Issued by the Kansas Insurance Department, Kathleen Sebelius, Commissioner
November 26, 1997
TO: All Companies Authorized to Transact Accident & Health Insurance Business in the State of Kansas
SUBJECT: Mental Health "Parity" Requirements for Large Employer Groups (51 or More Employees)
The purpose of this bulletin is to advise all companies authorized to write coverage through a group policy providing hospital, medical, or surgical expense benefits in Kansas of the provisions of New Section 13 of 1997 Kansas Senate Bill No. 204. The following requirements affect both new policy issues and renewals on and after January 1, 1998.
1. If a group policy does not have an annual and/or lifetime limit on medical, surgical or hospital expense benefits, it cannot have limits on mental health coverage.
2. If the group has an annual and/or lifetime dollar limit on medical, surgical or hospital expense benefits, it must have the same annual and/or lifetime dollar limits on mental health services.
The following requirements should be adhered to in complying with New Section 13(e).
a. Large groups are required to provide mental health parity as outlined by 1997 SB No. 204, unless they can prove that the application of this new section will result in an increase in the cost under the plan of at least one percent. All plans must provide the mental health benefits required by K.S.A. 1996 Supp. 40-2,105 regardless of the one percent cost factor.
b. To demonstrate that the cost of providing mental health benefits will exceed one percent of the plan cost, a company must maintain a file which documents the one percent rate impact pursuant to K.S.A. 40-2215. As required by K.S.A. 40-2215, companies must file with the Insurance Department, prior to use, the rating methodology they use to calculate the cost of providing mental health benefits.
c. Once a group has opted out of the mental health coverage requirements, the carrier has to annually update the data concerning the one percent rate impact.
d. For community rated pools, the rate determination for the one percent rate impact may be based on the total pool.
e. Carriers may compute the rate impact using either prospective or retrospective means.
"Mental health benefits", as defined in New Section 13(g)(4), means "benefits with respect to mental health services, as defined under terms of the policy, but does not include benefits with respect to treatment of substance abuse or chemical dependency." It is important to note that minimum mandated benefits for substance abuse and chemical dependency as required by K.S.A. 40-2,105 must be provided in large employer group plans regardless of the applicability of New Section 13 of 1997 Kansas Senate Bill 204.
It also should be noted that the mental health benefits required by K.S.A. 40-2,105 shall be provided in large employer group plans whenever such plans are not required to provide mental health "parity".
If you have any questions or comments regarding information contained herein, please direct them to the Accident & Health Division of the Kansas Insurance Department, 420 SW 9th Street, Topeka, KS 66612, (785)296-7850.
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