This article includes our new "Observations" format, which combines compliance information with commentary and practical insights from our Benefits Compliance team.
The Mental Health Parity and Addiction Equity Act (MHPAEA) aims to ensure equitable coverage for mental health and substance use disorder benefits. However, recent developments have cast a shadow of uncertainty over its rules and enforcement. The Trump administration has announced plans to reexamine and potentially roll back regulations issued late in the Biden administration, which could include the new MHPAEA comparative analysis regulations. Additionally, a trade association has launched a legal challenge to these rules, arguing that they exceed regulatory authority and impose impractical requirements on employers. Certain healthcare industry stakeholders, including plan sponsors, insurers, and third-party administrators (TPAs), are now left grappling with the potential impact on mental health benefits and the broader regulatory environment. These developments prompt critical questions about future rules and enforcement, employer compliance responsibilities, and ongoing efforts to improve mental healthcare access, coverage, and transparency.
Background
MHPAEA applies to plans and carriers offering health insurance that covers both medical/surgical (MED/SURG) and mental health/substance use disorder (MH/SUD) benefits. Self-insured plans sponsored by small employers (50 or fewer employees) and retiree-only medical plans that do not cover current employees are exempt from MHPAEA requirements. MHPAEA rules are enforced by the tri-agencies (DOL, HHS, and IRS) and the Employee Benefits Security Administration (EBSA) of the DOL, which handles the majority of federal enforcement efforts.
While MHPAEA does not mandate mental health coverage, it requires plans that offer MH/SUD benefits to do so on par with MED/SURG benefits. This means plans and insurers cannot impose more restrictive financial requirements (e.g., deductibles, copays, coinsurance, or out-of-pocket maximums), quantitative treatment limitations (QTLs, such as limits on covered days, visits, or treatments), or nonquantitative treatment limitations (NQTLs, such as coverage exclusions, prior authorization requirements, medical necessity criteria, or network limitations) on MH/SUD benefits than those applied to MED/SURG benefits.
NQTL Comparative Analysis Requirements
Enforcing MHPAEA has been fraught with difficulties since its enactment in 2008. Reports have highlighted widespread noncompliance, particularly in the design and application of NQTLs, which has led to restricted access for MH/SUD benefits. To address these issues, the CAA 2021 amended MHPAEA to require group health plans and insurers to document their compliance with the law, specifically on NQTLs.
This documentation process is known as a comparative analysis, which requires a “robust discussion” of all NQTLs in a plan, as written and in operation. This means that general declarations of compliance and broadly stated practices are insufficient. Essentially, the comparative analysis must justify the inclusion of each NQTL. Additionally, upon request, plans must make their comparative analysis available to the federal tri-agencies, applicable state agencies, or participants. A self-insured plan sponsor is responsible for conducting the comparative analysis, whereas this responsibility falls on the insurer for a fully insured plan.
While employers will need to rely on their plan service providers (e.g., insurers and TPAs, including pharmacy benefits managers (PBMs) and administrative services only (ASO) arrangements), the DOL expects that an ERISA plan fiduciary will take an active role in the process — minimally by reviewing the comparative analysis, confirming and understanding the findings, and seeking assurances from the service providers that the plan’s NQTLs and comparative analysis comply with MHPAEA. These duties align with the general duties that ERISA imposes on plan fiduciaries. For further guidance on ERISA fiduciary duties, PPI clients can download a copy of the PPI publication ERISA Fiduciary Governance: A Guide for Employers from the Client Help Center.
Compliance Conundrum for Self-Insured Plans
For self-insured plans, the comparative analysis task is often complicated by a disconnect between the parties. Specifically, the party legally responsible for compliance (an employer sponsoring a self-insured plan) doesn’t necessarily have ready access to the required information, which is held by another party, typically the TPA. Very few self-insured health plans are administered without TPAs deciding claims, designing plan coverage terms, and maintaining provider networks. Further, the comparative analysis is not straightforward, and plan sponsors rarely have the technical expertise. Simply identifying the NQTLs to analyze requires a sophisticated understanding of plan design and administration. As a result, it is imperative for self-insured plans to have their TPA’s full cooperation. This means completing the comparative analysis for NQTLs designed by the TPA such as exclusions, coverage guidelines and restrictions, prior authorization requirements, network composition, and reimbursement rates.
