erage) 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-related dis-
order 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 (or coverage) dur-
ing the following plan year, and such exemption 
shall apply to the plan (or coverage) for 1 plan 
year. 
‘‘(B) APPLICABLE PERCENTAGE.—With re-
spect to a plan (or coverage), the applicable 
percentage described in this paragraph shall 
be— 
‘‘(i) 2 percent in the case of the first 
plan year to which this paragraph applies; 
and 
‘‘(ii) 1 percent in the case of each 
subsequent plan year. 
‘‘(C) DETERMINATIONS BY ACTUARIES.— 
Determinations as to increases in actual costs 
under a plan (or coverage) for purposes of this
subsection shall be made in writing and pre-
pared and certified by a qualified and licensed 
actuary who is a member in good standing of 
the American Academy of Actuaries. Such de-
terminations shall be made available by the 
plan administrator (or health insurance issuer, 
as the case may be) to the general public. 
‘‘(D) 6-MONTH
DETERMINATIONS.—If a 
group health plan (or a health insurance issuer 
offering coverage in connection with such a 
plan) seeks an exemption under this paragraph, 
determinations under subparagraph (A) shall be 
made after such plan (or coverage) has com-
plied with this section for the first 6 months of 
the plan year involved. 
‘‘(E) NOTIFICATION.—An election to mod-
ify coverage of mental health and substance-re-
lated disorder benefits as permitted under this 
paragraph shall be treated as a material modi-
fication in the terms of the plan as described in 
section 102(a) and notice of which shall be pro-
vided a reasonable period in advance of the 
change. 
‘‘(F) 
NOTIFICATION
OF
APPROPRIATE 
AGENCY.—
‘‘(i) IN
GENERAL.—A group health 
plan that, based on a certification de-
scribed under subparagraph (C), qualifies 
for an exemption under this paragraph, 
and elects to implement the exemption, 
shall notify the Department of Labor of 
such election. 
‘‘(ii) REQUIREMENT.—A notification 
under clause (i) shall include— 
‘‘(I) a description of the number 
of covered lives under the plan (or 
coverage) 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 (or coverage); 
‘‘(II) for both the plan year upon 
which a cost exemption is sought and 
the year prior, a description of the ac-
tual total costs of coverage with re-
spect to medical and surgical benefits 
and mental health and substance-re-
lated disorder benefits under the plan; 
and
‘‘(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 men-
tal health and substance-related dis-
order benefits under the plan. 
‘‘(iii) CONFIDENTIALITY.—A notifica-
tion under clause (i) shall be confidential. 
The Department of Labor shall make 
available, upon request to the appropriate 
committees of Congress and on not more 
than an annual basis, an anonymous 
itemization of such notifications, that in-
cludes— 
‘‘(I) a breakdown of States by 
the size and any type of employers 
submitting such notification; and 
‘‘(II) a summary of the data re-
ceived under clause (ii). 
‘‘(G) NO
IMPACT
ON
APPLICATION
OF 
STATE LAW.—The fact that a plan or coverage 
is exempt from the provisions of this section 
under subparagraph (A) shall not affect the ap-
plication of State law to such plan or coverage.
‘‘(H) CONSTRUCTION.—Nothing in this 
paragraph shall be construed as preventing a 
group health plan (or health insurance coverage 
offered in connection with such a plan) from 
complying with the provisions of this section 
notwithstanding that the plan or coverage is not 
required to comply with such provisions due to 
the application of subparagraph (A).’’. 
(f) CHANGE IN EXCLUSION FOR SMALLEST EMPLOY-
ERS.—Subsection (c)(1)(B) of such section is amended— 
(1) by inserting ‘‘(or 1 in the case of an em-
ployer residing in a State that permits small groups 
to include a single individual)’’ after ‘‘at least 2’’ the 
first place it appears; and 
(2) by striking ‘‘and who employs at least 2 em-
ployees on the first day of the plan year’’. 
(g) ELIMINATION OF SUNSET PROVISION.—Such sec-
tion is amended by striking subsection (f). 
(h) CLARIFICATION
REGARDING
PREEMPTION.— 
Such section is further amended by inserting after sub-
section (e) the following new subsection: 
‘‘(f) PREEMPTION, RELATION TO STATE LAWS.— 
‘‘(1) IN GENERAL.—This part shall not be con-
strued to supersede any provision of State law which 
establishes, implements, or continues in effect any
consumer protections, benefits, methods of access to 
benefits, rights, external review programs, or rem-
edies solely relating to health insurance issuers in 
connection with group health insurance coverage (in-
cluding benefit mandates or regulation of group 
health plans of 50 or fewer employees) except to the 
extent that such provision prevents the application 
of a requirement of this part. 
‘‘(2) CONTINUED PREEMPTION WITH RESPECT 
TO GROUP HEALTH PLANS.—Nothing in this section 
shall be construed to affect or modify the provisions 
of section 514 with respect to group health plans. 
‘‘(3) OTHER STATE LAWS.—Nothing in this sec-
tion shall be construed to exempt or relieve any per-
son from any laws of any State not solely related to 
health insurance issuers in connection with group 
health coverage insofar as they may now or here-
after relate to insurance, health plans, or health cov-
erage.’’. 
(i) CONFORMING AMENDMENTS TO HEADING.— 
(1) IN GENERAL.—The heading of such section 
is amended to read as follows:
‘‘SEC. 712. EQUITY IN MENTAL HEALTH AND SUBSTANCE- 
RELATED DISORDER BENEFITS.’’. 
(2) CLERICAL AMENDMENT.—The table of con-
tents in section 1 of such Act is amended by striking 
the item relating to section 712 and inserting the 
following new item: 
‘‘Sec. 712. Equity in mental health and substance-related disorder benefits.’’. 
