chemical dependency benefits if similar limitations or
requirements are not imposed on medical and surgical
benefits.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Mental Health and
Substance Abuse Parity Amendments of 2001’’.
SEC. 2. REVISION IN LIMITS APPLIED TO MENTAL HEALTH
BENEFITS.
(a) APPLICATION TO GROUP HEALTH PLANS AND
GROUP HEALTH INSURANCE UNDER ERISA.—
(1) EXPANSION TO COVER TREATMENT LIMITA-
TIONS
AND
FINANCIAL
REQUIREMENTS
GEN-
ERALLY.—Section 712 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1185a) is
amended—
(A) in the heading, by striking ‘‘CER-
TAIN’’;
(B) by amending subsections (a) and (b) to
read as follows:
‘‘(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 mental health benefits, such plan or coverage
shall not impose treatment limitations or financial require-
ments on the coverage of mental health benefits if similar
limitations or requirements are not imposed on coverage
of medical and surgical benefits in comparable settings
(including inpatient and outpatient settings).
‘‘(b) CONSTRUCTION.—Nothing in this section shall
be construed—
‘‘(1) as prohibiting a group health plan (or
health insurance coverage offered in connection with
such a plan) from—
‘‘(A) negotiating separate reimbursement
rates and service delivery systems for different
benefits; or
‘‘(B) managing the provision of benefits
through the use of pre-admission screening,
prior authorization of services, and other mech-
anisms designed to limit coverage of items and
services to those deemed to be medically nec-
essary;
‘‘(2) as requiring a group health plan (or health
insurance coverage offered in connection with such a
plan) to provide any specific mental health benefits;
or
‘‘(3) as preventing a group health plan or
health insurance issuer applying subsection (a) with-
out regard to benefits for preventive care.’’; and
(C) in subsection (e), by striking para-
graphs (1) and (2) and inserting the following:
‘‘(1) TREATMENT
LIMITATIONS.—The term
‘treatment limitations’ means limits on the fre-
quency of treatment, number of visits, or other lim-
its on the scope and duration of treatment, as cov-
ered by a group health plan (or health insurance
coverage offered in connection with such a plan).
Such term does not include limits on benefits or cov-
erage based solely on medical necessity.
‘‘(2) FINANCIAL
REQUIREMENTS.—The term
‘financial 
requirements’ 
means 
copayments,
deductibles, out-of-network charges, out-of-pocket
contributions or fees, annual limits, and lifetime ag-
gregate limits imposed on covered individuals.’’.
(2) ELIMINATION OF COST EXEMPTION.—Such
section is further amended by striking paragraph (2)
of subsection (c).
(3) ELIMINATION OF SUNSET.—Such section is
further amended by striking subsection (f).
(4) CLERICAL AMENDMENT.—The item in the
table of contents in section 1 of such Act relating to
section 712 is amended by striking ‘‘certain’’.
(b) APPLICATION TO GROUP HEALTH PLANS AND
HEALTH
INSURANCE
ISSUERS
UNDER
THE
PUBLIC
HEALTH SERVICE ACT.—
(1) EXPANSION TO COVER TREATMENT LIMITA-
TIONS
AND
FINANCIAL
REQUIREMENTS
GEN-
ERALLY.—Section 2705 of the Public Health Service
Act (42 U.S.C. 300gg–5) is amended—
(A) in the heading, by striking ‘‘CER-
TAIN’’;
(B) by amending subsections (a) and (b) to
read as follows:
‘‘(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 mental health benefits, such plan or coverage
shall not impose treatment limitations or financial require-
ments on the coverage of mental health benefits if similar
limitations or requirements are not imposed on coverage
of medical and surgical benefits in comparable settings
(including inpatient and outpatient settings).
‘‘(b) CONSTRUCTION.—Nothing in this section shall
be construed—
‘‘(1) as prohibiting a group health plan (or
health insurance coverage offered in connection with
such a plan) from—
‘‘(A) negotiating separate reimbursement
rates and service delivery systems for different
benefits; or
‘‘(B) managing the provision of benefits
through the use of pre-admission screening,
prior authorization of services, and other mech-
anisms designed to limit coverage of items and
services to those deemed to be medically nec-
essary;
‘‘(2) as requiring a group health plan (or health
insurance coverage offered in connection with such a
plan) to provide any specific mental health benefits;
or
‘‘(3) as preventing a group health plan or
health insurance issuer applying subsection (a) with-
out regard to benefits for preventive care.’’; and
(C) in subsection (e), by striking para-
graphs (1) and (2) and inserting the following:
‘‘(1) TREATMENT
LIMITATIONS.—The term
‘treatment limitations’ means limits on the fre-
quency of treatment, number of visits, or other lim-
its on the scope and duration of treatment, as cov-
ered by a group health plan (or health insurance
coverage offered in connection with such a plan).
Such term does not include limits on benefits or cov-
erage based solely on medical necessity.
