Mental Health Parity Laws by State: Enforcement and Gaps

Mental health parity laws vary significantly from state to state. Federal law sets a national floor: if a health plan offers mental health or substance use disorder benefits, it must cover them on terms comparable to medical and surgical care. On top of that floor, states have layered their own rules, and the strength of those rules ranges from robust enforcement regimes with regular audits and financial penalties to statutes that only require insurers to make mental health coverage available as an option. Which protections actually reach you depends on where you live and, just as importantly, on whether your health plan is fully insured or self-funded.

The Federal Floor Every State Builds On

The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) is the baseline. It applies to group health plans and insurers that offer mental health and substance use disorder benefits, and it requires that those benefits be no more restrictive than medical and surgical benefits.¹ A key limit: MHPAEA does not require any plan to offer mental health coverage. It only governs how coverage is structured when it exists.

Parity applies across three areas. Financial requirements like copayments, deductibles, and out-of-pocket maximums must be comparable. Quantitative treatment limitations — visit caps, day limits, and similar numerical restrictions — cannot be more restrictive for mental health than for medical care. And non-quantitative treatment limitations (NQTLs), which include prior authorization, medical necessity criteria, provider network standards, and formulary design, must be applied no more stringently to mental health benefits.²

The Affordable Care Act extended this reach by requiring individual and small-group marketplace plans to include mental health and substance use services as essential health benefits. The Consolidated Appropriations Act of 2021 added that plans must maintain written comparative analyses showing their NQTLs comply with parity and produce those analyses when regulators or participants ask.³

The 2024 Federal Rule Is in Limbo

In September 2024, the Departments of Labor, Health and Human Services, and Treasury published a major final rule strengthening the NQTL requirements. It required plans to collect data on whether their NQTLs produced material differences in access to mental health care, take corrective action if they did, and meet detailed content standards for their comparative analyses.² General provisions were set to take effect for plan years starting on or after January 1, 2025, with the more demanding requirements phasing in a year later.³

The ERISA Industry Committee sued to block the rule in January 2025. The federal government asked for and received a stay of the litigation in May 2025 while it reconsiders the rule.⁴ Shortly after, the departments announced they would not enforce provisions of the 2024 rule that were new relative to the 2013 regulations, and would hold off on enforcement for at least 18 months after any final decision.⁵

What that means in practice: the original MHPAEA statute, the 2013 implementing regulations, and the comparative analysis requirement from the 2021 law remain in full effect and are actively enforced. The 2024 additions are on hold at the federal level.⁵ States, however, are free to enforce their own laws and, in some cases, the 2024 requirements themselves.

How State Laws Differ in Strength and Scope

State parity laws fall into three broad categories. Full parity statutes require equal coverage for mental health and physical health conditions. Mandated benefit laws require insurers to cover some mental health services but permit disparities in how the benefits are structured. Mandated offering laws only require insurers to make mental health coverage available as an option.⁶

The diagnoses covered vary just as much. Some states apply parity to all recognized mental health conditions. Others limit their mandates to “serious mental illness” — a narrower category typically covering schizophrenia, bipolar disorder, and major depression. Some restrict coverage to “biologically based” mental illnesses, a definition that can exclude conditions like anxiety disorders or PTSD depending on how the state draws the line. At least 38 states include substance use disorders in their parity or mandated benefit frameworks.⁶

A 2018 scorecard from The Kennedy Forum, the Kennedy-Satcher Center for Mental Health Equity, The Carter Center, and Well Being Trust graded state parity statutes and gave 32 states a failing grade. Illinois scored highest with a 100, Wyoming lowest at 10. The scorecard weighed whether the law covered all recognized mental health and substance use disorders, whether it required cost parity and regulated NQTLs, and whether it empowered regulators to enforce compliance and require reporting.⁷

States Considered to Have the Strongest Protections

California

California’s Senate Bill 855, effective January 1, 2021, is widely regarded as one of the strongest state parity laws in the country. It requires plans to cover medically necessary treatment for all recognized mental health conditions and substance use disorders on the same terms as other medical care. Coverage cannot be limited to short-term or acute treatment, and insurers must cover intermediate care including residential treatment, partial hospitalization, and intensive outpatient programs.⁸

SB 855 defines medical necessity by reference to “generally accepted standards of mental health and substance use disorder care” and requires insurers to use clinical criteria developed by nonprofit professional associations. Utilization review staff must achieve interrater reliability pass rates of at least 90 percent. If in-network providers are not available within timely access standards, the insurer must arrange out-of-network care at in-network cost-sharing.⁸ In July 2025, the California Department of Insurance added regulations requiring that substance use utilization reviews be conducted by board-certified addiction specialists and that insurers integrate behavioral health crisis services under Assembly Bill 988.⁹