Unfortunately, some TPAs have been reluctant to complete a comparative analysis on behalf of their plan sponsor clients. If a TPA will not provide an adequate comparative analysis, the plan sponsor will need to conduct the analysis with legal counsel or hire a specialized vendor.
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Our Observation:
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The DOL has signaled that it did not intend to create a new type of specialized vendor to complete the comparative analysis. Instead, the agency expected that the analysis would be completed by the TPAs that design and administer NQTLs. However, some plans may choose to engage a vendor where its TPA will not provide an adequate comparative analysis.
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Selecting a vendor to complete a plan’s comparative analysis is a “fiduciary act” under ERISA, requiring a prudent certification process. Due to the complexity of the analysis, the information-gathering challenges from TPAs, and the lack of a model from the DOL, plan sponsors should exercise caution when choosing a vendor. Importantly, even after engaging a comparative analysis vendor, a self-insured plan sponsor must still monitor the service provider’s work, remain attentive to problematic NQTLs, and take corrective action as needed.
Uncertain Regulatory Environment
On September 9, 2024, the tri-agencies announced extensive final rules implementing MHPAEA. Please see our previous Compliance Corner article outlining these final rules: The Wait Is Over! Final MHPAEA Rules Announced. Some of the new rules are already in force while others become effective January 1, 2026. On January 17, 2025, the ERISA Industry Committee (ERIC), a national nonprofit trade association representing large employers, filed a lawsuit challenging the MHPAEA final rules as exceeding the tri-agencies’ regulatory authority. The lawsuit alleges that the final rules impose new and ambiguous requirements that are so burdensome and unworkable that they will discourage employers from offering MH/SUD benefits at all. The tri-agencies have requested an extension to reply, citing the need for additional time to determine how they wish to proceed regarding the MHPAEA final rules.
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Our Observation:
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While the lawsuit is still in its early stages, it is expected that ERIC will raise the Supreme Court’s recent Loper Bright decision to support its argument that the MHPAEA final rules are inconsistent with MHPAEA’s and the CAA 2021’s statutory language. Loper Bright overruled long-standing precedent that required deference to a federal agency’s regulatory interpretation of a Congressional statute. The decision generally makes regulatory interpretations of statutes more susceptible to being struck down by a reviewing court.
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On February 14, 2025, ERIC submitted a request to the tri-agencies to postpone the final rules’ implementation while the lawsuit is pending. Notably, other healthcare industry groups and mental health advocates, including the American Medical Association, American Psychological Association, American Foundation for Suicide Prevention, and The Kennedy Forum, have issued statements opposing ERIC’s lawsuit and broadly defending the MHPAEA final rules. These statements call on the Trump administration to continue increasing access to MH/SUD treatment and improving transparency in healthcare claims administration through the MHPAEA final rules.
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Our Observation:
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It is unclear what position the Trump administration will take on the MHPAEA final rules. The NQTL comparative analysis requirement was introduced via the CAA 2021, which was signed into law in the final days of the Trump administration’s first term. However, the current administration may accept ERIC’s argument that the Biden administration’s regulations went beyond the CAA 2021’s authority and pull back those MHPAEA final rules. While coverage for MH/SUD treatment is generally considered a bipartisan issue, many policies from the Trump administration’s first term that were continued by the Biden administration are being reexamined and reversed. Furthermore, newly introduced budget cuts may leave fewer resources for DOL/EBSA enforcement of MHPAEA.
