Trump Administration Reconsidering the Mental Health Parity Rule

The mental health parity rule — which places new requirements on health plans to cover mental health and addiction care on the same terms as other types of care — has been paused amid legal challenges and may ultimately be rolled back. 

In a recent court ruling, the Trump administration revealed that it does not intend to enforce the mental health parity rule while it gives the rule — which was finalized last fall by the Biden administration and had begun to be put in place this year — another look. That means employers will not be penalized for lack of compliance while the case is pending.

In a joint statement on May 15, the departments of Labor, Health and Human Services, and the Treasury said, “The Departments will not enforce the 2024 Final Rule or otherwise pursue enforcement actions, based on a failure to comply that occurs prior to a final decision in the litigation, plus an additional 18 months.”

The rule expands on the Mental Health Parity and Addiction Equity Act, a 2008 law meant to keep mental health benefits covered at the same level as physical health benefits. 

Under the rule, if health plans were found to provide inadequate access to mental health or substance use disorder care, they were required by the new guidelines to come into compliance with the requirements by analyzing their provider networks, prior authorization policies, and out-of-network payment rates. That could entail “adding more mental health and substance use professionals to their networks or reducing red tape for providers to deliver care,” a White House press release stated in September.

But in the midst of legal challenges by industry groups, the administration said it will not enforce the rule as it considers its next steps, either by ultimately modifying it or rescinding it entirely.

The ERISA Industry Committee (ERIC), an association representing about 100 large employers, filed a suit against the rule in January, asserting that the regulation exceeds jurisdictional authority and places too many hardships on employers. 

ERIC applauded the stay of the rule. 

“Despite extensive efforts to work with the previous administration, the final rule requirements are wholly unworkable, and litigation became the only path to protecting employees and their access to quality, affordable benefits,” ERIC President and CEO James Gelfand said in a statement. “We are pleased that the Trump administration has responded to the lawsuit, will not penalize employers under the rule while the case is pending, and is reconsidering the rule to address the concerns [ERIC] expressed throughout the regulatory process.”

Reaction from employers on the rule has been mixed.

Groups such as ERIC said it is burdensome for employers — opponents of the rule argue that expanded requirements, and the associated costs, may cause employers to reduce mental health coverage. However, other groups have been supportive of the rule, saying it is needed to provide more equitable care for those with mental health conditions.

For instance, the CEO Alliance for Mental Health,  a group of CEOs from 16 of the top mental health and substance abuse organizations in the U.S., earlier this year said it was “deeply disappointed by ERIC’s suit to stop the rule, urging employers to support the final rule and strengthen mental health parity protections.” 

SHRM, meanwhile, has urged the agencies to strike a balance that would encourage mental health benefit offerings without creating undue compliance burdens for employers. 

The mental health parity rule — and its legal challenges — comes as mental health becomes a bigger focus in the workplace. Scores of research have found that a significant number of employees are dealing with conditions including stress, depression, and anxiety, with many employers trying to figure out ways to help.

In response, several employers have amped up their mental health benefits for employees in recent years. Still, many people with mental health conditions or substance use disorders do not get treatment or must contend with long waiting periods.