
http://www.dol.gov/ebsa/healthreform and 
http://www.cciio.cms.gov/resources/factsheets/index.html), these FAQs answer questions from 
stakeholders to help people understand the law and benefit from it, as intended. 
 
 
Coverage of Preventive Services 
 
Public Health Service (PHS) Act section 2713 and the interim final regulations relating to 
coverage of preventive services1 require non-grandfathered group health plans and health 
insurance coverage offered in the individual or group market to provide benefits for, and prohibit 
the imposition of cost-sharing requirements with respect to, the following: 
 
  Evidenced-based items or services that have in effect a rating of "A" or "B" in the current 
recommendations of the United States Preventive Services Task Force (USPSTF) with 
respect to the individual involved, except for the recommendations of the USPSTF 
regarding breast cancer screening, mammography, and prevention issued on or around 
November 2009, which are not considered current;  
  Immunizations for routine use in children, adolescents, and adults that have in effect a 
recommendation from the Advisory Committee on Immunization Practices (ACIP) of the 
Centers for Disease Control and Prevention (CDC) with respect to the individual 
involved;  
  With respect to infants, children, and adolescents, evidence-informed preventive care and 
screenings provided for in the comprehensive guidelines supported by the Health 
Resources and Services Administration (HRSA); and  
  With respect to women, evidence-informed preventive care and screening provided for in 
comprehensive guidelines supported by HRSA, to the extent not already included in the 
current recommendations of the USPSTF.2 
 
                                                            
1 75 FR 41726 (July 19, 2010). 
2 Womens Preventive Services: Required Health Plan Coverage Guidelines (HRSA Guidelines) were adopted and 
released on August 1, 2011, based on recommendations developed by the Institute of Medicine (IOM) at the request 
of HHS. These recommended womens preventive services are required to be covered without cost-sharing, for plan 
years (or, in the individual market, policy years) beginning on or after August 1, 2012. 
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If a recommendation or guideline does not specify the frequency, method, treatment, or setting 
for the provision of that service, the plan or issuer can use reasonable medical management 
techniques to determine any coverage limitations.3 
 
These requirements do not apply to grandfathered health plans.4 
 
Q1:  On September 24, 2013, the USPSTF issued new recommendations with respect to 
breast cancer.5  What changes must plans make to comply with the new recommendations?  
 
The USPSTF recently revised its B recommendation regarding medications for risk reduction 
of primary breast cancer in women.  The September 2013 recommendation now says: 
 
The USPSTF recommends that clinicians engage in shared, informed decisionmaking 
with women who are at increased risk for breast cancer about medications to reduce their 
risk.  For women who are at increased risk for breast cancer and at low risk for adverse 
medication effects, clinicians should offer to prescribe risk-reducing medications, such as 
tamoxifen or raloxifene. 
 
Accordingly, for plan or policy years beginning one year after the date the recommendation or 
guideline is issued (in this case, plan or policy years beginning on or after September 24, 2014), 
non-grandfathered group health plans and non-grandfathered health insurance coverage offered 
in the individual or group market will be required to cover such medications for applicable 
women without cost sharing subject to reasonable medical management.  
 
 
Limitations on Cost-Sharing under the Affordable Care Act 
 
PHS Act section 2707(b), as added by the Affordable Care Act, provides that a non-
grandfathered group health plan shall ensure that any annual cost-sharing imposed under the plan 
does not exceed the limitations provided for under sections 1302(c)(1) and (c)(2) of the 
Affordable Care Act. Section 1302(c)(1) limits out-of-pocket costs and, for small group market 
plans, section 1302(c)(2) limits deductibles.6   
 
For plan or policy years beginning in 2014, the annual limitation on out-of-pocket costs in effect 
under Affordable Care Act section 1302(c)(1) is $6,350 for self-only coverage and $12,700 for 
                                                            
3 See 26 CFR 54.9815-2713T(a)(4), 29 CFR 2590.715-2713(a)(4), and 45 CFR 147.130(a)(4). 
4 In addition, the HRSA Guidelines exempt group health plans established or maintained by certain religious 
employers (and any group health insurance provided in connection with such plans) from any requirement to cover 
contraceptive services that would otherwise apply.  Additionally, accommodations are available for group health 
plans (and any group health insurance provided in connection with such plans) established or maintained by certain 
non-grandfathered, non-profit eligible organizations with religious objections to contraceptive services with respect 
to the requirement to cover contraceptive services.  See 78 FR 39870 (July 2, 2013) and 
http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/preventive-services-guidance-6-28-
2013.pdf.  
5 This Recommendation Statement was first published in Annals of Internal Medicine on September 24, 2013.  See 
http://www.uspreventiveservicestaskforce.org/uspstf13/breastcanmeds/breastcanmedsrs.htm. 
6 The annual limitation on out-of-pocket costs is also applied to non-grandfathered individual market coverage 
through the essential health benefits package requirements of PHS Act section 2707(a). 
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coverage other than self-only coverage.  For plan or policy years beginning after 2014, the 
annual limitation on out-of-pocket costs is increased by the premium adjustment percentage 
described under Affordable Care Act section 1302(c)(4).   
 
