Mental Health Coverage Improves Yet Awareness Lags

Plan sponsors have improved their coverage of mental health care in response to heightened demand—but participants may be unaware that the parity between care coverage types has increased.

Eighty-three percent of people surveyed in the Employee Benefit Research Institute’s 2024 Consumer Engagement in Health Care Survey said mental health care services should be covered in the same way as other health care services. However, 39% of respondents were unsure whether their own health plan did.

Paul Fronstin, EBRI’s director of health benefits research, says that covering mental and physical health services the “same way” means having the same cost sharing between employer and plan participant. He says the deductibles, copayments and restrictions on the number of visits might be the same for both types of care. Typically, restrictions are no longer an issue.

“But there [have] been [restrictions] in the past,” Fronstin says. “If people think there are restrictions or it’s going to cost them more to get mental health care services than other services, that may be a deterrent to [them] getting that care when they need it.”

Legislative Developments

Fewer than half (46%) of respondents reported that their health plan covers mental health care and other services the same way. Yet despite the findings of EBRI’s survey, federal policymakers have addressed the issue of access through several mental health parity laws.

The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 prevents group health plans and health insurance companies that provide mental health or substance use disorder benefits from imposing benefit limitations on those benefits that are less favorable than those on medical/surgical benefits. The Patient Protection and Affordable Care Act of 2010 built on MHPAEA by requiring coverage of services to treat mental health and substance use disorders as one of 10 essential health benefits categories.

The Consolidated Appropriations Act of 2021 had amended MHPAEA to require plans and issuers to provide comparative analyses of their nonquantitative treatment limitations to the U.S. secretaries of treasury, labor, and health and human services upon request and to authorize the secretaries to determine whether those NQTLs comply with MHPAEA. The administration of President Donald Trump stayed the requirement earlier this year in response to a lawsuit brought in January by the ERISA Industry Committee.

The Trump administration’s decision has spawned both optimism and concern across the industry.

A summary of the final rule states, “these final rules amend the existing [nonquantitative treatment limitation] standard to prohibit group health plans and health insurance issuers offering group or individual health insurance coverage from using NQTLs that place greater restrictions on access to mental health and substance use disorder benefits as compared to medical/surgical benefits.”

ERIC’s complaint argued that the parity rule imposes “ambiguous” and “burdensome” requirements that would discourage employers from offering mental health and substance use disorder benefits—what the group calls an example of regulatory overreach. ERIC released a statement in May praising the Trump administration’s response to the lawsuit and its decision not to penalize employers under the rule while the case is pending and the rule is being reconsidered.

Organizations focused on mental health and substance use disorder, including the Legal Action Center, the American Psychological Association, Inseparable, Mental Health America, National Alliance on Mental Illness and National Health Law Program, criticized the Trump administration’s decision.

“Rather than defending the bipartisan non-discrimination law that enables people with mental health conditions and substance use disorders to get equitable health care, the administration has promised to revisit the 2024 parity regulations and not enforce these critical consumer protections,” the organizations wrote in a statement. “As a result, working people and their families who are paying for health insurance coverage will face steeper challenges to accessing the mental health and substance use disorder care to which they are legally entitled.”

As of August, the case remains pending.

Knowledge Gap

Christin Kuretich, vice president of supplemental products at Voya, says there are three reasons that knowledge about mental health benefits continues to lag the offerings despite legislative protections: access, the prevalence of high-deductible health plans and incomplete reimbursements to mental health care providers.

“Since COVID, we’ve lost mental health clinicians in the field. … People have been burned out and exiting as therapists, social workers [and] counselors,” Kuretich says. “There [are] just not enough providers in the mental health space for the number of people who want treatment.”

Kuretich says the second issue relates to how HDHPs pass more health care costs on to employees. Whereas a deductible for treatment in a preferred provider organization plan might be $250 or $500, the minimum annual deductible for family coverage in 2025 in an HDHP plan is $3,300, and families could see deductibles of up to  $6,000.

“People may not feel like their coverage is the same because there isn’t the same equivalent of those preventive screenings on the physical side … things like annual exams, mammograms, colonoscopies and blood tests,” says Kuretich. “If you want to pursue mental health care, you have to pay out of pocket until you hit that high deductible.”

Because insurance companies do not always reimburse mental health providers the full amount of their services, many providers do not take insurance, Kuretich explains. Employees might feel their ability to take advantage of mental health coverage is limited.

Demand Trends Upward

The percentage of the population younger than age 65 with employment-based health coverage that was diagnosed with a mental health disorder increased to 18.5% in 2020 from 14.2% in 2013, according to research from EBRI. Despite the onset of the pandemic in early 2020, the jump in diagnosis rates over that period came almost entirely before the pandemic.

Fronstin notes that the numbers are probably even higher, as some people with mental health conditions do not seek care. Some providers, like primary care physicians, might not record that a participant has a mental health condition.

Voya’s Kuretich says the interest in, demand for and expectation that an employer will provide mental health benefits also is subject to a generational divide.

According to a Voya Financial Consumer Insights & Research survey, conducted in April, 67% of Generation Z and 59% of Millennials said offering mental health benefits would make them more likely to stay with their current employer. Only 43% of Generation X and 31% of Baby Boomers said the same.

“Millennials now make up … over half of the workforce, and Gen Z is coming in strong,” says Kuretich. “Eventually, those two generations who have the strongest demand for this coverage … are going to be the majority.”

Response Follows

“Employers are much more concerned about the mental health of their employees than they were 10 years ago,” says Fronstin. “COVID is partly responsible for that, but employers were moving that direction anyway because they recognize that there’s a link between mental health and productivity.”

Plan sponsors have been trying to “remove barriers” to access to mental health, Fronstin adds. He says employee assistance programs have helped to some degree with issues such as finding a mental health care provider that accepts new patients, but they are not necessarily sufficient solutions.

Kuretich says plan sponsors should ensure they are not only providing the “standard EAP” to their employees, but also that they are providing top-down support, building awareness and communicating with employees about what mental health benefits are available.

“A great next step is [asking plan sponsors,] ‘How are you communicating about the benefits that are in place?’” Kuretich says. “One of the first biggest gaps [to fill] is letting employees know what they do have access to—in some cases, free of charge.”