Recent trends indicate that more employers will switch from a fully insured group health plan to a self-insured or level-funded group health arrangement over the next few years. Indeed, McKinsey & Company’s 2024 Employer Health Benefits Survey projects that as many as 12 million employees may leave fully insured group health plans by 2030 due to rising costs under the fixed-premium insured model. As a result, employers moving to a self-insured or level-funded group health platform may need to complete additional tasks to ensure compliance with the Employee Retirement Income Security Act of 1974 (ERISA).

In the case of fully insured group health plans, an employer may be accustomed to the insurer providing some or much of the information required by ERISA for compliance purposes. Depending on its construction, a self-funded or level-funded plan may need to take a more active role in claims and appeals processes, required plan documents, and compliance with the Health Insurance Portability and Accountability Act (HIPAA), among others.

This article will highlight one such responsibility that can slip through the cracks of a self-insured or level-funded group health plan’s compliance procedures: the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).

The Employee Benefits Security Administration (EBSA) — the U.S. Department of Labor (DOL) agency that ensures the integrity of private-sector employee benefit plans — issued a news release on Jan. 15, 2026, which once again highlighted MHPAEA as a nationwide focus of EBSA’s investigative efforts.

In the context of fully insured health plans, the insurance carrier is responsible for compliance with Mental Health Parity requirements. However, self-insured or level-funded plans with 50 or more employees are also required to satisfy MHPAEA’s mandate. Indeed, MHPAEA requires employers who maintain self-insured or level-funded group health plans to have certain documentation in place or face civil penalties under federal law. As a result, MHPAEA is a timely example of a potential ERISA compliance failure that may catch the attention of federal regulators.

What Does MHPAEA Regulate?

• The purpose of MHPAEA is to ensure parity between medical/surgical (M/S) benefits and mental health and substance use disorder (MH/SUD) benefits provided by group health plans.
• MHPAEA focuses, in part, on nonquantitative treatment limitations (NQTLs). 
• Examples of NQTLs include coverage exclusions, prior authorization requirements, medical necessity criteria and network limitations.
• If a group health plan includes mental health treatment, then coverage guidelines, exclusions, provider networks and claims practices cannot be applied more stringently to MH/SUD benefits than to M/S benefits.

What Does MHPAEA Require?

• MHPAEA requires self-insured and level-funded group health plans to perform and document a comparative analysis of the design and application of NQTLs to ensure parity between M/S and MH/SUD benefits.
• Under the applicable regulations, the comparative analysis must consider six classifications of benefits, including emergency care, prescription drugs, inpatient (in-network and out-of-network) and outpatient (in-network and out-of-network).
• In order to comply with MHPAEA, the comparative analysis must undertake certain steps for each of the six classifications.
• Ultimately, the analysis must determine if the processes, strategies and evidentiary standards used in applying the NQTLs are comparable and not more stringently applied to MH/SUD than M/S benefits, both as written and in operation.

How Can a Group Health Plan Satisfy MHPAEA’s Requirements?

• In the case of a self-insured or level-funded group health plan, the plan sponsor is required to prepare a written comparative analysis documenting compliance for any NQTLs imposed on MH/SUD benefits.
• A compliant comparative analysis for a self-insured or level-funded plan requires obtaining information concerning NQTLs from third-party administrators, evaluating NQTLs within the six classifications of benefits and completing the steps for analyzing the NQTLs.
• This requirement can prove burdensome for non-insured plans because the information necessary to complete the analysis is frequently in the hands of third-party administrators and other service providers.
• Nevertheless, self-insured and level-funded plans have a fiduciary duty under ERISA to obtain the data required to complete the analysis.

What Happens if There Is No Comparative Analysis in Place (or the Analysis Is Incomplete)?

• The comparative analysis must be provided within 10 days if requested by a federal or state agency, or within 30 days if requested by a plan participant.
• If EBSA finds that the comparative analysis is insufficient or otherwise fails to meet the requirements of MHPAEA, it is noncompliant.
• Noncompliance with MHPAEA may result in a $110 per day penalty for each affected individual, with the potential for other penalties under federal law, which can add up quickly.

How Can a Group Health Plan Get Started on the Road to Compliance?

• As with any law affecting employee benefits plans, the first step is to determine if MHPAEA applies to the plan at issue.
• The next step is determining whether the group health plan provides MH/SUD benefits, which are required in most plans governed by the Affordable Care Act (ACA).
• At that point, an employer would do well to open a dialogue with its third-party administrators, service providers and contractors to obtain the information these entities have created to support the plan’s design, limitations, exclusions and other factors that may bear on NQTLs for MH/SUD benefits.
• An employer may also want to contact experienced ERISA counsel to assist in creating a comparative analysis that navigates this complex area of compliance.

Whether an employer recently moved to a self-insured or level-funded plan, or established such a plan some time ago, it is in the best interests of the sponsoring employer to review all its compliance obligations under ERISA, the ACA, HIPAA and other laws affecting employee benefit plans. The objective is to ensure that an employer has processes and procedures in place to address compliance shortcomings before they become the subject of regulatory interest and to satisfy ERISA’s overall compliance requirements.