health plans, participants and beneficiaries, applicable 
State and local regulatory bodies, and the National Asso-
ciation of Insurance Commissioners concerning the re-
quirements of this section and shall provide assistance 
concerning such requirements and the continued operation 
of applicable State law. Such guidance and information 
shall inform participants and beneficiaries of how they 
may obtain assistance under this section, including, where 
appropriate, assistance from State consumer and insur-
ance agencies.’’; 
(7) by striking ‘‘mental health benefits’’ and in-
serting ‘‘mental health and substance use disorder 
benefits’’ each place it appears in subsections 
(a)(1)(B)(i), (a)(1)(C), (a)(2)(B)(i), and (a)(2)(C); 
and 
(8) by striking ‘‘mental health benefits’’ and in-
serting ‘‘mental health or substance use disorder 
benefits’’ each place it appears (other than in any 
provision amended by the previous paragraph). 
(b) AMENDMENTS
TO PUBLIC HEALTH SERVICE 
ACT.—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: 
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‘‘(3) FINANCIAL REQUIREMENTS AND TREAT-
MENT LIMITATIONS.— 
‘‘(A) IN GENERAL.—In the case of a group 
health plan (or health insurance coverage of-
fered in connection with such a plan) that pro-
vides both medical and surgical benefits and 
mental health or substance use disorder bene-
fits, such plan or coverage shall ensure that— 
‘‘(i) the financial requirements appli-
cable to such mental health or substance 
use disorder benefits are no more restric-
tive than the predominant financial re-
quirements applied to substantially all 
medical and surgical benefits covered by 
the plan (or coverage), and there are no 
separate cost sharing requirements that 
are applicable only with respect to mental 
health or substance use disorder benefits; 
and 
‘‘(ii) the treatment limitations applica-
ble to such mental health or substance use 
disorder benefits are no more restrictive 
than the predominant treatment limita-
tions applied to substantially all medical 
and surgical benefits covered by the plan 
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(or coverage) and there are no separate 
treatment limitations that are applicable 
only with respect to mental health or sub-
stance use disorder benefits. 
‘‘(B) DEFINITIONS.—In this paragraph: 
‘‘(i) FINANCIAL REQUIREMENT.—The 
term 
‘financial 
requirement’ 
includes 
deductibles, copayments, coinsurance, and 
out-of-pocket expenses, but excludes an ag-
gregate lifetime limit and an annual limit 
subject to paragraphs (1) and (2), 
‘‘(ii) PREDOMINANT.—A financial re-
quirement or treatment limit is considered 
to be predominant if it is the most com-
mon or frequent of such type of limit or 
requirement. 
‘‘(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 treat-
ment. 
‘‘(4) AVAILABILITY OF PLAN INFORMATION.— 
The criteria for medical necessity determinations 
made under the plan with respect to mental health 
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or substance use disorder benefits (or the health in-
surance coverage offered in connection with the plan 
with respect to such benefits) shall be made avail-
able by the plan administrator (or the health insur-
ance issuer offering such coverage) in accordance 
with regulations to any current or potential partici-
pant, beneficiary, or contracting provider upon re-
quest. The reason for any denial under the plan (or 
coverage) of reimbursement or payment for services 
with respect to mental health or substance use dis-
order benefits in the case of any participant or bene-
ficiary shall, on request or as otherwise required, be 
made available by the plan administrator (or the 
health insurance issuer offering such coverage) to 
the participant or beneficiary in accordance with 
regulations. 
‘‘(5) OUT-OF-NETWORK
PROVIDERS.—In the 
case of a plan or coverage that provides both med-
ical and surgical benefits and mental health or sub-
stance use disorder benefits, if the plan or coverage 
provides coverage for medical or surgical benefits 
provided by out-of-network providers, the plan or 
coverage shall provide coverage for mental health or 
substance use disorder benefits provided by out-of- 
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network providers in a manner that is consistent 
with the requirements of this section.’’; 
(2) in subsection (b), by amending paragraph 
(2) to read as follows: 
‘‘(2) in the case of a group health plan (or 
health insurance coverage offered in connection with 
such a plan) that provides mental health or sub-
stance use disorder benefits, as affecting the terms 
and conditions of the plan or coverage relating to 
such benefits under the plan or coverage, except as 
provided in subsection (a).’’; 
(3) in subsection (c)— 
(A) in paragraph (1), by inserting before 
the period the following: ‘‘(as defined in section 
2791(e)(4), except that for purposes of this 
paragraph such term shall include employers 
with 1 employee in the case of an employer re-
siding in a State that permits small groups to 
include a single individual)’’; and 
(B) by striking paragraph (2) and insert-
ing the following: 
‘‘(2) COST EXEMPTION.— 
‘‘(A) IN
GENERAL.—With respect to a 
group health plan (or health insurance coverage 
offered in connection with such a plan), if the 
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application of this section to such plan (or cov-
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 use disorder 
benefits under the plan (as determined and cer-
tified 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) during the fol-
lowing plan year, and such exemption shall 
apply to the plan (or coverage) 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 (or coverage) involved regard-
less of any increase in total costs. 
