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Some, but not all insurance plans are required to cover addiction treatment services.
The Affordable Care Act (ACA) requires plans to cover 10 Essential Health Benefits (EHB) including mental health and substance use disorder (MH/SUD) services, in compliance with the Parity Act.
The plans required to cover MH/SUD benefits under the EHB requirement are individual plans (including Marketplace plans), small group employer plans, and the Medicaid Alternative Benefit Plans (which are the plans that cover the Medicaid expansion population in states that opted to expand Medicaid under the ACA). While plans subject to the EHB requirement must cover MH/SUD benefits, the specific benefits that have to be covered are not defined by the law but in each state’s EHB benchmark plan. For more on the MH/SUD services covered by each state’s benchmark plan, see our Uncovering Coverage Gaps report.
Children’s Health Insurance Program (CHIP) plans are also required to cover behavioral health services, either under Medicaid’s Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) benefit or under separate CHIP mandatory benefit requirements.
States may have their own benefit mandates requiring coverage of certain SUD benefits that apply to state-regulated health plans. States also determine the specific SUD benefits covered in their state’s Medicaid program.
Most health plans are subject to the Mental Health Parity and Addiction Equity Act (Parity Act). The Parity Act is not a benefit mandate. Instead, the law requires that if the plan covers mental health and addiction services, it must offer “meaningful coverage” of MH/SUD services and cover them the same way the plan covers physical health services. Specifically, if a plan offers any MH/SUD benefits, it must offer MH/SUD benefits in all classifications in which physical health services are offered. Meaning, the plan could not offer only emergency MH/SUD services but not inpatient or outpatient services if such services were covered for physical health benefits. Recently the federal government clarified that the plan must provide “meaningful coverage” of MH/SUD benefits, but the term has not yet been defined.
While the Parity Act does not explicitly require plans to cover MH/SUD benefits, in effect it requires plans to offer a broader continuum of services under the “meaningful coverage requirement” because plans typically do offer at least some coverage for mental health or addiction treatment. For more on the Parity Act, see “The Parity Act” section of the Insurance Resource Center.
The one major type of health plan that is not currently subject to the Parity Act is Medicare. Until recently, Medicare covered only the least and most intensive levels of care for SUD treatment (outpatient and inpatient). As a result of the Consolidated Appropriations Act of 2023, Medicare now also covers intensive outpatient services and partial hospitalization services, as well as services from more provider types, including master’s level mental health and addiction counselors and marriage and family therapists, peer support specialists, and community health workers. Medicare also provides coverage for opioid treatment program (OTP) services, which were previously excluded. But Medicare still does not cover residential SUD treatment or community-based SUD treatment facilities other than OTPs and is not subject to the Parity Act (see Legal Action Center’s Medicare Addiction Parity Project).
While it can be confusing to determine which type of health plan you have and what type of requirements may apply, just remember that it’s important to speak up if your health plan tells you that it isn’t covering addiction treatment for your or your loved one. They may be violating the law, and it is important to alert an insurance regulator who can investigate further. For more on what to do, see the “Denials” section of the Insurance Resource Center.