A previous FAQ provided guidance on out-of-pocket maximums for the first year of 
applicability where a group health plan or group health insurance issuer utilizes more than one 
service provider to administer benefits that are subject to the annual limitation on out-of-pocket 
costs.7  This guidance generally provided that, for group health plans and group health insurance 
issuers that utilize more than one service provider to administer benefits that are subject to the 
annual limitation on out-of-pocket costs, only for the first plan year beginning on or after January 
1, 2014 (first year of applicability), the Departments will consider the annual limitation on out-
of-pocket costs to be satisfied if: 
 
  The plan complies with the requirements with respect to its major medical coverage 
(excluding, for example, prescription drug coverage and pediatric dental coverage); and  
  To the extent that the plan or any health insurance coverage includes an out-of-pocket 
maximum on coverage that does not consist solely of major medical coverage (for 
example, if a separate out-of-pocket maximum applies with respect to prescription drug 
coverage), that out-of-pocket maximum does not exceed the dollar amounts set forth in 
section 1302(c)(1) of the Affordable Care Act.  
   
Q2: After this first year of applicability, are plans and issuers subject to PHS Act section 
2707 required to apply the out-of-pocket maximum across all essential health benefits? 
 
Yes.  For plan years beginning on or after January 1, 2015, non-grandfathered group health plans 
and group health insurance coverage must have an out-of-pocket maximum which limits overall 
out-of-pocket costs on all essential health benefits (EHB).  Because cost-sharing limits in section 
1302(c) of the Affordable Care Act apply only to EHB, plans are not required to apply the annual 
limitation on out-of-pocket maximums to benefits that are not EHB.  To determine which 
benefits are EHB for purposes of complying with PHS Act section 2707, the Departments will 
consider self-insured group health plans or large group health plans to have used a permissible 
definition of EHB under section 1302(b) of the Affordable Care Act if the definition is one that 
is authorized by the Secretary of HHS.8  Furthermore, the Departments intend to use their 
enforcement discretion and work with large group market and self-insured plans that make a 
good faith effort to apply an authorized definition of EHB.  This approach is consistent with the 
                                                            
7 See Affordable Care Act Implementation FAQs Part XII, Q2, available at http://www.dol.gov/ebsa/faqs/faq-
aca12.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs12.html.  
Transition relief is applicable only for the first plan year beginning on or after January 1, 2014.   
8 The list of the authorized plans for purposes of determining EHB for the large group market and self-funded plans 
is found at 45 CFR 156.100.  See also Frequently Asked Questions on Essential Health Benefits Bulletin, Question 
10 (February 17, 2012), available at: www.cms.gov/CCIIO/Resources/Files/Downloads/ehb-faq-508.pdf.  (For the 
list of base-benchmark plans adopted by the States for use by non-grandfathered health insurance coverage in the 
individual and small group markets, see Patient Protection and Affordable Care Act; Standards Related to Essential 
Health Benefits, Actuarial Value, and Accreditation, 78 FR 12834 (February 25, 2013), Appendix A: List of 
Essential Health Benefit Benchmarks.  For policy documents containing additional details about the base-benchmark 
plans, see the National Association of Insurance Commissioners website, available at: 
http://www.naic.org/index_health_reform_section.htm.)   
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approach the Departments have taken with respect to annual and lifetime limits under PHS Act 
section 2711.9   
 
Q3: Some plans, such as those with multiple service providers, may find it easier to divide 
the annual limit on out-of-pocket costs across multiple categories of benefits, rather than 
reconcile claims across multiple service providers.  Is this permitted, if the combined out-
of-pocket maximum for the year does not exceed the annual limitation under section 
1302(c) of the Affordable Care Act?  
 