(j) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply with respect to plan years be-
ginning on or after January 1, 2009. 
(2) SPECIAL
RULE
FOR
COLLECTIVE
BAR-
GAINING
AGREEMENTS.—In the case of a group 
health plan maintained pursuant to one or more col-
lective bargaining agreements between employee rep-
resentatives and one or more employers ratified be-
fore 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 col-
lective 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, 2009.
For purposes of subparagraph (A), any plan amend-
ment 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. 
(k) DOL ANNUAL SAMPLE COMPLIANCE.—The Sec-
retary of Labor shall annually sample and conduct random 
audits of group health plans (and health insurance cov-
erage offered in connection with such plans) in order to 
determine their compliance with the amendments made by 
this division and shall submit to the appropriate commit-
tees of Congress an annual report on such compliance with 
such amendments. The Secretary shall share the results 
of such audits with the Secretaries of Health and Human 
Services and of the Treasury. 
(l) ASSISTANCE
TO
PARTICIPANTS
AND
BENE-
FICIARIES.—The Secretary of Labor shall provide assist-
ance to participants and beneficiaries of group health 
plans with any questions or problems with compliance with 
the requirements of this division. The Secretary shall no-
tify participants and beneficiaries how they can obtain as-
sistance from State consumer and insurance agencies and 
the Secretary shall coordinate with State agencies to en-
sure that participants and beneficiaries are protected and 
afforded the rights provided under this division. 
SEC. 103. AMENDMENTS TO THE PUBLIC HEALTH SERVICE 
ACT RELATING TO THE GROUP MARKET. 
(a) EXTENSION OF PARITY TO TREATMENT LIMITS 
AND BENEFICIARY FINANCIAL REQUIREMENTS.—Section 
2705 of the Public Health Service Act (42 U.S.C. 300gg– 
5) is amended— 
(1) in subsection (a), by adding at the end the 
following new paragraphs: 
‘‘(3) TREATMENT
LIMITS.—In the case of a 
group health plan that provides both medical and 
surgical benefits and mental health or substance-re-
lated disorder benefits— 
‘‘(A) NO TREATMENT LIMIT.—If the plan 
or coverage does not include a treatment limit 
(as defined in subparagraph (D)) on substan-
tially all medical and surgical benefits in any 
category of items or services (specified in sub-
paragraph (C)), the plan or coverage may not 
impose any treatment limit on mental health or 
substance-related disorder benefits that are 
classified in the same category of items or serv-
ices.
‘‘(B) TREATMENT LIMIT.—If the plan or 
coverage includes a treatment limit on substan-
tially all medical and surgical benefits in any 
category of items or services, the plan or cov-
erage may not impose such a treatment limit on 
mental health or substance-related disorder 
benefits for items and services within such cat-
egory that is more restrictive than the predomi-
nant treatment limit that is applicable to med-
ical and surgical benefits for items and services 
within such category. 
‘‘(C) CATEGORIES
OF
ITEMS
AND
SERV-
ICES FOR APPLICATION OF TREATMENT LIMITS 
AND
BENEFICIARY
FINANCIAL
REQUIRE-
MENTS.—For purposes of this paragraph and 
paragraph (4), there shall be the following five 
categories of items and services for benefits, 
whether medical and surgical benefits or mental 
health and substance-related disorder benefits, 
and all medical and surgical benefits and all 
mental health and substance related benefits 
shall be classified into one of the following cat-
egories: 
‘‘(i) INPATIENT, IN-NETWORK.—Items 
and services not described in clause (v)
furnished on an inpatient basis and within 
a network of providers established or rec-
ognized under such plan or coverage. 
‘‘(ii) INPATIENT, OUT-OF-NETWORK.— 
Items and services not described in clause 
(v) furnished on an inpatient basis and 
outside any network of providers estab-
lished or recognized under such plan or 
coverage. 
‘‘(iii) OUTPATIENT, 
IN-NETWORK.— 
Items and services not described in clause 
(v) furnished on an outpatient basis and 
within a network of providers established 
or recognized under such plan or coverage. 
‘‘(iv) 
OUTPATIENT, 
OUT-OF-NET-
WORK.—Items and services not described 
in clause (v) furnished on an outpatient 
basis and outside any network of providers 
established or recognized under such plan 
or coverage. 
‘‘(v) EMERGENCY
CARE.—Items and 
services, whether furnished on an inpatient 
or outpatient basis or within or outside 
any network of providers, required for the 
treatment of an emergency medical condi-
tion (as defined in section 1867(e) of the 
Social Security Act, including an emer-
gency condition relating to mental health 
or substance-related disorders). 
‘‘(D) TREATMENT
LIMIT
DEFINED.—For 
purposes of this paragraph, the term ‘treatment 
limit’ means, with respect to a plan or coverage, 
limitation on the frequency of treatment, num-
ber of visits or days of coverage, or other simi-
lar limit on the duration or scope of treatment 
under the plan or coverage. 
‘‘(E) PREDOMINANCE.—For purposes of 
this subsection, a treatment limit or financial 
requirement with respect to a category of items 
and services is considered to be predominant if 
it is the most common or frequent of such type 
of limit or requirement with respect to such cat-
egory of items and services. 
‘‘(4) 
BENEFICIARY
FINANCIAL
REQUIRE-
MENTS.—In the case of a group health plan that 
provides both medical and surgical benefits and 
mental health or substance-related disorder bene-
fits— 
‘‘(A) NO
BENEFICIARY
FINANCIAL
RE-
QUIREMENT.—If the plan or coverage does not