The Patient Protection and Affordable Care Act (ACA, P.L. 111-148 , as modified by P.L. 111-152 , the Health Care and Education Reconciliation Act of 2010) contains a number of provisions that generally combine to expand the reach of federal mental health parity requirements as established by the Mental Health Parity Act of 1996 (MHPA) and the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). In addition, while the ACA does not create an explicit federal-level mandated benefit for mental health and substance abuse disorder services, it does create one for certain health plan types. This report provides a brief background on mental health parity and the policy discussion around parity in health insurance coverage; an overview of federal mental health parity law prior to the enactment of the ACA; and an analysis of the impact of the ACA on federal mental health parity law. Prior to 1996, health insurance coverage for mental illness had historically been less generous than that for other physical illnesses. This has generally been reflected either by a complete lack of coverage of a particular mental health condition or related services or by a differential structuring of coverage terms for mental health benefits relative to benefits for medical and surgical services. For example, prior to the enactment of the federal mental health parity laws, health plans often chose to impose lower annual or lifetime dollar limits on mental health coverage; to limit treatment of mental health illnesses by covering fewer hospital days and outpatient office visits; and to increase cost sharing for mental health care services relative to medical or surgical services. In addition, in- and out-of-network coverage has often been variable between mental health and medical and surgical services. Mental health parity is a response to this disparity in insurance coverage, and generally refers to the concept that health insurance coverage for mental health services should be offered on par with covered medical and surgical benefits. Policymakers have developed three general approaches to achieving parity, based broadly on two dichotomous distinctions: namely, whether the approach mandates coverage and whether the approach requires parity coverage. Specifically, parity laws may require insurers to cover certain, or all, mental illnesses (mandated coverage); laws also may or may not require parity coverage. Policies including any type of coverage mandate for mental illnesses, and requiring parity coverage, are defined as taking a full parity approach. Policies which include any type of coverage mandate for mental illnesses, and which do not require parity coverage, are defined as taking a minimum mandated benefit approach. Finally, policies which do not include coverage mandates for mental illnesses, but which require parity coverage, are defined as taking a mandated offering parity approach. Federal mental health parity law prior to the ACA employed a mandated offering parity approach; it did not mandate coverage of any specific mental health or substance abuse disorder service, but it did require that where an insurer covered by the law chose to cover both mental health and medical and surgical benefits, they had to do so in compliance with the federal mental health parity requirements. The ACA contains a number of provisions which, when considered together, achieve two key goals with respect to mental health parity: (1) they expand the reach of the applicability of the federal mental health parity requirements; and (2) they create a mandated benefit for the coverage of certain mental health and substance abuse disorder services (to be determined through rulemaking) in a number of specific financing arrangements. Importantly, the ACA does not include an explicit or comprehensive coverage mandate for mental health services at the federal level; it only contains separate provisions which, when considered together, mandate coverage of mental health services for certain plans. In addition, the ACA does not modify the federal mental health parity requirements themselves; rather it contains several provisions which expand the applicability of said requirements to a number of specific financing arrangements. Two major mental health parity laws passed at the federal level prior to enactment of the ACA, and together establish the federal mental health parity requirements. These two laws are MHPA, which requires parity in annual and aggregate lifetime limits, and MHPAEA, which expands the federal parity requirements to include parity in treatment limitations, financial requirements, and in- and out-of-network covered benefits. Neither of these laws mandates the coverage of any specific mental health condition; rather, where an insurer chooses to cover both mental health and medical and surgical benefits, they are required to do so in compliance with these parity requirements. Recent data indicate that approximately one-third of employers with more than 50 employees have modified their benefits in response to MHPAEA. Of this group, a small percentage has elected to drop coverage for mental health and substance use disorder services in response to the requirements in MHPAEA, while the majority has instead responded by eliminating limits on coverage or increasing utilization management