Yes.  Plans and issuers are permitted to structure a benefit design using separate out-of-pocket 
limits, provided that the combined amount of any separate out-of-pocket limits applicable to all 
EHBs under the plan does not exceed the annual limitation on out-of-pocket maximums for that 
year under section 1302(c) of the Affordable Care Act.10   
 
Q4:  If a plan includes a network of providers, is the plan required to count an individuals 
out-of-pocket expenses for out-of-network items and services toward the plans annual 
maximum out-of-pocket limit? 
 
No.  A plan may, but is not required to, count out-of-pocket spending for out-of-network items 
and services towards the plans annual maximum out-of-pocket limit.  PHS Act section 2707 sets 
limits on cost sharing with reference to the limitations set forth in section 1302(c) of the 
Affordable Care Act.  Under HHS regulations at 45 CFR 156.130(c) implementing Affordable 
Care Act section 1302(c), cost-sharing requirements for benefits that are EHB from a provider 
outside a plans network of providers are not required to be counted toward the annual limitation 
on out-of-pocket costs.  
 
With respect to health insurance issuers offering qualified health plans (QHPs) through a Health 
Insurance Marketplace (Marketplace) only, as noted in the Interim Final Rule on Maximizing 
January 1, 2014 Coverage Opportunities, 78 Fed. Reg. 76212 (Dec. 17, 2013), HHS strongly 
encourages QHP issuers to allow enrollees to receive in-network benefits with respect to any 
provider listed in the version of the provider directory as of the date of that enrollees enrollment 
for the beginning months of coverage, in cases where issuers are unable to maintain provider 
directories in a current status.  HHS also urges QHP issuers to temporarily cover non-formulary 
drugs, as well as drugs that are on a QHP issuers formulary but typically require prior 
authorization or step therapy prior to being covered, during the first 30 days of coverage, starting 
on January 1, 2014.  Accordingly, under these limited circumstances, HHS strongly encourages 
                                                            
9 Frequently Asked Questions on Essential Health Benefits Bulletin (February 17, 2012), available at: 
http://www.cms.gov/CCIIO/Resources/Files/Downloads/ehb-faq-508.pdf.   
10 The Departments note, however, that regulations implementing MHPAEA prohibit a group health plan or health 
insurance coverage in the group or individual market from applying a cumulative financial requirement or treatment 
limitation, such as an out-of-pocket maximum, to mental health or substance use disorder benefits in a classification 
that accumulates separately from any such cumulative financial requirement or treatment limitation established for 
medical/surgical benefits in the same classification. Accordingly, under MHPAEA, plans and issuers are prohibited 
from imposing an annual out-of-pocket maximum on all medical/surgical benefits in a classification and a separate 
annual out-of-pocket maximum on all mental health and substance use disorder benefits in the same classification.  
See 26 CFR 54.9812-1(c)(3)(v), 29 CFR 2590.712(c)(3)(v), and 45 CFR 146.136(c)(3)(v) and 147.160. 
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QHP issuers to count enrollees out-of-pocket expenses on these services and items toward the 
QHPs annual maximum out-of-pocket limits. 
 
Q5:  Is a plan required to count an individuals out-of-pocket costs for non-covered items 
or services (such as cosmetic services) toward the plans annual maximum out-of-pocket 
limit? 
 
No.  A plan may, but is not required to, count out-of-pocket spending for non-covered services 
towards the plans annual maximum out-of-pocket costs.  The term cost-sharing does not 
include spending for non-covered services.  Under section 1302(c)(3) of the Affordable Care 
Act, the term cost-sharing includes:  
 
  Deductibles, coinsurance, copayments, or similar charges; and  
  Any other expenditure required of an individual which is a qualified medical expense 
(within the meaning of section 223(d)(2) of the Internal Revenue Code (the Code)) with 
respect to EHB covered under the plan.  
 
The term cost-sharing does not include premiums, balance billing amounts for non-network 
providers, or spending for non-covered services. Nothing, however, prohibits a plan or issuer 
from counting such expenses toward the plan's annual maximum out-of-pocket limit, particularly 
in the circumstances described in Q4 above with respect to QHP issuers. 
 
