The Mental Health Parity Act and the ADA

Two recent pieces of regulation have impacted how employers treat mental health issues. The Federal Mental Health Parity Act of 1996 becomes effective on January 1, 1998, and earlier in the year the Equal Employment Opportunity Commission (EEOC) issued guidelines on the Americans with Disabilities Act (ADA) and Psychiatric Disabilities. This article will describe these two pieces of legislation/regulation and their impact on employers.

The Mental Health Parity Act applies to companies with 51 or more employees. It requires employers to provide coverage for the diagnosis and medically necessary treatment of mental illness under the same terms and conditions applied to other medical conditions. It applies to medical plans renewed on or after January 1, 1998. The law's major provisions are:

A plan must provide equal lifetime and annual maximums for medical and mental health benefits. If a group health plan does not provide dollar limits for medical or surgical benefits, it cannot apply them to mental health.
A plan cannot impose dollar limits for hospital stays or outpatient visits. However, it can impose day limits on hospital stays and outpatient visits.
The Act excludes substance abuse and chemical dependency from the requirement of equal maximums.

An employer can claim exemption from the Act if compliance results in a one-percent or higher increase in the overall cost of the group health plan's premiums. The burden is on the employer to prove the increase, and the Act does not explain how employers would claim an exemption.

The Americans with Disabilities Act (ADA) was passed in 1990 and it prohibits discrimination in employment against individuals with disabilities. Earlier this year the EEOC issued the guidelines on ADA and Psychiatric Disabilities. The guidelines were issued in order to:

Respond to questions and concerns expressed by individuals with psychiatric disabilities regarding the ADA,
Answer questions posed by employers about how ADA applies in the context of psychiatric disabilities, and
Facilitate the full enforcement of the ADA with respect to individuals alleging employment discrimination based on psychiatric disability;

The ADA defines "mental impairment" to include "[a]ny mental or psychological disorder, such as . . . emotional or mental illness." Examples of "emotional or mental illness[es]" include major depression, bipolar disorder, anxiety disorders (which include panic disorder, obsessive compulsive disorder, and post-traumatic stress disorder), schizophrenia, and personality disorders.

Employers must keep all information concerning the medical condition or history of its applicants or employees, including information about psychiatric disability, confidential under the ADA. If employees ask questions about a coworker who has a disability, the employer must not disclose any medical information in response.

An employer must provide a reasonable accommodation to the known physical or mental limitations of a qualified individual with a disability unless it can show that the accommodation would impose an undue hardship. Reasonable accommodations include:

Time off using accrued paid leave or unpaid leave
Modified work schedules
Allowing more frequent breaks
Changing management style such as offering more frequent and detailed job guidance
Changing the work environment, such as making it quieter and easier for the employee to concentrate

The ADA does not protect:

Sexual behavior disorders
Compulsive gambling
Kleptomania
Pyromania
Psychoactive substance use disorders resulting from current illegal use of drugs

Employees with a protected mental disability are not exempt from the company's standards of conduct and disciplinary procedures.

More information on the ADA and Psychiatric Disabilities is available at the EEOC's web site: http://www.eeoc.gov/docs/psych.txt

Conclusion

At first glance it appears that compliance with these regulations will be costly to employers. That may be true. However, the other side of the equation is the cost of not treating and accommodating mental disabilities. Studies have shown that mental disorders are a major source of absenteeism, low productivity, accidents, turnover, job dissatisfaction and interpersonal conflict. In addition, depression is associated with higher levels of disability than most chronic physical disorders. Untreated mental health disorders can lead to more costly medical treatment and workers compensation claims. One study of Medicaid patients with chronic illnesses showed a drop in medical costs when the patients received psychotherapy.

Providing accommodation and health care for employees with mental disabilities may result in some cost savings, although it will be difficult to measure how much. Since employers must comply with the law, the best approach is to work with the health care providers to control costs. Examples of cost control techniques include:

Using Employer Assistance Plans (EAP's) [link]
Encourage the use of outpatient treatment rather than more expensive inpatient services
Establish a preferred provider network
Install managed care techniques such as case management

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