‘‘(B) APPLICABLE PERCENTAGE.—With re-
spect to a plan (or coverage), the applicable 
percentage described in this subparagraph shall 
be— 
‘‘(i) 2 percent in the case of the first 
plan year in which this section is applied; 
and 
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‘‘(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 
section shall be made and certified by a quali-
fied and licensed actuary who is a member in 
good standing of the American Academy of Ac-
tuaries. All such determinations shall be in a 
written report prepared by the actuary. The re-
port, and all underlying documentation relied 
upon by the actuary, shall be maintained by the 
group health plan or health insurance issuer for 
a period of 6 years following the notification 
made under subparagraph (E). 
‘‘(D) 6-MONTH
DETERMINATIONS.—If a 
group health plan (or a health insurance issuer 
offering coverage in connection with a group 
health plan) seeks an exemption under this 
paragraph, determinations under subparagraph 
(A) shall be made after such plan (or coverage) 
has complied with this section for the first 6 
months of the plan year involved. 
‘‘(E) NOTIFICATION.— 
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‘‘(i) IN
GENERAL.—A group health 
plan (or a health insurance issuer offering 
coverage in connection with a group health 
plan) that, based upon a certification de-
scribed under subparagraph (C), qualifies 
for an exemption under this paragraph, 
and elects to implement the exemption, 
shall promptly notify the Secretary, the ap-
propriate State agencies, and participants 
and beneficiaries in the plan of such elec-
tion. 
‘‘(ii) REQUIREMENT.—A notification 
to the Secretary under clause (i) shall in-
clude— 
‘‘(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-
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spect to medical and surgical benefits 
and mental health and substance use 
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 use disorder 
benefits under the plan. 
‘‘(iii) CONFIDENTIALITY.—A notifica-
tion 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 in-
cludes— 
‘‘(I) a breakdown of States by 
the size and type of employers submit-
ting such notification; and 
‘‘(II) a summary of the data re-
ceived under clause (ii). 
‘‘(F) AUDITS
BY
APPROPRIATE
AGEN-
CIES.—To determine compliance with this para-
graph, the Secretary may audit the books and 
records of a group health plan or health insur-
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ance issuer relating to an exemption, including 
any actuarial reports prepared pursuant to sub-
paragraph (C), during the 6-year period fol-
lowing 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 ex-
emption covered by such notification.’’; 
(4) in subsection (e), by striking paragraph (4) 
and inserting the following: 
‘‘(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. 
‘‘(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.’’; 
(5) by striking subsection (f); 
(6) by striking ‘‘mental health benefits’’ and in-
serting ‘‘mental health and substance use disorder 
benefits’’ each place it appears in subsections 
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(a)(1)(B)(i), (a)(1)(C), (a)(2)(B)(i), and (a)(2)(C); 
and 
(7) by striking ‘‘mental health benefits’’ and in-
serting ‘‘mental health or substance use disorder 
benefits’’ each place it appears (other than in any 
provision amended by the previous paragraph). 
(c) AMENDMENTS TO INTERNAL REVENUE CODE.— 
Section 9812 of the Internal Revenue Code of 1986 is 
amended— 
(1) in subsection (a), by adding at the end the 
following: 
‘‘(3) FINANCIAL REQUIREMENTS AND TREAT-
MENT LIMITATIONS.— 
‘‘(A) IN GENERAL.—In the case of a group 
health plan that provides both medical and sur-
gical benefits and mental health or substance 
use disorder benefits, such plan shall ensure 
that— 
‘‘(i) the financial requirements appli-
cable to such mental health or substance 
use disorder benefits are no more restric-
tive than the predominant financial re-
quirements applied to substantially all 
medical and surgical benefits covered by 
the plan, and there are no separate cost 
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sharing requirements that are applicable 
only with respect to mental health or sub-
stance use disorder benefits; and 
‘‘(ii) the treatment limitations applica-
ble to such mental health or substance use 
disorder benefits are no more restrictive 
than the predominant treatment limita-
tions applied to substantially all medical 
and surgical benefits covered by the plan 
and there are no separate treatment limi-
tations that are applicable only with re-
spect to mental health or substance use 
disorder benefits. 
