Mental health benefits are now a central part of employee wellness strategies nationwide. But with growing demand for mental health services comes increased government oversight. In 2025, the Department of Labor (DOL) and the Centers for Medicare & Medicaid Services (CMS) are intensifying audits and releasing new guidance to enforce the Mental Health Parity and Addiction Equity Act (MHPAEA) like never before.

If your company offers a group health plan, understanding these changes is critical to avoiding penalties, lawsuits, and costly plan disruptions.

What Is Mental Health Parity?

The MHPAEA, enacted in 2008, requires group health plans and insurers to treat mental health and substance use disorder (MH/SUD) benefits the same as medical/surgical benefits. This means:

• No higher copays for counseling vs. physical therapy

• No stricter preauthorization requirements for mental health than for other medical services

• No narrower provider networks for mental health care

Why Parity Compliance Matters More in 2025

1. Stricter DOL and CMS Enforcement

The DOL has made mental health parity a top priority. Starting in 2025, health plans must submit comparative analyses proving their MH/SUD benefits are equivalent to medical benefits. If plans fail, the DOL can mandate corrections or deny plan approval.

2. Increased Employer Plan Audits

Self-funded employers—common among mid-sized companies—are now under heavier scrutiny. Plans may be flagged if:

• Counseling requires preauthorization but physical therapy does not

• Mental health visits have stricter annual limits than cardiology visits

• Out-of-network reimbursement is lower for mental health than for other specialties

3. Rising Employee Lawsuits

With mental health awareness at record levels, employees are filing more parity complaints with the DOL and initiating private lawsuits. These cases bring risks of reputational damage, class-action litigation, and expensive mid-year plan redesigns.

How Employers Can Prepare for MHPAEA Compliance

1. Request a Parity Audit from Your Broker or TPA

Work with your benefits advisor to:

• Obtain a compliance analysis from your carrier or TPA

• Benchmark MH/SUD coverage against industry norms

• Identify benefit limits, copay discrepancies, or network access issues

2. Review Plan Documents for Red Flags

Scan for terms such as “preauthorization required,” “session limit per year,” or “different cost-sharing tier.” If these apply to mental health but not physical health, you could be out of compliance.

3. Educate HR and Benefits Teams

Parity is federal law, not just best practice. Ensure teams:

• Understand MHPAEA requirements

• Know when to escalate concerns

• Include parity checks in annual renewal processes

4. Communicate Clearly with Employees

Misunderstandings often cause compliance complaints. Consider distributing a one-page guide explaining:

• How to access mental health care

• Which services (if any) require preauthorization

• What parity means for their benefits

Case Study: Noncompliance in Action

A 130-employee nonprofit in Illinois offered counseling benefits under a self-funded plan that:

• Required preauthorization after 5 sessions

• Charged a $50 copay for counseling vs. $25 for medical visits

• Limited counseling to 12 sessions per year

After an employee complaint, the DOL audited the plan. The nonprofit was forced to:

• Redesign benefits mid-year

• Reimburse employees

• Pay over $40,000 in legal fees and penalties

Insurance Protection for Parity Compliance Risks

MHPAEA compliance ties into fiduciary responsibility, HR compliance, and even Directors & Officers (D&O) liability. Employers should review whether they have:

• Employment Practices Liability Insurance (EPLI)

• Fiduciary Liability Coverage

• Regulatory Penalty Endorsements (if available)

Final Takeaway for Employers

Mental health parity is not optional, and enforcement in 2025 will be aggressive. Whether you’re fully insured or self-funded, now is the time to:

• Review plan language

• Benchmark benefits

• Educate your HR and benefits teams

Not sure if your health plan meets MHPAEA requirements? We can help you request a compliance review from your carrier or TPA and ensure your insurance program covers potential regulatory and legal risks—while keeping employee well-being a top priority.

Mental Health Parity Enforcement in 2025: What Employers

Must Know to Stay Compliant