‘‘(A) IN GENERAL.—This section shall not
apply to any group health plan (and group
health insurance coverage offered in connection
with a group health plan) for any plan year of
a small employer.
‘‘(B) SMALL EMPLOYER.—For purposes of
subparagraph (A), the term ‘small employer’
means, in connection with a group health plan
with respect to a calendar year and a plan year,
an employer who employed an average of at
least 2 but not more than 50 employees on
business days during the preceding calendar
year and who employs at least 2 employees on
the first day of the plan year.
‘‘(C) APPLICATION OF CERTAIN RULES IN
DETERMINATION
OF
EMPLOYER
SIZE.—For
purposes of this paragraph—
‘‘(i) APPLICATION
OF
AGGREGATION
RULE FOR EMPLOYERS.—Rules similar to
the rules under subsections (b), (c), (m),
and (o) of section 414 of the Internal Rev-
enue Code of 1986 shall apply for purposes
of treating persons as a single employer.
‘‘(ii) EMPLOYERS NOT IN EXISTENCE
IN PRECEDING YEAR.—In the case of an
employer which was not in existence
throughout the preceding calendar year,
the determination of whether such em-
ployer is a small employer shall be based
on the average number of employees that
it is reasonably expected such employer
will employ on business days in the current
calendar year.
‘‘(iii) PREDECESSORS.—Any reference
in this paragraph to an employer shall in-
clude a reference to any predecessor of
such employer.
‘‘(2) INCREASED COST EXEMPTION.—This sec-
tion shall not apply with respect to a group health
plan (or health insurance coverage offered in connec-
tion with a group health plan) if the application of
this section to such plan (or to such coverage) re-
sults in an increase in the cost under the plan (or
for such coverage) of at least 1 percent.
‘‘(d) SEPARATE APPLICATION TO EACH OPTION OF-
FERED.—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 op-
tion.
‘‘(e) DEFINITIONS.—For purposes of this section—
‘‘(1) 
TREATMENT
LIMITATION.—The 
term
‘treatment limitation’ means, with respect to benefits
under a group health plan or health insurance cov-
erage, any day or visit limits imposed on coverage of
benefits under the plan or coverage during a period
of time.
‘‘(2) FINANCIAL REQUIREMENT.—The term ‘fi-
nancial requirement’ means, with respect to benefits
under a group health plan or health insurance cov-
erage, any deductible, coinsurance, or cost-sharing
or an annual or lifetime dollar limit imposed with re-
spect to the benefits under the plan or coverage.
‘‘(3) MEDICAL OR SURGICAL BENEFITS.—The
term ‘medical or surgical benefits’ means benefits
with respect to medical or surgical services, as de-
fined under the terms of the plan or coverage (as the
case may be), but does not include substance abuse
treatment benefits.
‘‘(4) SUBSTANCE
ABUSE
TREATMENT
BENE-
FITS.—The term ‘substance abuse treatment bene-
fits’ means benefits with respect to substance abuse
treatment services but only insofar as such treat-
ment services are abstinence-based. Such term in-
cludes non-narcotic medication-based therapy and
appropriate transitional medication-based therapy.
‘‘(5) SUBSTANCE
ABUSE
TREATMENT
SERV-
ICES.—The term ‘substance abuse services’ means
any of the following items and services provided for
the treatment of substance abuse:
‘‘(A) Inpatient treatment, including detoxi-
fication.
‘‘(B) Non-hospital residential treatment.
‘‘(C) 
Outpatient 
treatment, 
including
screening and assessment, medication manage-
ment, individual, group, and family counseling,
and relapse prevention.
‘‘(D) Prevention services, including health
education and individual and group counseling
to encourage the reduction of risk factors for
substance abuse.
‘‘(6) SUBSTANCE ABUSE.—The term ‘substance
abuse’ includes chemical dependency.
‘‘(f) NOTICE.—A group health plan under this part
shall comply with the notice requirement under section
714(f) of the Employee Retirement Income Security Act
of 1974 with respect to the requirements of this section
as if such section applied to such plan.
‘‘(g) SUNSET.—This section shall not apply to bene-
fits for services furnished in plan years beginning on or
after January 1, 2005.’’.
(B) CONFORMING
AMENDMENT.—Section
2723(c) of such Act (42 U.S.C. 300gg–23(c)) is
amended by striking ‘‘section 2704’’ and insert-
ing ‘‘sections 2704 and 2707’’.
(2) ERISA AMENDMENTS.—
(A) IN GENERAL.—Subpart B of part 7 of
subtitle B of title I of the Employee Retirement
Income Security Act of 1974 is amended by
adding at the end the following new section:
‘‘SEC. 714. PARITY IN THE APPLICATION OF TREATMENT
LIMITATIONS 
AND 
FINANCIAL 
REQUIRE-
MENTS TO SUBSTANCE ABUSE TREATMENT
BENEFITS.