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Comparative Analysis Still in Effect, Litigation Risk Remains
Regardless of the Trump administration’s actions on the MHPAEA final rules or the outcome of the ERIC lawsuit, the NQTL comparative analysis requirement remains in effect by statute (MHPAEA and CAA 2021). This requirement is not subject to regulatory challenges under Loper Bright or changes in federal agency policy. While the manner of implementation may vary, there has been bipartisan support for maintaining the NQTL comparative analysis provision, making it likely that the requirement will remain.
Beyond DOL enforcement, which may decrease due to new budget constraints, group health plans face a growing risk of litigation from employees challenging denied MH/SUD claims. The lawsuits typically challenge coverage exclusions and the medical necessity criteria used to decide MH/SUD claims, arguing that they are inconsistent with the medical community’s standards of care. These claims often relate to residential treatment or wilderness therapy exclusions, limitations on treatment for autism spectrum disorder, or stricter review processes applied to MH/SUD claims.
MHPAEA litigation and federal enforcement efforts have also targeted plan transparency issues, namely, the failure to provide documents related to NQTLs and coverage guidelines. Plan sponsors should confirm their insurers or TPAs provide adequate documentation in response to information requests from participants or beneficiaries, often made during the claim appeals process. Under ERISA, the requested information can extend beyond the plan document to include the comparative analysis, medical necessity criteria, claim review guidelines, and administrative services agreements with TPAs. Further, any NQTL applied to a claim decision must be clearly and simply explained in the denial letter.
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Our Observation:
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Shortcomings in MHPAEA and ERISA document disclosures leave plans exposed to substantial late penalties, up to $110 per day. Even if a plan responds to a document request within 30 days (as required under ERISA), penalties may still accrue if any documents are missing from the response. Self-insured plan sponsors in particular should verify that robust procedures are in place to respond fully and timely to any MHPAEA or ERISA document request. Responding to document requests can be burdensome and, like completing the comparative analysis, may require extensive information controlled by the TPA. Therefore, the responsibility for responding should be explicitly addressed in administrative services agreements between plan sponsors and TPAs.
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Remaining Vigilant
Certain DOL-identified impermissible NQTLs or participant MH/SUD coverage complaints should be treated as red flags for potential noncompliance. Specifically, any challenged plan terms or practices (e.g., exclusion, limitation, coverage guideline, or reimbursement rate) should be closely examined with the TPA handling claims. This degree of attention to participant grievances may prevent lawsuits or DOL investigations. NQTLs that cannot be justified as comparable between MH/SUD and MED/SURG must then be corrected. Ideally, the comparative analysis would be completed before introducing an NQTL. But if a problematic NQTL is later discovered, corrective actions are favored over belated justifications. For information on common “red flag” plan terms that signal possible MHPAEA noncompliance, clients can download a copy of the PPI publication MHPAEA Compliance: Red Flag NQTLs from the Client Help Center.
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Our Observation:
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Corrective actions may include removing the NQTL, adding coverage for previously excluded benefits, and changing claims processing procedures. These types of coverage changes may require a plan amendment (through a Summary of Material Modifications or updated Summary Plan Description), notification to participants, and re-adjudication of claims impacted by an impermissible NQTL.
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Final Thoughts
Despite the uncertain regulatory environment, the MHPAEA NQTL comparative analysis remains in effect. Because there is no annual submission requirement, it may be easy to overlook. However, plan sponsors must be prepared to respond completely and quickly to a request for the analysis from a regulator, participant, or beneficiary, which can often be a lengthy process. With these challenges in mind, plan sponsors should proactively obtain assurances of compliance from their carriers or TPAs. The comparative analysis task is particularly challenging for self-insured plans and necessitates cooperation from the TPAs that design and administer NQTLs. For specific action items and tools to help employers navigate the MHPAEA NQTL comparative analysis requirement, clients can download a copy of the PPI publication MHPAEA NQTL Comparative Analysis: A Guide for Employers from the Client Help Center.