Expatriate Health Plans 
A previous FAQ provided guidance and temporary transitional relief regarding the extent to 
which expatriate health coverage is subject to the provisions of the Affordable Care Act.11   
 
Q6:  Can the Departments provide any additional clarification of the definition of an 
insured expatriate health plan for purposes of the temporary transitional relief, as well as 
additional clarification of the scope of the relief provided?   
Yes.  For purposes of the temporary transitional relief, an insured expatriate health plan is an 
insured group health plan with respect to which enrollment is limited to primary insureds for 
whom there is a good faith expectation that such individuals will reside outside of their home 
country or outside of the United States for at least six months of a 12-month period and any 
covered dependents, and also with respect to group health insurance coverage offered in 
conjunction with the expatriate group health plan.  The 12-month period can fall within a single 
plan year or across two consecutive plan years.   
Also, the earlier guidance only mentioned subtitles A and C of title I of the Affordable Care Act, 
but the Departments will also consider the requirements of subtitle D of title I of the Affordable 
Care Act to be satisfied if a plan and issuer of an insured expatriate health plan complies with the 
pre-Affordable Care Act version of title XXVII of the PHS Act.  
                                                            
11 See Affordable Care Act Implementation FAQs Part XIII, Q1, available at http://www.dol.gov/ebsa/faqs/faq-
aca13.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs13.html.   
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The Departments note that coverage provided under an insured expatriate health plan generally is 
minimum essential coverage under section 5000A of the Code. 
Q7:  Do the Departments intend to issue regulations or provide additional guidance on 
insured expatriate health plans? 
The Departments continue to consider narrowly tailored guidance with respect to insured 
expatriate health plans that takes into account the ability of such coverage to reasonably comply 
with the requirements of subtitles A, C, and D of title I of the Affordable Care Act.  The 
Departments intend that any new regulations or guidance that is more restrictive on plans or 
issuers will not be applicable to plan years ending on or before December 31, 2016.  Insured 
expatriate health plans may continue to rely on the temporary transitional relief set forth in 
Affordable Care Act Implementation FAQs Part XIII, Q1 at least through those plan years.  
 
Wellness Programs 
On June 3, 2013, the Departments issued final regulations12 regarding nondiscriminatory 
wellness programs in group health coverage under PHS Act section 2705 and the related 
provisions of the Employee Retirement Income Security Act (ERISA) and the Code.  The final 
regulations increase the maximum permissible reward under a health-contingent wellness 
program offered in connection with a group health plan (and any related health insurance 
coverage) from 20 percent to 30 percent of the cost of coverage, and further increase the 
maximum permissible reward to 50 percent for wellness programs designed to prevent or reduce 
tobacco use.  The final regulations also address the reasonable design of health-contingent 
wellness programs and the reasonable alternatives that must be offered in order to avoid 
prohibited discrimination.  In the preamble to the final regulations, the Departments stated that 
they anticipated issuing future subregulatory guidance as necessary.  The following FAQs 
address several issues that have been raised since the publication of the final regulations.  
 
Q8:  A group health plan charges participants a tobacco premium surcharge but also 
provides an opportunity to avoid the surcharge if, at the time of enrollment or annual re-
enrollment, the participant agrees to participate in (and subsequently completes within the 
plan year) a tobacco cessation educational program.  A participant who is a tobacco user 
initially declines the opportunity to participate in the tobacco cessation program, but joins 
in the middle of the plan year.  Is the plan required to provide the opportunity to avoid the 
surcharge or provide another reward to the individual for that plan year? 
 
No.  If a participant is provided a reasonable opportunity to enroll in the tobacco cessation 
program at the beginning of the plan year and qualify for the reward (i.e., avoiding the tobacco 
premium surcharge) under the program, the plan is not required (but is permitted) to provide 
another opportunity to avoid the tobacco premium surcharge until renewal or reenrollment for 
coverage for the next plan year.  Nothing, however, prevents a plan or issuer from allowing 
rewards (including pro-rated rewards) for mid-year enrollment in a wellness program for that 
plan year. 
                                                            
12 See 78 FR 33158 (June 3, 2013). 
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Q9:  A plan participants doctor advises that an outcome-based wellness programs 
standard for obtaining a reward is medically inappropriate for the plan participant.  The 
doctor suggests a weight reduction program (an activity-only program) instead.  Does the 
plan have a say in which one?   
 
Yes.  The plan must provide a reward for individuals who qualify by satisfying a reasonable 
alternative standard.  If an individuals personal physician states that the outcome-based wellness 
program is not medically appropriate for that individual and recommends a weight reduction 
program (an activity-only program) instead, the plan must provide a reasonable alternative 
standard that accommodates the recommendations of the individuals personal physician with 
regard to medical appropriateness.  Many different weight reduction programs may be 
reasonable for this purpose, and a participant should discuss different options with the plan.   
 
Q10: Paragraph (f)(6) of the final regulations provides sample language that may be used 
to satisfy the requirement to provide notice of the availability of a reasonable alternative 
standard.  Are plans and issuers permitted to modify this language? 
 