‘‘(a) IN GENERAL.—In the case of a group health
plan (or health insurance coverage offered in connection
with such a plan) that provides both medical and surgical
benefits and substance abuse treatment benefits, the plan
or coverage shall not impose treatment limitations or fi-
nancial requirements on the substance abuse treatment
benefits unless similar limitations or requirements are im-
posed for medical and surgical benefits.
‘‘(b) CONSTRUCTION.—Nothing in this section shall
be construed—
‘‘(1) as requiring a group health plan (or health
insurance coverage offered in connection with such a
plan) to provide any substance abuse treatment ben-
efits; or
‘‘(2) to prevent a group health plan or a health
insurance issuer offering group health insurance cov-
erage from negotiating the level and type of reim-
bursement with a provider for care provided in ac-
cordance with this section.
‘‘(c) EXEMPTIONS.—
‘‘(1) SMALL EMPLOYER EXEMPTION.—
‘‘(A) IN GENERAL.—This section shall not
apply to any group health plan (and group
health insurance coverage offered in connection
with a group health plan) for any plan year of
a small employer.
‘‘(B) SMALL EMPLOYER.—For purposes of
subparagraph (A), the term ‘small employer’
means, in connection with a group health plan
with respect to a calendar year and a plan year,
an employer who employed an average of at
least 2 but not more than 50 employees on
business days during the preceding calendar
year and who employs at least 2 employees on
the first day of the plan year.
‘‘(C) APPLICATION OF CERTAIN RULES IN
DETERMINATION
OF
EMPLOYER
SIZE.—For
purposes of this paragraph—
‘‘(i) APPLICATION
OF
AGGREGATION
RULE FOR EMPLOYERS.—Rules similar to
the rules under subsections (b), (c), (m),
and (o) of section 414 of the Internal Rev-
enue Code of 1986 shall apply for purposes
of treating persons as a single employer.
‘‘(ii) EMPLOYERS NOT IN EXISTENCE
IN PRECEDING YEAR.—In the case of an
employer which was not in existence
throughout the preceding calendar year,
the determination of whether such em-
ployer is a small employer shall be based
on the average number of employees that
it is reasonably expected such employer
will employ on business days in the current
calendar year.
‘‘(iii) PREDECESSORS.—Any reference
in this paragraph to an employer shall in-
clude a reference to any predecessor of
such employer.
‘‘(2) INCREASED COST EXEMPTION.—This sec-
tion shall not apply with respect to a group health
plan (or health insurance coverage offered in connec-
tion with a group health plan) if the application of
this section to such plan (or to such coverage) re-
sults in an increase in the cost under the plan (or
for such coverage) of at least 1 percent.
‘‘(d) SEPARATE APPLICATION TO EACH OPTION OF-
FERED.—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 op-
tion.
‘‘(e) DEFINITIONS.—For purposes of this section—
‘‘(1) 
TREATMENT
LIMITATION.—The 
term
‘treatment limitation’ means, with respect to benefits
under a group health plan or health insurance cov-
erage, any day or visit limits imposed on coverage of
benefits under the plan or coverage during a period
of time.
‘‘(2) FINANCIAL REQUIREMENT.—The term ‘fi-
nancial requirement’ means, with respect to benefits
under a group health plan or health insurance cov-
erage, any deductible, coinsurance, or cost-sharing
or an annual or lifetime dollar limit imposed with re-
spect to the benefits under the plan or coverage.
‘‘(3) MEDICAL OR SURGICAL BENEFITS.—The
term ‘medical or surgical benefits’ means benefits
with respect to medical or surgical services, as de-
fined under the terms of the plan or coverage (as the
case may be), but does not include substance abuse
treatment benefits.
‘‘(4) SUBSTANCE
ABUSE
TREATMENT
BENE-
FITS.—The term ‘substance abuse treatment bene-
fits’ means benefits with respect to substance abuse
treatment services but only insofar as such treat-
ment services are abstinence-based. Such term in-
cludes non-narcotic medication-based therapy and
appropriate transitional medication-based therapy.
‘‘(5) SUBSTANCE
ABUSE
TREATMENT
SERV-
ICES.—The term ‘substance abuse services’ means
any of the following items and services provided for
the treatment of substance abuse:
‘‘(A) Inpatient treatment, including detoxi-
fication.
‘‘(B) Non-hospital residential treatment.
‘‘(C) 
Outpatient 
treatment, 
including
screening and assessment, medication manage-
ment, individual, group, and family counseling,
and relapse prevention.