New York

Timothy’s Law, enacted in 2006, gave New York some of the earliest state-level parity protections and served as a precursor to the federal MHPAEA.¹⁰ Insurers must use medical necessity criteria approved by the state Office of Mental Health for mental health treatment and a specific level-of-care tool for substance use disorders. Mental health inpatient care for minors at state-licensed facilities is exempt from medical necessity review for the first 14 days, and substance use disorder treatment at state-licensed facilities is exempt for the first 28 days.¹¹

The state also bans “fail first” requirements that would force patients to try cheaper treatments before covering what their doctor recommends.¹² In 2018, New York created CHAMP, described as the first-in-the-nation ombudsman program to help residents navigate behavioral health coverage disputes. Copayments for in-network services at opioid treatment programs are prohibited, and plans must submit comprehensive parity compliance reports.¹⁰

Illinois

Illinois topped the 2018 Kennedy Forum scorecard.⁷ After federal regulators announced they would not enforce the 2024 MHPAEA rule, the Illinois Department of Insurance stated in 2025 that it would continue enforcing those provisions on the original schedule. The department said no state law required it to defer to federal non-enforcement of lawful regulations, and it called the 2024 rule a “meaningful step forward” for compliance. Provisions effective January 1, 2025 continue to be enforced in Illinois, and those set for January 1, 2026 will take effect on schedule.¹³

Maryland

Maryland’s approach to NQTL oversight is unusually rigorous. Under Maryland Insurance Code § 15-144, the insurance commissioner selects no fewer than five NQTLs for analysis every two years, with at least one relating to network composition and no more than two to utilization review. For the 2024 reporting year, the commissioner designated prior authorization, prescription drug formulary design, provider reimbursement, strategies for addressing provider shortages, and provider network directories.¹⁴

All 17 carriers that submitted initial reports in 2024 failed to meet every statutory requirement on their first attempt, and the state conducted up to three rounds of review per NQTL, often identifying more than 50 deficiencies in a single initial submission. The Maryland Insurance Administration issues financial penalties for reports that remain incomplete and notices of noncompliance for reports that reveal parity violations.¹⁴ Carriers must also post public summaries of their analyses on their websites within 30 days of the filing deadline.¹⁵

Texas

Texas requires all fully insured health plans to provide mental health and substance use benefits at the same level as medical and surgical benefits, covering financial requirements, quantitative limits, and NQTLs. These rules, enacted as House Bill 10 during the 85th Legislature, closely track federal MHPAEA and took effect for plans issued or renewed on or after January 1, 2018.¹⁶ The Texas Department of Insurance examines HMOs, PPOs, and EPOs every three years and requires issuers to submit comparative and mathematical analyses demonstrating parity in design and operation. Under House Bill 2595, the department works with the Health and Human Services Commission’s Ombudsman for Behavioral Health to produce an annual parity report for the legislature.¹⁷

Why the Type of Plan Matters More Than the State

State parity laws, no matter how strong, do not reach self-funded employer health plans. Self-funded plans (where the employer pays claims directly rather than buying insurance) are governed by the federal Employee Retirement Income Security Act (ERISA) and are exempt from state insurance regulation.⁶ If your employer self-funds — common among larger employers — living in California or New York does not automatically get you the benefit of SB 855 or Timothy’s Law.

Federal MHPAEA still applies to self-funded plans, and the Department of Labor’s Employee Benefits Security Administration (EBSA) is the enforcer, overseeing plans covering more than 156 million workers, retirees, and family members. A DOL Office of Inspector General audit found EBSA lacks statutory authority to assess civil monetary penalties against non-compliant plans, cannot bring enforcement actions directly against health insurance issuers, and often must work through plan sponsors even when a third-party administrator committed the violation. Reviews can take up to three years, and the process relies heavily on voluntary compliance.¹⁸

The share of the insured population subject to state-level oversight is small in many places. Research published in 2023 found the share ranged from just 9 percent in West Virginia to about 21 percent in Massachusetts, with the rest in self-funded plans.¹⁹ Before assuming your state’s parity law protects you, check with your HR department or plan documents to confirm whether the plan is fully insured or self-funded.

How States Enforce, and Where Enforcement Falls Short

State insurance departments are the primary enforcers for individual and small-group markets, using several tools. Market conduct examinations review how insurers actually process and pay claims; Pennsylvania and West Virginia have run baseline exams specifically targeting parity compliance. Rate and form reviews check policy documents annually and are good at catching explicit quantitative violations like visit caps, though weaker for complex NQTL problems. Colorado has denied rates when insurers failed to demonstrate cost-sharing parity.²⁰

Regulators also collect outcomes data (out-of-network claim rates, prior authorization approval rates, network access metrics) to spot patterns, and they take consumer and provider complaints. Colorado has established a dedicated portal for providers to submit parity-related complaints.²⁰