‘‘(2) FINANCIAL
REQUIREMENTS.—The term
‘financial 
requirements’ 
means 
copayments,
deductibles, out-of-network charges, out-of-pocket
contributions or fees, annual limits, and lifetime ag-
gregate limits imposed on covered individuals.’’.
(2) ELIMINATION OF COST EXEMPTION.—Such
section is further amended by striking paragraph (2)
of subsection (c).
(3) ELIMINATION OF SUNSET.—Such section is
further amended by striking subsection (f).
(c) APPLICATION TO GROUP HEALTH PLANS UNDER
THE INTERNAL REVENUE CODE OF 1986.—
(1) EXPANSION TO COVER TREATMENT LIMITA-
TIONS
AND
FINANCIAL
REQUIREMENTS
GEN-
ERALLY.—Section 9812 of the Internal Revenue
Code of 1986 (relating to parity in the application
of certain limits to mental health benefits) is
amended—
(A) in the heading, by striking ‘‘CER-
TAIN’’;
(B) by amending subsections (a) and (b) to
read as follows:
‘‘(a) IN GENERAL.—In the case of a group health
plan that provides both medical and surgical benefits and
mental health benefits, such plan shall not impose treat-
ment limitations or financial requirements on the coverage
of mental health benefits if similar limitations or require-
ments are not imposed on coverage of medical and surgical
benefits in comparable settings (including inpatient and
outpatient settings).
‘‘(b) CONSTRUCTION.—Nothing in this section shall
be construed—
‘‘(1) as prohibiting a group health plan from—
‘‘(A) negotiating separate reimbursement
rates and service delivery systems for different
benefits; or
‘‘(B) managing the provision of benefits
through the use of pre-admission screening,
prior authorization of services, and other mech-
anisms designed to limit coverage of items and
services to those deemed to be medically nec-
essary;
‘‘(2) as requiring a group health plan to provide
any specific mental health benefits; or
‘‘(3) as preventing a group health plan applying
subsection (a) without regard to benefits for preven-
tive care.’’; and
(C) in subsection (e), by striking para-
graphs (1) and (2) and inserting the following:
‘‘(1) TREATMENT
LIMITATIONS.—The term
‘treatment limitations’ means limits on the fre-
quency of treatment, number of visits, or other lim-
its on the scope and duration of treatment, as cov-
ered by a group health plan. Such term does not in-
clude limits on benefits or coverage based solely on
medical necessity.
‘‘(2) FINANCIAL
REQUIREMENTS.—The term
‘financial 
requirements’ 
means 
copayments,
deductibles, out-of-network charges, out-of-pocket
contributions or fees, annual limits, and lifetime ag-
gregate limits imposed on covered individuals.’’.
(2) ELIMINATION OF COST EXEMPTIONS.—Such
section is further amended by striking paragraph (2)
of subsection (c).
(3) ELIMINATION OF SUNSET.—Such section is
further amended by striking subsection (f).
(4) CLERICAL AMENDMENT.—The item relating
to section 9812 in the table of sections of subchapter
B of chapter 100 of the Internal Revenue Code of
1986 is amended by striking ‘‘certain’’.
(d) APPLICATION TO INDIVIDUAL HEALTH INSUR-
ANCE.—Part B of title XXVII of the Public Health Serv-
ice Act is amended by inserting after section 2752 the fol-
lowing new section:
‘‘SEC. 2753. PARITY IN THE APPLICATION OF LIMITS TO
MENTAL HEALTH BENEFITS.
‘‘The provisions of subsections (a), (b), and (e) of sec-
tion 2705 shall apply to health insurance coverage offered
by a health insurance issuer in the individual market in
the same manner as they apply to health insurance cov-
erage offered by a health insurance issuer in connection
with a group health plan.’’.
(e) EFFECTIVE DATES.—
(1) GROUP HEALTH PLANS.—
(A) IN
GENERAL.—Subject to subpara-
graph (B), the amendments made by sub-
sections (a), (b), and (c) shall apply with re-
spect to group health plans for plan years be-
ginning on or after July 1, 2002.
(B) In the case of a group health plan
maintained pursuant to 1 or more collective
bargaining agreements between employee rep-
resentatives and 1 or more employers ratified
before the date of enactment of this Act, the
amendments made by subsections (a), (b), and
(c) shall not apply to plan years beginning be-
fore the later of—
(i) the date on which the last collec-
tive bargaining agreements relating to the
plan terminates (determined without re-
gard to any extension thereof agreed to
after the date of the enactment of this
Act), or
(ii) July 1, 2002.
For purposes of clause (i), any plan amendment
made pursuant to a collective bargaining agree-
ment relating to the plan which amends the
plan solely to conform to any requirement
added by subsection (a), (b), or (c) shall not be
treated as a termination of such collective bar-
gaining agreement.