‘‘(D) Prevention services, including health
education and individual and group counseling
to encourage the reduction of risk factors for
substance abuse.
‘‘(6) SUBSTANCE ABUSE.—The term ‘substance
abuse’ includes chemical dependency.
‘‘(f) NOTICE UNDER GROUP HEALTH PLAN.—The
imposition of the requirements of this section shall be
treated as a material modification in the terms of the plan
described in section 102(a)(1), for purposes of assuring
notice of such requirements under the plan; except that
the summary description required to be provided under the
last sentence of section 104(b)(1) with respect to such
modification shall be provided by not later than 60 days
after the first day of the first plan year in which such
requirements apply.
‘‘(g) SUNSET.—This section shall not apply to bene-
fits for services furnished in plan years beginning on or
after January 1, 2005.’’.
(B) Section 731(c) of such Act (29 U.S.C.
1191(c)) is amended by striking ‘‘section 711’’ and
inserting ‘‘sections 711 and 714’’.
(C) Section 732(a) of such Act (29 U.S.C.
1191a(a)) is amended by striking ‘‘section 711’’ and
inserting ‘‘sections 711 and 714’’.
(D) The table of contents in section 1 of such
Act is amended by inserting after the item relating
to section 713 the following new item:
‘‘Sec. 714. Parity in the application of treatment limitations and financial re-
quirements to substance abuse treatment benefits.’’.
(3) 
INTERNAL
REVENUE
CODE
AMEND-
MENTS.—(A) Subchapter B of chapter 100 of the
Internal Revenue Code of 1986 (relating to other re-
quirements) is amended by adding at the end the
following new section:
‘‘SEC. 9813. PARITY IN THE APPLICATION OF TREATMENT
LIMITATIONS 
AND 
FINANCIAL 
REQUIRE-
MENTS TO SUBSTANCE ABUSE TREATMENT
BENEFITS.
‘‘(a) IN GENERAL.—In the case of a group health
plan that provides both medical and surgical benefits and
substance abuse treatment benefits, the plan shall not im-
pose treatment limitations or financial requirements on
the substance abuse treatment benefits unless similar limi-
tations or requirements are imposed for medical and sur-
gical benefits.
‘‘(b) CONSTRUCTION.—Nothing in this section shall
be construed—
‘‘(1) as requiring a group health plan to provide
any substance abuse treatment benefits; or
‘‘(2) to prevent a group health plan from nego-
tiating the level and type of reimbursement with a
provider for care provided in accordance with this
section.
‘‘(c) EXEMPTIONS.—
‘‘(1) SMALL EMPLOYER EXEMPTION.—
‘‘(A) IN GENERAL.—This section shall not
apply to any group health plan for any plan
year of a small employer.
‘‘(B) SMALL EMPLOYER.—For purposes of
subparagraph (A), the term ‘small employer’
means, in connection with a group health plan
with respect to a calendar year and a plan year,
an employer who employed an average of at
least 2 but not more than 50 employees on
business days during the preceding calendar
year and who employs at least 2 employees on
the first day of the plan year.
‘‘(C) APPLICATION OF CERTAIN RULES IN
DETERMINATION
OF
EMPLOYER
SIZE.—For
purposes of this paragraph—
‘‘(i) APPLICATION
OF
AGGREGATION
RULE FOR EMPLOYERS.—Rules similar to
the rules under subsections (b), (c), (m),
and (o) of section 414 shall apply for pur-
poses of treating persons as a single em-
ployer.
‘‘(ii) EMPLOYERS NOT IN EXISTENCE
IN PRECEDING YEAR.—In the case of an
employer which was not in existence
throughout the preceding calendar year,
the determination of whether such em-
ployer is a small employer shall be based
on the average number of employees that
it is reasonably expected such employer
will employ on business days in the current
calendar year.
‘‘(iii) PREDECESSORS.—Any reference
in this paragraph to an employer shall in-
clude a reference to any predecessor of
such employer.
‘‘(2) INCREASED COST EXEMPTION.—This sec-
tion 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.
‘‘(d) SEPARATE APPLICATION TO EACH OPTION OF-
FERED.—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 op-
tion.
‘‘(e) DEFINITIONS.—For purposes of this section—
‘‘(1) 
TREATMENT
LIMITATION.—The 
term
‘treatment limitation’ means, with respect to benefits
under a group health plan, any day or visit limits
imposed on coverage of benefits under the plan dur-
ing a period of time.
‘‘(2) FINANCIAL REQUIREMENT.—The term ‘fi-
nancial requirement’ means, with respect to benefits
under a group health plan, any deductible, coinsur-
ance, or cost-sharing or an annual or lifetime dollar
limit imposed with respect to the benefits under the
plan.