Enforcement is difficult in practice. A review across five states found that insurers sometimes submit comparative analyses that are voluminous or deliberately overwhelming, and that reliance on third-party vendors for behavioral health management complicates comparisons because the vendors may lack visibility into the insurer’s medical benefit administration.²¹

Over the past several years, at least 10 states have taken corrective action against more than 30 health plans for parity violations, resulting in over $31 million in fines and payments. Notable actions include a $2 million fine imposed on five insurers in Illinois, over $1.33 million in fines assessed across two rounds of examinations in Delaware, and $575,000 in fines plus $500,000 for education programs in Connecticut against UnitedHealthcare entities.²²

Parity in Medicaid Managed Care

Parity applies to Medicaid managed care organizations, Medicaid alternative benefit plans, and CHIP programs under separate federal regulations.²³ Compliance has been uneven. A March 2024 audit by the HHS Office of Inspector General examined eight states and found CMS had not ensured their compliance with Medicaid managed care parity. In all eight, contracts between the state and managed care organizations lacked required parity provisions by the compliance date. Five states had not conducted the required parity analyses, and managed care organizations in the eight states imposed NQTLs on mental health benefits that were more stringent than for medical care.²⁴

In response, CMS released draft templates in September 2024 to standardize how states document parity compliance in Medicaid and CHIP, though those templates had not been finalized as of late 2025.²⁵ A separate CMS rule finalized in April 2024 requires Medicaid agencies to enforce maximum appointment wait times of no more than 10 business days for outpatient mental health and substance use services, with secret shopper surveys to verify compliance.²⁶

What to Do if You Think Your Plan Is Violating Parity

The first step is figuring out which regulator has authority over your plan. For fully insured plans purchased by individuals or employers, the state insurance commissioner is the right place to file a complaint. For self-funded private employer plans, complaints go to the U.S. Department of Labor. For state or local government employer plans, the Department of Health and Human Services handles oversight.²⁷

When a claim is denied, file an internal appeal with the health plan first, then request an external review through your state or an independent review organization if the internal appeal fails. Federal parity law entitles you, free of charge, to the specific reason for a denial, the plan’s medical necessity criteria, and descriptions of the processes and standards used to apply treatment limitations. Persistence often works: between 39 and 59 percent of internal appeals and roughly 40 percent of external appeals have resulted in reversals in favor of the consumer.²⁸

Organizations including the American Psychiatric Association and The Kennedy Forum maintain complaint templates, hotlines, and registries where consumers can report suspected violations. Reporting through these channels also helps advocacy organizations track patterns and document systemic problems for regulators.²⁹

1
U.S. Department of Labor. Mental Health and Substance Use Disorder Parity
2
Federal Register. Requirements Related to the Mental Health Parity and Addiction Equity Act
3
U.S. Department of Labor. Final Rules Under the Mental Health Parity and Addiction Equity Act
4
Georgetown Law Litigation Tracker. ERISA Industry Committee v. Department of Health and Human Services
5
CMS. Statement Regarding Enforcement of Final Rule Requirements Related to MHPAEA
6
National Conference of State Legislatures. Mental Health Benefits: State Laws Mandating or Regulating
7
The Kennedy Forum. 32 States Get a Failing Grade on New Report Cards
8
California Legislature. SB 855, Chapter 151, Statutes of 2020
9
California Department of Insurance. California Department of Insurance Enacts Landmark Regulations
10
Legal Action Center. The State of Parity in New York State
11
New York State Attorney General. Behavioral Health Parity Laws
12
New York State Office of Mental Health. Laws
13
Illinois Department of Insurance. Enforcement of 2024 MHPAEA Rulemaking
14
Maryland Insurance Administration. Nonquantitative Treatment Limitations and Data 2025 Final Report
15
Maryland COMAR. COMAR 31.10.51.04
16
Texas Department of Insurance. Mental Health Parity Overview
17
Texas Department of Insurance. Mental Health Parity Annual Report 2023
18
DOL Office of Inspector General. EBSA Needs to Improve MHPAEA Enforcement
19
National Library of Medicine. Division of Oversight Responsibility and MHPAEA Enforcement
20
Commonwealth Fund. Enforcing Mental Health Parity: State Options to Improve Access to Care
21
American Society of Addiction Medicine. State Insurance Parity Enforcement
22
Parity Track. State Parity Enforcement Actions
23
Medicaid.gov. Parity
24
HHS Office of Inspector General. CMS Did Not Ensure That Selected States Complied With Medicaid Managed Care Mental Health and Substance Use Disorder Parity Requirements
25
Georgetown University Center for Children and Families. Medicaid and CHIP Mental Health Parity: Latest Federal Actions Explained
26
Policy Center for Maternal Mental Health. New CMS Rules Finalized Addressing Medicaid Provider Network Adequacy and Appointment Wait Times
27
CMS. Mental Health Parity and Addiction Equity
28
The Kennedy Forum. Parity Violation Appeal Filing
29
American Psychiatric Association. Parity