Yes.  The final regulations state that the sample language provided in paragraph (f)(6), or 
substantially similar language, can be used to satisfy the notice requirement.  Plans and issuers 
may modify the sample language to reflect the details of their wellness programs, provided that 
the notice includes all of the required content described in paragraphs (f)(3)(v) or (f)(4)(v), as 
applicable, of the final regulations.  Additional sample language is available in examples 
illustrating the final regulations requirements for outcome-based wellness programs.13 
 
Fixed Indemnity Insurance 
Fixed indemnity insurance provided under a group health plan meeting the conditions outlined in 
the Departments' regulations14 is an excepted benefit under PHS Act section 2791(c)(3)(B), 
ERISA section 733(c)(3)(B), and Code section 9832(c)(3)(B).  As such, it is generally exempt 
from the health coverage requirements of title XXVII of the PHS Act, part 7 of ERISA, and 
chapter 100 of the Code. The Departments have noticed a significant increase in the number of 
health insurance policies labeled as fixed indemnity insurance. 
 
A previous FAQ provided guidance reiterating that, in order for a fixed indemnity policy to be 
considered an excepted benefit, it must pay on a per-period basis, and that a fixed indemnity 
policy that pays on a per-service basis does not meet the conditions for excepted benefits.15  
 
 
 
                                                            
13 See examples 1, 4, and 6 in paragraph (f)(4)(vi) of the final regulations, published at 78 FR 33158 (June 3, 2013). 
14 See 26 CFR 54.9831-1(c)(4), 29 CFR 732(c)(4), and 45 CFR 146.145(c)(4). 
15 See Affordable Care Act Implementation FAQs Part XI, Q7, available at http://www.dol.gov/ebsa/faqs/faq-
aca11.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs11.html.   
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Q11: If insurance labeled as fixed indemnity insurance provides benefits other than on a 
per-period basis, may the insurance nonetheless qualify as excepted benefits?   
   
Yes.  With respect to group health insurance coverage that does not meet the definition of fixed 
indemnity excepted benefits, coverage that supplements other group health plan coverage may, 
nonetheless, qualify as supplemental excepted benefits under sections 2722(c)(3) and 2791(c)(4) 
of the PHS Act, sections 732(c)(3) and 733(c)(4) of ERISA, and sections 9831(c)(3) and 
9832(c)(4) of the Code.  See 26 CFR 54.9831-1(c)(5); 29 CFR 2590.732(c)(5); 45 CFR 
146.145(c)(5); the Department of Labors Employee Benefits Security Administrations Field 
Assistance Bulletin No. 2007-04 (available at http://www.dol.gov/ebsa/pdf/fab2007-4.pdf); HHS 
Centers for Medicare & Medicaid Services Insurance Standards Bulletin 08-01 (available at 
http://www.cms.gov/CCIIO/Resources/Files/Downloads/hipaa_08_01_508.pdf); and Internal 
Revenue Service Notice 2008-23 (available at http://www.irs.gov/irb/2008-07_IRB/ar09.html).16   
Furthermore, HHS intends to propose amendments to 45 CFR 148.220(b)(3) that would allow 
fixed indemnity coverage sold in the individual health insurance market to be considered to be an 
excepted benefit if it meets the following conditions: 
 
1.  It is sold only to individuals who have other health coverage that is minimum essential 
coverage within the meaning of section 5000A(f) of the Code; 
 
2.  There is no coordination between the provision of benefits and an exclusion of benefits 
under any other health coverage; 
 
3.  The benefits are paid in a fixed dollar amount regardless of the amount of expenses 
incurred and without regard to the amount of benefits provided with respect to an event 
or service under any other health coverage; and 
 
4.  A notice is displayed prominently in the plan materials informing policyholders that the 
coverage does not meet the definition of minimum essential coverage and will not satisfy 
the individual responsibility requirements of section 5000A of the Code. 
 
If these proposed revisions are implemented, fixed indemnity insurance in the individual market 
would no longer have to pay benefits solely on a per-period basis to qualify as an excepted 
benefit. 
 
