October 2026 HR

Mental Health Parity: DOL Provides Employers with a Compliance Roadmap

On Sept. 8, 2026, the U.S. Department of Labor (DOL) issued Field Assistance Bulletin No. 2026-03 (Bulletin) to clarify its approach to enforcing the parity requirements for nonquantitative treatment limitations (NQTLs) under the Mental Health Parity and Addiction Equity Act (MHPAEA). The Bulletin specifically identifies three categories of NQTLs that the DOL intends to prioritize and focus its enforcement efforts on.

The DOL also launched an accompanying webpage that provides a variety of resources for employers on MHPAEA compliance, including a description of warning signs that have often signaled potential compliance problems, best practices for monitoring operational compliance for specific NQTLs, examples of how health plans have addressed concerns during NQTL investigations, tips for health plans being reviewed by the DOL for NQTL compliance, and a list of questions that health plan fiduciaries should ask service providers regarding MHPAEA compliance.

Employers should work with their service providers to review their health plan’s written terms and operations for warning signs of MHPAEA noncompliance, taking into account the DOL’s enforcement guidance.

Background

MHPAEA generally prohibits health plans and health insurance issuers from imposing barriers on access to mental health or substance use disorder (MH/SUD) benefits that do not apply to medical and surgical (M/S) benefits. MHPAEA’s parity requirements apply to financial requirements and to quantitative treatment limitations and NQTLs, which generally limit the scope or duration of benefits. MHPAEA requires health plans and issuers to perform and document comparative analyses of the design and application of NQTLs used for MH/SUD benefits compared to M/S benefits.

The DOL’s national enforcement priorities for 2026 include addressing barriers to MH/SUD benefits. The DOL has received reports that prior enforcement of MHPAEA’s NQTL comparative analysis requirements created “substantial confusion and unnecessary burdens” on health plans. The Bulletin is intended to provide a framework for complying with MHPAEA’s NQTL requirements.

DOL Investigations: Three Key Focus Areas

The Bulletin provides that the DOL will prioritize and focus on NQTL comparative analysis enforcement in the following three areas where there is the highest potential harm to participants and beneficiaries:

1. Separate treatment limitations for MH/SUD conditions, including blanket exclusions
2. Medical necessity standards and review process, including prior authorization, concurrent review and retrospective review
3. Standards for determining network adequacy, with a focus on network admission standards and provider reimbursement methodologies

While the DOL will focus enforcement in these three areas, the Bulletin provides that the DOL may need to investigate other categories of NQTLs as issues arise, particularly when responding to participant complaints.

Warning Signs of Noncompliance

The DOL’s new webpage identifies numerous “red flags” often seen in DOL investigations that have signaled MHPAEA compliance problems, including those described in the table below.

Warning Sign: Separate treatment exclusions for MH/SUD conditions

Examples:

Exclusion of applied behavioral analysis (ABA) therapy, speech therapy or occupational therapy for autism spectrum disorder, and no similar exclusions of treatments for M/S conditions.

Exclusion of medications for addiction treatment, such as methadone, naltrexone or buprenorphine, or other evidence-based treatments for opioid or other substance use disorders, especially where similar services or the same medications are covered to treat M/S conditions. Such exclusions may be described in plan documents using terms such as “medication-assisted treatment.”

Exclusion of nutritional counseling or medical nutrition therapy for eating disorders, especially where the same or similar services are covered for M/S conditions like diabetes, obesity or stroke recovery.

Exclusion of residential treatment programs, intensive outpatient programs or partial hospitalization programs for MH/SUD conditions, especially where intermediate levels of care like skilled nursing, home health or rehabilitation programs are covered for M/S conditions.

Warning Sign: Medical necessity standards and review process

Examples:

Prior authorization or concurrent care review is required for almost all MH/SUD benefits but is not required for any (or only required for a few) M/S benefits in the same benefit classification.

Age limits on certain MH/SUD services, like ABA therapy, or on all services to treat autism spectrum disorder, with no or few such limitations for M/S benefits in the same benefit classification.

Extra review requirements to obtain MH/SUD services, when they apply to some MH/SUD services and not to any M/S services, or they apply to all MH/SUD services and less than all M/S services in a benefit classification. Such review requirements can go by many names, including “care manager” requirements and “utilization management” or “utilization review” requirements, or “prepayment review.”

Certain criteria required to obtain MH/SUD care that are not criteria required to obtain M/S care, such as a requirement to exhaust or engage with community resources, repeat diagnostic testing requirements for autism spectrum disorder or imposing step therapy or fail-first requirements to initiate or continue coverage. These criteria are often found in medical necessity policies or plan documents.

Warning Sign: Standards for determining network adequacy, including network admission standards and provider reimbursement methodologies

Examples:

More burdensome processes or stricter criteria for MH/SUD providers to participate in a network as compared to processes or criteria for M/S providers.

Wait time standards or maximum response timelines for MH/SUD claims and appeals are longer than the standards or response timelines for M/S claims and appeals.