of benefits. The ACA requires coverage of (as of yet unspecified) mental health and substance use disorder services by certain plans, including those plans to be offered through the Exchanges. It is unclear what impact these requirements will have on plans' decisions to retain or drop coverage of mental health and substance use disorder services once they go fully into effect in 2014. MHPA ( P.L. 104-204 ) was the first federal mental health parity law. MHPA employs a mandated offering parity approach, with no coverage mandates, but requiring partial parity. It achieves this by mandating that annual and aggregate lifetime dollar limits on coverage for mental health services under group health plans and health insurance issuers offering group health coverage offering mental health coverage be no less than those for medical and surgical services. MHPA, as well as federal parity legislation introduced in later Congresses, amends the Employee Retirement Income Security Act (ERISA), the Public Health Service Act (PHSA), and the Internal Revenue Code (IRC) to apply the parity coverage requirements to all group health coverage arrangements governed by these statutes. MHPA establishes a small employer exemption, which was further amended by MHPAEA, exempting employers with between 2 and 50 employees from the federal mental health parity requirements. MHPA also contains a cost exemption, also further amended by MHPAEA, allowing group health plans that experience a cost increase of at least 1% as a result of complying with the act to be exempt from parity requirements. Since its enactment, MHPA, which originally sunset in 2001, received annual extensions through the end of 2008. The sunset provision in MHPA was repealed by MHPAEA. MHPAEA ( P.L. 110-343 ) expands the scope of mental health parity requirements at the federal level, and includes substance use disorders within its scope. It expands on the MHPA requirement of parity in aggregate lifetime and annual limits requiring, in addition, parity in treatment limitations, financial requirements, and in- and out-of-network benefits. MHPAEA amends the small employer exemption added by MHPA to include employers with only one employee seeking group insurance in those states where small groups are permitted to include a single individual and defining small employer per PHSA Section 2791(e)(4). MHPAEA also significantly amends MHPA's cost exemption to clarify its parameters. In addition, the federal mental health parity requirements established by MHPA and MHPAEA do not apply to the individual market. Prior to the enactment of the ACA, all of the federal mental health parity requirements were codified at PHSA Section 2705 (the ACA redesignates PHSA Section 2705 as PHSA Section 2726). Also prior to the ACA, all Medicaid managed care plans and all CHIP plans that chose to cover mental health services were required to comply with some or all of the federal mental health parity requirements. Medicare, offered to beneficiaries through either traditional fee-for-service or stand-alone Medicare Advantage (managed care) plans, is not required to comply with the federal mental health parity requirements to any extent. Generally, the effect of the mental health parity provisions in the ACA is to extend the applicability of the federal mental health parity requirements, and to mandate coverage of certain (to be specified) mental health services by specific plan types (see Table 1 ). In particular, several questions are raised by the expansion of the applicability of the federal mental health parity requirements. Specifically, the ACA expands the reach of federal mental health parity law to three main types of plans: qualified health plans (QHPs), as established by the ACA; Medicaid non-managed care benchmark and benchmark-equivalent plans; and plans offered through the individual market. The ACA modifies existing parity law to require compliance with the federal mental health parity requirements by plans offered through the individual market. It appears, however, that the small employer exemption in federal parity law remains in effect, and in fact, that the definition of small employer was expanded, per the ACA. Beginning in 2014, QHPs purchased through an Exchange must cover mental health services (to be determined through rulemaking), and must offer these services in compliance with the federal mental health parity requirements. The interaction between this requirement, and the apparent continued existence of the small employer exemption, raises considerations that may need to be reconciled through rulemaking. Medicaid benchmark and benchmark-equivalent plans, that are not managed care plans and that offer mental health services, must do so in compliance with the federal mental health parity requirements for financial requirements and treatment limitations. The ACA did not alter the applicability of parity requirements with respect to the Children's Health Insurance Program (CHIP), but the application of federal mental health parity requirements to CHIP plans, as required in law prior to the ACA, is explained here in detail. In addition, the ACA mandates coverage of certain mental health services specifically for QHPs; Medicaid benchmark and benchmark-equivalent plans; and new plans in the individual and small group markets.