‘‘(B) DEFINITIONS.—In this paragraph: 
‘‘(i) FINANCIAL REQUIREMENT.—The 
term 
‘financial 
requirement’ 
includes 
deductibles, copayments, coinsurance, and 
out-of-pocket expenses, but excludes an ag-
gregate lifetime limit and an annual limit 
subject to paragraphs (1) and (2), 
‘‘(ii) PREDOMINANT.—A financial re-
quirement or treatment limit is considered 
to be predominant if it is the most com-
mon or frequent of such type of limit or 
requirement. 
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‘‘(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 treat-
ment. 
‘‘(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 partici-
pant, beneficiary, or contracting provider upon re-
quest. 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 bene-
ficiary in accordance with regulations. 
‘‘(5) OUT-OF-NETWORK
PROVIDERS.—In the 
case of a plan that provides both medical and sur-
gical benefits and mental health or substance use 
disorder benefits, if the plan provides coverage for 
medical or surgical benefits provided by out-of-net-
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work providers, the plan shall provide coverage for 
mental health or substance use disorder benefits pro-
vided by out-of-network providers in a manner that 
is consistent with the requirements of this section.’’; 
(2) in subsection (b), by amending paragraph 
(2) to read as follows: 
‘‘(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).’’; 
(3) in subsection (c)— 
(A) by amending paragraph (1) to read as 
follows: 
‘‘(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, with respect to a calendar year and a 
plan year, an employer who employed an aver-
age of at least 2 (or 1 in the case of an em-
ployer residing in a State that permits small 
groups to include a single individual) but not 
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more than 50 employees on business days dur-
ing 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 subpara-
graphs (B) and (C) of section 4980D(d)(2) 
shall apply.’’; and 
(B) by striking paragraph (2) and insert-
ing the following: 
‘‘(2) COST EXEMPTION.— 
‘‘(A) IN
GENERAL.—With respect to a 
group health plan, if the application of this sec-
tion 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 fol-
lowing plan year, and such exemption shall 
apply to the plan for 1 plan year. An employer 
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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. 
‘‘(B) APPLICABLE PERCENTAGE.—With re-
spect to a plan, the applicable percentage de-
scribed in this subparagraph shall be— 
‘‘(i) 2 percent in the case of the first 
plan year in which this section is applied; 
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 for purposes of this section shall 
be made and certified by a qualified and li-
censed actuary who is a member in good stand-
ing 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). 
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‘‘(D) 6-MONTH
DETERMINATIONS.—If a 
group health plan seeks an exemption under 
this paragraph, determinations under subpara-
graph (A) shall be made after such plan has 
complied with this section for the first 6 
months of the plan year involved. 
‘‘(E) NOTIFICATION.— 
‘‘(i) IN
GENERAL.—A group health 
plan that, based upon a certification de-
scribed under subparagraph (C), qualifies 
for an exemption under this paragraph, 
and elects to implement the exemption, 
shall promptly notify the Secretary, the ap-
propriate State agencies, and participants 
and beneficiaries in the plan of such elec-
tion. 
‘‘(ii) REQUIREMENT.—A notification 
to the Secretary under clause (i) shall in-
clude— 
‘‘(I) a description of the number 
of covered lives under the plan in-
volved 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; 
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‘‘(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 use 
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 use disorder 
benefits under the plan. 
‘‘(iii) CONFIDENTIALITY.—A notifica-
tion 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 in-
cludes— 
‘‘(I) a breakdown of States by 
the size and type of employers submit-
ting such notification; and 
‘‘(II) a summary of the data re-
ceived under clause (ii). 
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‘‘(F) AUDITS
BY
APPROPRIATE
AGEN-
CIES.—To determine compliance with this para-
graph, the Secretary may audit the books and 
records of a group health plan relating to an 
exemption, including any actuarial reports pre-
pared 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 sub-
paragraph (E) may also conduct such an audit 
with respect to an exemption covered by such 
notification.’’; 
(4) in subsection (e), by striking paragraph (4) 
and inserting the following: 
‘‘(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. 
‘‘(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.’’; 
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(5) by striking subsection (f); 
(6) by striking ‘‘mental health benefits’’ and in-
serting ‘‘mental health and substance use disorder 
benefits’’ each place it appears in subsections 
(a)(1)(B)(i), (a)(1)(C), (a)(2)(B)(i), and (a)(2)(C); 
and 
(7) by striking ‘‘mental health benefits’’ and in-
serting ‘‘mental health or substance use disorder 
benefits’’ each place it appears (other than in any 
provision amended by the previous paragraph). 
(d) REGULATIONS.—Not later than 1 year after the 
date of enactment of this Act, the Secretaries of Labor, 
Health and Human Services, and the Treasury shall issue 
regulations to carry out the amendments made by sub-
sections (a), (b), and (c), respectively. 
(e) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply 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, re-
gardless of whether regulations have been issued to 
carry out such amendments by such effective date, 
except that the amendments made by subsections 
(a)(5), (b)(5), and (c)(5), relating to striking of cer-
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