Procedures exist to help participants and beneficiaries who cannot find an available network provider for M/S services, but no procedures exist for MH/SUD services, or such procedures are more burdensome for participants and beneficiaries seeking MH/SUD services.

Requirements for licensed MH/SUD providers to bill through another licensed provider, where no such requirement exists for M/S providers.

Methodologies for calculating network or out-of-network provider reimbursement amounts are different for MH/SUD providers than for M/S providers. Examples include policies that apply a set percentage discount to reimbursement rates for masters-level MH/SUD providers while masters-level M/S providers receive no discount or a smaller one.

Employer Takeaway

Health plan fiduciaries should keep MHPAEA compliance in mind when selecting and monitoring service providers. Further, the DOL’s webpage includes a list of questions that plan fiduciaries should ask existing and prospective service providers.

MLR Season is Upon Us

Employers with insured group health plans may be receiving a medical loss ratio (MLR) rebate from their health insurance issuers. Issuers who did not meet the applicable MLR percentage for 2025 must provide rebates to plan sponsors by Sept. 30, 2026. These rebates may be in the form of a premium credit or a lump-sum payment.

MLR Rules

The MLR rules require health insurance issuers to spend a minimum percentage of their premium dollars on medical care and health care quality improvement. This percentage is 85% for issuers in the large group market and 80% for issuers in the small and individual group markets. States may set higher MLR standards than the federal 80%/85% thresholds.

Issuers must report to the federal government how they spent their premium dollars for each calendar year by July 31 of the following year. Issuers who do not meet the applicable MLR standard must provide rebates by Sept. 30, following the end of the MLR reporting year. Issuers who issue rebates must provide plan sponsors and participants with a notice explaining the rebate and how it was calculated.

Using MLR Rebates

Most group health plans sponsored by employers in the private sector are subject to ERISA. Employers with ERISA plans should not assume they can simply retain an MLR rebate. In general, unless an employer pays the entire cost of health coverage without any employee contribution, at least a portion of the rebate will be a plan asset under ERISA. Any rebate amount that qualifies as a plan asset must be used for the exclusive benefit of the plan’s participants and beneficiaries.

Employers can satisfy ERISA’s exclusive benefit requirement by distributing the plan asset portion of the rebate to participants using a reasonable, fair and objective allocation method. If distributing payments to participants is not feasible, the employer may use this portion of the rebate for other permissible plan purposes, such as applying the rebate toward future participant premium payments or benefit enhancements. Also, to avoid the requirement to hold plan assets in trust, employers should use any plan asset portion of the rebate within three months of its receipt.

Employer Takeaway

Employers who receive MLR rebates should consider their options for using the rebate. Any rebate amount that qualifies as a plan asset under the Employee Retirement Income Security Act (ERISA) must be used for the exclusive benefit of the plan’s participants and beneficiaries. Employers should use the plan asset portion of the rebate within three months of receiving it to avoid ERISA’s trust requirement. In addition, employers who receive MLR rebates should be prepared to answer employees’ questions about the rebate and how it is being allocated. Please see our guide for additional information.

Medicare Part D Notices Are Due Before Oct. 15, 2026

Each year, Medicare Part D requires group health plan sponsors to disclose to individuals who are eligible for Medicare Part D and to the Centers for Medicare and Medicaid Services (CMS) whether the health plan’s prescription drug coverage is creditable.

Plan sponsors must provide the annual disclosure notice to Medicare-eligible individuals before Oct. 15, 2026 — the start date of the annual enrollment period for Medicare Part D. CMS has provided model disclosure notices for employers to use.

This notice is important because Medicare beneficiaries who are not covered by creditable prescription drug coverage and do not enroll in Medicare Part D when first eligible will likely pay higher premiums if they enroll at a later date. Although there are no specific penalties associated with this notice requirement, failing to provide the notice may be detrimental to employees.

Creditable Coverage

A group health plan’s prescription drug coverage is considered creditable if its actuarial value equals or exceeds the actuarial value of standard Medicare Part D prescription drug coverage. In general, this actuarial determination measures whether the expected amount of paid claims under the group health plan’s prescription drug coverage is at least as much as the expected amount of paid claims under the Medicare Part D prescription drug benefit. For plans that have multiple benefit options (for example, PPO, HDHP and HMO), the creditable coverage test must be applied separately for each benefit option.

Model Notices

CMS has provided two model notices for employers to use:

• A Model Creditable Coverage Disclosure Notice for when the health plan’s prescription drug coverage is creditable; and
• A Model Non-creditable Coverage Disclosure Notice for when the health plan’s prescription drug coverage is not creditable.

These model notices are also available in Spanish on the CMS website.

Employers are not required to use the model notices from CMS. However, if the model language is not used, a plan sponsor’s notices must include certain information, including a disclosure about whether the plan’s coverage is creditable and explanations of the meaning of creditable coverage and why creditable coverage is important.

Notice Recipients

The creditable coverage disclosure notice must be provided to Medicare Part D-eligible individuals who are covered by, or who apply for, the health plan’s prescription drug coverage. An individual is eligible for Medicare Part D if they:

• Are entitled to Medicare Part A or are enrolled in Medicare Part B
• Live in the service area of a Medicare Part D plan.

