Article Abstract

Article Abstract

Online ISSN: 1099-176X Print ISSN: 1091-4358
The Journal of Mental Health Policy and Economics
Volume 28, Issue 4, 2025. Pages: 121-124
Published Online: 1 December 2025

PERSPECTIVE Self-Funded Group Health Plans:A Public Mental Health Threat to Employees?

Meiram Bendat,^1* Katherine G. Kennedy²

¹J.D., Ph.D., Adjunct Professor, Department of Psychiatry & Behavioral Sciences, Stanford University School of Medicine, Stanford, CA, USA.
²M.D, Clinical Professor, Department of Psychiatry, Yale University School of Medicine, New Haven, CT, USA.

*Correspondence to: Meiram Bendat, J.D., Ph.D., Adjunct Professor, Department of Psychiatry & Behavioral Sciences, Stanford University School of Medicine, 401 Quarry Road, Stanford, CA 94305-5717, USA.
Tel: +1-310-598-3690, x.101
Fax: (888) 975-1957
E-mail: mbendat1@stanford.edu

Source of Funding: None declared.

Abstract

This article addresses the pervasive need for high-quality, affordable mental health care and the specific access impediments posed by self-funded group health plans sponsored by private employers in the United States. This article posits that in the absence of federal law establishing concrete and enforceable medical necessity and network adequacy standards, self-funded group health plans may be designed or administered in ways that improperly restrict access to essential mental health services. Legal and clinical data are presented to illustrate mental health care coverage gaps. Reforms to the Employee Retirement and Security Act of 1974 (“ERISA”) are proposed to facilitate access to medically necessary, timely, and geographically accessible mental health care for 35 million Americans covered by large group ERISA health plans. Alternative coverage strategies in the absence of ERISA reforms are also identified.

With nearly one in four Americans estimated to have a mental illness and only half of them receiving treatment in a given year, access to affordable, quality mental health care remains out of reach for many. Although health insurance is intended to promote access to mental health care, approximately 35 million Americans covered by self-funded group health plans sponsored by private employers may be unaware that their health plans are not subject to federal standards for medical necessity and network adequacy, key terms that determine the availability of coverage and can significantly limit their access to essential treatment. The Employee Retirement and Security Act of 1974 (“ERISA”) governing self-funded group health plans does not require them to base their definitions of medical necessity for covered services on generally accepted standards of care. Nor does ERISA require them to follow or disclose network adequacy standards. To the extent network adequacy standards are often undisclosed, if they exist at all, plan participants can be exposed to significant out-of-network financial liabilities when in-network mental health services are unavailable. ERISA’s judicial review provisions further disadvantage plan participants by requiring courts to defer to employer benefit interpretations and by severely restricting available relief. To improve access to affordable, high quality mental healthcare for participants in self-funded health plans, the following reforms are crucial: a federal definition of medical necessity, time and distance standards for network adequacy, hold harmless provisions for out-of-network costs due to network inadequacy, and removal of restrictions on judicial review and available remedies.

Received 14 April 2025; accepted 16 November 2025