‘‘(3) MEDICAL OR SURGICAL BENEFITS.—The
term ‘medical or surgical benefits’ means benefits
with respect to medical or surgical services, as de-
fined under the terms of the plan, but does not in-
clude substance abuse treatment benefits.
‘‘(4) SUBSTANCE
ABUSE
TREATMENT
BENE-
FITS.—The term ‘substance abuse treatment bene-
fits’ means benefits with respect to substance abuse
treatment services but only insofar as such treat-
ment services are abstinence-based. Such term in-
cludes non-narcotic medication-based therapy and
appropriate transitional medication-based therapy.
‘‘(5) SUBSTANCE
ABUSE
TREATMENT
SERV-
ICES.—The term ‘substance abuse services’ means
any of the following items and services provided for
the treatment of substance abuse:
‘‘(A) Inpatient treatment, including detoxi-
fication.
‘‘(B) Non-hospital residential treatment.
‘‘(C) 
Outpatient 
treatment, 
including
screening and assessment, medication manage-
ment, individual, group, and family counseling,
and relapse prevention.
‘‘(D) Prevention services, including health
education and individual and group counseling
to encourage the reduction of risk factors for
substance abuse.
‘‘(6) SUBSTANCE ABUSE.—The term ‘substance
abuse’ includes chemical dependency.
‘‘(f) SUNSET.—This section shall not apply to bene-
fits for services furnished in plan years beginning on or
after January 1, 2005.’’
(B) Section 4980D(d)(1) of such Code is
amended by inserting ‘‘(other than a failure at-
tributable to section 9813)’’ after ‘‘on any fail-
ure’’.
(C) The table of sections of subchapter B
of chapter 100 of such Code is amended by
adding at the end the following new item:
‘‘Sec. 9813. Parity in the application of treatment limitations
and financial requirements to substance abuse
treatment benefits.’’
(b) INDIVIDUAL HEALTH INSURANCE.—(1) Part B
of title XXVII of the Public Health Service Act is amend-
ed by inserting after section 2752 the following new sec-
tion:
‘‘SEC. 2753. PARITY IN THE APPLICATION OF TREATMENT
LIMITATIONS 
AND 
FINANCIAL 
REQUIRE-
MENTS TO SUBSTANCE ABUSE BENEFITS.
‘‘(a) IN GENERAL.—The provisions of section 2707
(other than subsections (e) and (g)) shall apply to health
insurance coverage offered by a health insurance issuer
in the individual market in the same manner as it applies
to health insurance coverage offered by a health insurance
issuer in connection with a group health plan in the small
or large group market.
‘‘(b) NOTICE.—A health insurance issuer under this
part shall comply with the notice requirement under sec-
tion 714(f) of the Employee Retirement Income Security
Act of 1974 with respect to the requirements referred to
in subsection (a) as if such section applied to such issuer
and such issuer were a group health plan.
‘‘(c) SUNSET.—This section shall not apply to bene-
fits for services furnished on or after January 1, 2005.’’.
(2) Section 2762(b)(2) of such Act (42 U.S.C.
300gg–62(b)(2)) is amended by striking ‘‘section 2751’’
and inserting ‘‘sections 2751 and 2753’’.
(c) EFFECTIVE DATES.—(1) Subject to paragraph
(3), the amendments made by subsection (a) apply with
respect to group health plans for plan years beginning on
or after January 1, 2000.
(2) The amendments made by subsection (b) apply
with respect to health insurance coverage offered, sold,
issued, renewed, in effect, or operated in the individual
market on or after January 1, 2000.
(3) In the case of a group health plan maintained
pursuant to 1 or more collective bargaining agreements
between employee representatives and 1 or more employ-
ers ratified before the date of enactment of this Act, the
amendments made subsection (a) shall not apply to plan
years beginning before the later of—
(A) the date on which the last collective bar-
gaining agreements relating to the plan terminates
(determined without regard to any extension thereof
agreed to after the date of enactment of this Act),
or
(B) January 1, 2000.
For purposes of subparagraph (A), any plan amendment
made pursuant to a collective bargaining agreement relat-
ing to the plan which amends the plan solely to conform
to any requirement added by subsection (a) shall not be
treated as a termination of such collective bargaining
agreement.
(d) COORDINATED REGULATIONS.—Section 104(1)
of Health Insurance Portability and Accountability Act of
1996 is amended by striking ‘‘this subtitle (and the
amendments made by this subtitle and section 401)’’ and
inserting ‘‘the provisions of part 7 of subtitle B of title
I of the Employee Retirement Income Security Act of
1974, and the provisions of parts A and C of title XXVII
of the Public Health Service Act, and chapter 1000 of the
Internal Revenue Code of 1986’’.
Æ