Problems Related to Claims for Psychological or Psychiatric Treatment

Part 2, Chapter 4: Traditional Individual and Group Plans, Doctors' Bills Page 13

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In many health insurance policies, there may be a significant difference between the reimbursement provided for the treatment of illnesses such as cancer or heart disease and the reimbursement provided for the treatment of mental or emotional illnesses. That difference is generally referred to as a lack of parity. It can obviously have serious economic consequences for individuals who need treatment for a mental or emotional illness.

A guarantee of parity was included in one of the original proposals for the federal Portability and Accountability Act. Although the act was passed in the summer of 1996, the guarantee of parity -- which would have ensured full equality of benefits in terms of reimbursement for the treatment of both physical and mental illnesses -- was not included in the final version.

However, the federal Mental Health Parity Act, passed in October of 1996, focused on this issue once again. The act specifically prohibits insurers that offer coverage for the treatment of mental illnesses from establishing lower yearly or lifetime benefit maximums for reimbursement for the treatment of mental illness than for the treatment of physical illness.

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