Mental Health Coverage

Revised March 2010

Note: This information was developed to provide consumers with general information and guidance about insurance coverages and laws. It is not intended to provide a formal, definitive description or interpretation of Department policy. For specific Department policy on any issue, regulated entities (insurance industry) and interested parties should contact the Department.

The National Alliance on Mental Illness defines mental illnesses as “medical conditions that disrupt a person's thinking, feeling, mood, ability to relate to others and daily functioning.” Mental illnesses can affect persons of any age, race, religion, or income. The National Institute of Mental Health reports that one in four adults—approximately 57.7 million Americans—experience a mental health disorder in a given year. This fact sheet provides information regarding mental health coverage required by State and federal law.

Serious Mental Illness

Who Must Provide the Coverage?

Illinois law requires insurance companies and HMOs that provide coverage for hospital or medical benefits to employer groups of 51 or more employees to also provide coverage for “serious mental illnesses” (the “Serious Mental Illness Law” [215 ILCS 5/370c(b)]).

The Serious Mental Illness Law does not apply to self-insured employers or to trusts or insurance policies written outside Illinois. However, for HMOs, the Law does apply in certain situations to contracts written outside of Illinois if the HMO member is a resident of Illinois and the HMO has established a provider network in Illinois. To determine if your HMO is subject to the Serious Mental Illness Law, you should contact the HMO directly or check your certificate of coverage.

What is Covered?

Group insurance and HMO plans subject to the Serious Mental Illness Law must provide coverage for the treatment of “serious mental illnesses” under the same terms and conditions as coverage for other illnesses or diseases. As defined by the Law, serious mental illnesses include:

Schizophrenia;
Paranoid and other psychotic disorders;
Bipolar disorders (hypomanic, manic, depressive, and mixed);
Major depressive disorders (single episode or recurrent)
Schizoaffective disorders (bipolar or depressive);
Pervasive developmental disorders;
Obsessive-compulsive disorders
Depression in childhood and adolescence;
Panic disorder;
Post-traumatic stress disorders (acute, chronic, or with delayed onset); and
Anorexia nervosa and bulimia nervosa.

Like coverage for other conditions, coverage for the treatment of serious mental illnesses may be subject to insurance company determinations of medical necessity. If your insurance company or HMO denies a claim or pre-certification request on the grounds that a particular treatment is not medically necessary, Illinois law provides you the right to an independent review of the company’s determination.

Can an Insurer or HMO Impose Limits on Mental Health Coverage?

Federal law—the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (“MHPAEA,” Public Law 110-343) and the Mental Health Parity Act of 1996 (Public Law 104-204)—requires “parity,” or equivalence, between coverage for mental health or substance use disorder benefits and coverage for medical or surgical benefits.

Group policies subject to the MHPAEA may not impose financial requirements (e.g., deductibles, co-payments, or coinsurance) or treatment limitations (e.g., limits on the frequency of treatment, number of visits, or days of coverage) for the treatment of mental health or substance use disorders that are more restrictive than those applied to medical and surgical benefits. For example, a group policy that did not contain a limit on the number of outpatient visits for medical/surgical benefits could not limit the number of outpatient visits for mental health benefits.

The MHPAEA, which applies to group health insurance policies and HMO plans covering 51 or more employees, became effective on October 3, 2009. Policies issued, delivered, amended or renewed after this date must abide by the parity requirements established by the MHPAEA.

The Mental Health Parity Act of 1996 prohibits annual or lifetime limits for the treatment of mental health or substance use disorders that are lower (less favorable) than those applied to medical and surgical benefits.

For more information on federal mental health parity laws, please see this fact sheet prepared by the U.S. Centers for Medicare and Medicaid Services.

NOTE: Illinois’ Serious Mental Illness Law requires insurance companies to cover a certain minimum number of outpatient visits (60) and inpatient days (45) for the treatment of serious mental illnesses. However, the federal MHPAEA supersedes any contrary provisions in the Serious Mental Illness Law, which was passed prior to the enactment of the MHPAEA. For example, a policy subject to the MHPAEA could not limit the number of outpatient visits required under the Serious Mental Illness Law unless such limit meets the parity requirements established by the MHPAEA (as described above). Legislation has been introduced in Illinois to update the Serious Mental Illness Law to ensure its compliance with federal law.

What is Not Covered?

Under the Serious Mental Illness Law, your group insurance or HMO plan is not required to pay for treatment of an addiction to a controlled substance or cannabis that is used in violation of law, or for mental illness resulting from the use of a controlled substance or cannabis in violation of law.

If your insurance policy or HMO plan does provide coverage for the treatment of disorders related to or resulting from substance use and is subject to the federal MHPAEA, such coverage must meet the parity requirements described above.

Do I Have to Receive Treatment from a Certain Provider?

If you are covered by a managed care plan such as an HMO or PPO, then you must follow the requirements of the plan in order to receive optimum benefits. For example, you must use a preferred provider under a PPO plan in order to receive the preferred benefit level. In the HMO setting, you must follow plan requirements regarding referrals from your primary care physician in order to receive benefits.

Other Mental Illnesses

Who Must Offer the Coverage?

Illinois law [215 ILCS 370c (a)] requires insurance companies and HMOs that provide group coverage for hospital or medical benefits to offer coverage for the treatment of mental illnesses, other than the “serious mental illnesses” described above, to the group policyholder, regardless of the group size. The group policyholder (i.e., the employer) may accept or decline the offer. The law does not apply to self-insured employers or to trusts or insurance policies written outside Illinois. However, for HMOs, the law does apply in certain situations to contracts written outside of Illinois if the HMO member is a resident of Illinois and the HMO has established a provider network in Illinois. To determine if your HMO group plan must offer such coverage, you should contact the HMO directly or check your certificate of coverage.

What is Covered?

For those group policies that accept the offer of coverage, the law requires coverage for the “reasonable and necessary treatment and services” for such mental, emotional or nervous disorders or conditions.

If you are covered by a managed care plan such as an HMO or PPO, you are not limited to preferred or contracted providers to receive this benefit. You may receive treatment for mental illnesses from the licensed physician, licensed clinical psychologist, licensed clinical social worker or licensed clinical professional counselor of your choice.

What are the Limits?

For group policies subject to the federal MHPAEA (i.e., employer groups with 51 or more employees), mental health coverage offered under this law must be offered at the same cost sharing requirements (deductibles, co-payments, coinsurance) and treatment limitations (limits on the frequency of treatment, number of visits, or days of coverage) applicable to medical and surgical benefits.

For group policies exempted from the federal MHPAEA (i.e., employer groups of 50 or fewer employees), the insured may be required to pay up to 50% of expenses incurred as a result of the mental health treatments or services, and the policy may impose an annual limit for mental health benefits that is the lesser of $10,000 or 25% of the lifetime policy limit.