In general, an individual becomes entitled to Medicare Part A when they actually have Part A coverage, and not simply when they are first eligible. Medicare Part D-eligible individuals may include active employees, disabled employees, COBRA participants and retirees, as well as their covered spouses and dependents.

As a practical matter, group health plan sponsors often provide the creditable coverage disclosure notices to all plan participants.

Timing of Notices

At a minimum, creditable coverage disclosure notices must be provided at the following times:

If the creditable coverage disclosure notice is provided to all plan participants annually before Oct. 15 of each year, items (1) and (2) above will be satisfied. “Prior to,” as used above, means the individual must have been provided with the notice within the past 12 months – this means that if the notice was sent after October 15^th, 2025, it was sent prior to October 15^th of this year. In addition to providing the notice each year before Oct. 15, plan sponsors should consider including the notice in plan enrollment materials for new hires.

Method of Delivering Notices

Plan sponsors have flexibility in how they must provide their creditable coverage disclosure notices. The disclosure notices can be provided separately or, if certain conditions are met, they can be provided with other plan participant materials, like annual open enrollment materials. The notices can also be sent electronically in some instances.

As a general rule, a single disclosure notice may be provided to the covered Medicare beneficiary and all of their Medicare Part D-eligible dependents covered under the same plan. However, if it is known that any spouse or dependent who is eligible for Medicare Part D lives at a different address than where the participant materials were mailed, a separate notice must be provided to the Medicare-eligible spouse or dependent residing at a different address.

If a plan sponsor chooses to provide the disclosure notice with other plan participant information, the creditable coverage disclosure must be prominent and conspicuous. This means that the disclosure notice portion of the document – or a reference to the section in the document that contains the disclosure notice portion – must be prominently referenced in at least 14-point font in a separate box, bolded or offset on the first page of the provided plan participant information.

Electronic Delivery

Creditable coverage disclosure notices may be sent electronically under certain circumstances. CMS has issued guidance indicating that health plan sponsors may use the electronic disclosure standards under Department of Labor (DOL) regulations to send creditable coverage disclosure notices electronically. According to CMS, these regulations allow a plan sponsor to provide a creditable coverage disclosure notice electronically to plan participants who have the ability to access electronic documents at their regular place of work, if they have access to the sponsor’s electronic information system on a daily basis as part of their work duties.

The DOL’s regulations for electronic delivery require that:

• The plan administrator uses appropriate and reasonable means to ensure that the system for furnishing documents results in actual receipt of transmitted information
• Notice is provided to each recipient, at the time the electronic document is furnished, of the significance of the document
• A paper version of the document is available on request

Also, if a plan sponsor uses electronic delivery, the sponsor must inform the plan participant that the participant is responsible for providing a copy of the electronic disclosure to their Medicare-eligible dependents covered under the group health plan.

In addition, CMS guidance indicates that a plan sponsor may provide a disclosure notice electronically to retirees if the Medicare-eligible individual has indicated to the sponsor that they have adequate access to electronic information. According to CMS, before individuals agree to receive their information via electronic means, they must be informed of their right to obtain a paper version, how to withdraw their consent and update address information, and any hardware or software requirements to access and retain the creditable coverage disclosure notice.

If the individual consents to an electronic transfer of the notice, a valid email address must be provided to the plan sponsor and the consent from the individual must be submitted electronically to the plan sponsor. According to CMS, this ensures the individual’s ability to access the information and that the system for furnishing these documents results in actual receipt. In addition to having the disclosure notice sent to the individual’s email address, the notice (except for personalized notices) must be posted on the plan sponsor’s website, if applicable, with a link on the sponsor’s homepage to the disclosure notice.

Note: The DOL has proposed a new, additional electronic disclosure safe harbor for group health plans (modeled on the “notice-and-access” approach already used for retirement plans) that would broaden electronic delivery beyond the workplace-access standard above. Until the proposal is finalized, plan administrators should continue to comply with the standards for electronic delivery described above.

Disclosure to CMS

Plan sponsors are also required to disclose to CMS whether their prescription drug coverage is creditable. The disclosure must be made to CMS on an annual basis or upon any change that affects whether the coverage is creditable. At a minimum, the CMS creditable coverage disclosure notice must be provided at the following times:

• Within 60 days after the beginning date of the plan year for which the entity is providing the form
• Within 30 days after the termination of the prescription drug plan
• Within 30 days after any change in the creditable coverage status of the prescription drug plan

Plan sponsors are required to provide the disclosure notice to CMS through completion of the disclosure form on the CMS Creditable Coverage Disclosure webpage. This is the sole method for compliance with the CMS disclosure requirement, unless a specific exception applies.

Employer Takeaway

Employers should confirm whether their health plans’ prescription drug coverage is creditable or non-creditable and prepare to send their Medicare Part D disclosure notices before Oct. 15, 2026. To make the process easier, employers often include Medicare Part D notices in open enrollment packets they send out prior to Oct. 16.