Until HHS finalizes this rulemaking related to these proposed amendments, HHS will treat fixed 
indemnity coverage in the individual market as excepted benefits for enforcement purposes if it 
meets the conditions above in States where HHS has direct enforcement authority.  For States 
with primary enforcement authority, HHS encourages those States to also treat this coverage as 
an excepted benefit and will not consider that a State is not substantially enforcing the individual 
market requirements merely because it does so.   
                                                            
16 In addition, benefits offered as supplemental benefits to other coverage may qualify as an excepted employee 
assistance program (EAP).  See 78 FR 77632 (Dec. 24, 2013) (available at http://www.gpo.gov/fdsys/pkg/FR-2013-
12-24/pdf/2013-30553.pdf), and IRS Notice 2013-54 (available at http://www.irs.gov/pub/irs-drop/n-13-54.pdf) and 
DOL Technical Release 2013-03 (available at http://www.dol.gov/ebsa/newsroom/tr13-03.html), Q&A 9. 
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The Mental Health Parity and Addiction Equity Act of 2008 
 
The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) amended the PHS Act, 
ERISA, and the Code to provide increased parity between mental health and substance use 
disorder benefits and medical/surgical benefits. In general, MHPAEA requires that the financial 
requirements (such as coinsurance) and treatment limitations (such as visit limits) imposed on 
mental health and substance use disorder benefits cannot be more restrictive than the 
predominant financial requirements and treatment limitations that apply to substantially all 
medical/surgical benefits.17  On November 13, 2013, the Departments published final regulations 
on MHPAEA, which contain some clarifications regarding the statutes protections.18 
 
Q12: What was the effect of the Affordable Care Act on MHPAEA? 
 
The Affordable Care Act builds on MHPAEA and provides that mental health and substance use 
disorder services are one of ten EHB categories.  Under the EHB rule, non-grandfathered health 
plans in the individual and small group markets are required to comply with the requirements of 
the parity regulations to satisfy the requirement to provide EHB.  In addition, section 1563 of the 
Affordable Care Act extends the protections of MHPAEA to the entire individual market, both 
with respect to grandfathered and non-grandfathered coverage.19  Therefore: 
 
  For non-grandfathered individual market coverage:  For policy years beginning on or 
after January 1, 2014, all non-grandfathered individual market coverage that is not 
otherwise subject to the HHS transitional policy20 must include coverage for mental 
health and substance use disorder benefits, and that coverage must comply with the 
Federal parity requirements set forth in the interim final regulations issued in February 
2010.  The final regulations apply for policy years beginning on or after July 1, 2014 
(which, for calendar year policies, is January 1, 2015). 
 
  For grandfathered individual market coverage:  Grandfathered individual health 
insurance coverage is not subject to the EHB requirements and therefore is not required 
to cover mental health or substance use disorder benefits.  However, to the extent mental 
health or substance use disorder benefits are covered under the policy, coverage must 
comply with the Federal parity requirements set forth in final regulations for policy years 
beginning on or after July 1, 2014 (which, for calendar year policies, is January 1, 2015). 
 
  For non-grandfathered small group market coverage:  For plan years beginning on or 
after January 1, 2014, all non-grandfathered small group market coverage that is not 
otherwise subject to the HHS transitional policy must include coverage for mental health 
                                                            
17 MHPAEA does not mandate that plans and issuers cover mental health and substance use disorder benefits. It 
applies only if a plan or issuer provides those benefits.  
18 78 FR 68240 (November 13, 2013). 
19 In general, grandfathered coverage is coverage provided by a group health plan, or individual health insurance 
coverage, in which an individual was enrolled on March 23, 2010, and that has since that time not made certain 
changes in coverage.  See section 1251 of the Affordable Care Act and implementing regulations at 29 CFR 
2590.7151251 and 45 CFR 147.140.   
20 Letter to Insurance Commissioners, Center for Consumer Information and Insurance Oversight, November 14, 
2013. See http://www.cms.gov/CCIIO/Resources/Letters/Downloads/commissioner-letter-11-14-2013.PDF. 
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and substance use disorder benefits, and that coverage must comply with the Federal 
parity requirements set forth in the interim final regulations issued in February 2010.  The 
final regulations apply for plan years beginning on or after July 1, 2014 (which, for 
calendar year plans, is January 1, 2015). 
 
Grandfathered small group market coverage is not required to comply with either the EHB 
provisions or MHPAEA.  HHS has also released guidance explaining how the Federal parity 
requirements will be applied to the Childrens Health Insurance Program (CHIP), Medicaid 
managed-care organizations, and to Alternative Benefit Plans.  See the January 16, 2013 letter 
from CMS to State Medicaid Directors.21  
 
                                                            
21 Available at http://www.medicaid.gov/Federal-Policy-Guidance/downloads/SHO-13-001.pdf. 
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