(2) INDIVIDUAL
HEALTH
INSURANCE
COV-
ERAGE.—The amendment made by subsection (d)
shall apply with respect to health insurance coverage
offered, sold, issued, renewed, in effect, or operated
in the individual market on or after July 1, 2002.
(f) COORDINATION IN IMPLEMENTATION.—Effective
on the date of the enactment of this Act, section 104(1)
of the 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, 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’’.
SEC. 3. PARITY IN THE APPLICATION OF LIMITS TO SUB-
STANCE ABUSE AND CHEMICAL DEPEND-
ENCY BENEFITS.
(a) APPLICATION TO GROUP HEALTH PLANS UNDER
ERISA.—
(1) IN GENERAL.—Part 7 of subtitle B of title
II of the Employee Retirement Income Security Act
of 1974 is amended by inserting after section 713
the following new section:
‘‘SEC. 714. PARITY IN THE APPLICATION OF LIMITS TO SUB-
STANCE ABUSE AND CHEMICAL DEPEND-
ENCY BENEFITS.
‘‘The provisions of section 712 shall apply to benefits
with respect to treatment of substance abuse or chemical
dependency in the same manner as they apply to mental
health benefits.’’.
(2) CLERICAL AMENDMENT.—The table of con-
tents in section 1 of such Act is amended by insert-
ing after the item relating to section 713 the fol-
lowing new item:
‘‘Sec. 714. Parity in the application of limits to substance abuse and chemical
dependency benefits.’’.
(b) APPLICATION TO GROUP HEALTH PLANS AND
HEALTH
INSURANCE
ISSUERS
UNDER
THE
PUBLIC
HEALTH SERVICE ACT.—Title XXVII of the Public
Health Service Act is amended by inserting after section
2706 the following new section:
‘‘SEC. 2707. PARITY IN THE APPLICATION OF LIMITS TO
SUBSTANCE ABUSE AND CHEMICAL DEPEND-
ENCY BENEFITS.
‘‘The provisions of section 2705 shall apply to bene-
fits with respect to treatment of substance abuse or chem-
ical dependency in the same manner as they apply to men-
tal health benefits.’’.
(c) APPLICATION TO GROUP HEALTH PLANS UNDER
THE INTERNAL REVENUE CODE OF 1986.—
(1) IN
GENERAL.—Subchapter B of chapter
100 of the Internal Revenue Code of 1986 is amend-
ed by adding at the end the following new section:
‘‘SEC. 9813. PARITY IN THE APPLICATION OF LIMITS TO
SUBSTANCE ABUSE AND CHEMICAL DEPEND-
ENCY BENEFITS.
‘‘The provisions of section 9812 shall apply to bene-
fits with respect to treatment of substance abuse or chem-
ical dependency in the same manner as they apply to men-
tal health benefits.’’.
(2) CLERICAL AMENDMENT.—The table of sec-
tions for such subchapter is amended by adding at
the end the following new item:
‘‘Sec. 9813. Parity in the application of limits to substance abuse
and chemical dependency benefits.’’.
(d) APPLICATION TO INDIVIDUAL HEALTH INSUR-
ANCE COVERAGE UNDER THE PUBLIC HEALTH SERVICE
ACT.—Part B of title XXVII of the Public Health Service
Act, as amended by section 2(d), is amended by inserting
after section 2753 the following new section:
‘‘SEC. 2754. PARITY IN THE APPLICATION OF LIMITS TO
MENTAL HEALTH BENEFITS.
‘‘The provisions of section 2753 shall apply to bene-
fits with respect to treatment of substance abuse or chem-
ical dependency in the same manner as they apply to men-
tal health benefits.’’.
(e) EFFECTIVE DATES.—
(1) GROUP HEALTH PLANS.—
(A) IN
GENERAL.—Subject to subpara-
graph (B), the amendments made by sub-
sections (a), (b), and (c) shall apply with re-
spect to group health plans for plan years be-
ginning on or after July 1, 2002.
(B) In the case of a group health plan
maintained pursuant to 1 or more collective
bargaining agreements between employee rep-
resentatives and 1 or more employers ratified
before the date of enactment of this Act, the
amendments made by subsections (a), (b), and
(c) shall not apply to plan years beginning be-
fore the later of—
(i) the date on which the last collec-
tive bargaining agreements relating to the
plan terminates (determined without re-
gard to any extension thereof agreed to
after the date of the enactment of this
Act), or
(ii) July 1, 2002.
For purposes of clause (i), any plan amendment
made pursuant to a collective bargaining agree-
ment relating to the plan which amends the
plan solely to conform to any requirement
added by subsection (a), (b), or (c) shall not be
treated as a termination of such collective bar-
gaining agreement.
(2) INDIVIDUAL
HEALTH
INSURANCE
COV-
ERAGE.—The amendment made by subsection (d)
shall apply with respect to health insurance coverage
offered, sold, issued, renewed, in effect, or operated
in the individual market on or after July 1, 2002.
Æ