10 Laws and Regulations to Know to Maintain Mental Health Compliance

Mental health support intersects with a unique web of privacy rules, parity laws, and anti-discrimination statutes.Navigating mental health compliance isn't just about avoiding penalties; it's about ensuring your employees have equitable, protected access to the care they need. 

Whether you are managing a traditional health plan, a digital mental health solution, or an Employee Assistance Program (EAP), staying compliant requires vigilance across federal, state, and even international lines. To help you manage this responsibility, we have compiled 10 essential laws and regulations every benefits decision-maker needs to understand.

1. MHPAEA – Mental Health Parity and Addiction Equity Act

The Mental Health Parity and Addiction Equity Act (MHPAEA) is a cornerstone law for mental health compliance in the United States. Its core principle is simple: Mental health and substance use disorder benefits shouldn't be harder to access than medical or surgical benefits. However, the execution is often complex.

• Equal restrictions: MHPAEA mandates that financial requirements (like copays and deductibles) and treatment limitations (like medical necessity criteria) for mental health cannot be more restrictive than those for medical care.
• Beyond the basics: The law applies to both quantitative limits (numbers you can count) and nonquantitative treatment limitations (NQTLs), such as pre-authorization requirements or network admission standards.
• HR implications: You must actively oversee parity compliance reporting, including ensuring that complex comparative analyses for NQTLs are completed and available. This helps confirm that your plan doesn’t subtly discourage mental health utilization compared to medical care. 

2. ACA – Affordable Care Act

The Affordable Care Act (ACA) dramatically expanded access to mental health care by designating it as an essential health benefit, reinforcing its role as a component of overall health.

• Parity intersection: The ACA works hand-in-hand with MHPAEA, extending parity requirements to mental health benefits offered in individual and small group market plans.
• HR implications: HR teams must scrutinize their plans to ensure coverage limits, provider networks, and cost-sharing structures meet ACA standards. This is particularly relevant when evaluating EAPs that are bundled with health plans, as they must align with these broader coverage mandates.

3. ADA – Americans with Disabilities Act

The Americans with Disabilities Act (ADA) protects employees from discrimination based on disabilities, which includes qualifying mental health conditions. Understanding the ADA is vital for fostering an inclusive workplace where employees feel safe seeking help.

• Reasonable accommodations: Employers are required to provide reasonable accommodations for employees with mental health conditions such as depression, anxiety, or PTSD, provided it doesn't cause undue hardship.
• Non-discrimination & privacy: The ADA strictly prohibits discrimination based on mental health status and mandates rigorous confidentiality for any medical information disclosed during the accommodation process.
• HR implications: Auditing your internal processes is key. HR must review job descriptions, leave policies, and workplace procedures to ensure they don't inadvertently discriminate against those with mental health challenges and that all accommodation requests are handled with consistency and empathy.

4. FMLA – Family and Medical Leave Act

The Family and Medical Leave Act (FMLA) acknowledges that mental health crises can be just as debilitating as physical ones. It provides a safety net for employees who need time away to recover or care for a loved one.

• Job-protected leave: Eligible employees are entitled to up to 12 weeks of unpaid, job-protected leave in a 12-month period for serious health conditions, which explicitly includes mental health issues.
• Stress and anxiety: Conditions like severe stress and anxiety can qualify for FMLA leave if they are certified as "serious health conditions" by a healthcare provider.
• HR implications: Handling these requests requires sensitivity and precision. HR must manage the certification, documentation, and return-to-work processes carefully to ensure compliance while supporting the employee's recovery journey.

5. ERISA – Employee Retirement Income Security Act

The Employee Retirement Income Security Act (ERISA) is a federal law that governs most employer-sponsored benefit plans, including those that offer medical or mental health services. While originally designed for retirement plans, its scope also includes welfare benefit plans that provide care for mental health conditions.

• When EAPs are subject to ERISA: If an EAP offers services like counseling for mental health or substance use, it’s considered to provide “medical care” and is likely subject to ERISA. However, if it only refers employees to outside services, it may not be.
• Compliance obligations: ERISA-regulated EAPs must meet fiduciary requirements, including filing Form 5500 (in some cases), and providing a Summary Plan Description (SPD).
• HR implications: Determine whether your EAP is delivering direct medical services. If so, ensure plan documentation, fiduciary oversight, and disclosure rules are being followed—especially around mental health parity and COBRA applicability.

6. COBRA – Consolidated Omnibus Budget Reconciliation Act

When an employee leaves your organization, their need for mental health support doesn't disappear. COBRA ensures that they can maintain their coverage during transitional periods.

• Continuation of coverage: COBRA allows eligible employees and their dependents to continue their health coverage—including mental health benefits and many EAPs—after a qualifying event like job loss.
• Consistent terms: The coverage offered under COBRA must be identical to the benefits provided to similar active employees. 
• HR implications: Communication is critical here. HR must clearly explain how mental health services, including counseling sessions available through an EAP, are handled under COBRA continuation to avoid gaps in care during stressful life transitions.

7. HIPAA – Health Insurance Portability and Accountability Act

Trust is the foundation of effective mental health support. HIPAA (Health Insurance Portability and Accountability Act) establishes the legal framework that protects that trust by safeguarding sensitive health information.

• Privacy and security: HIPAA sets national standards for the protection of individually identifiable health information (PHI), covering mental health records and, in some cases, EAP data.
• Minimum necessary rule: The law limits the sharing of PHI to what is "minimally necessary" to accomplish the intended purpose and enforces strict controls on disclosures.
• HR implications: HR is often the conduit between employees and benefits vendors. You must coordinate closely with internal stakeholders to prevent HIPAA violations. This includes securing data transmission and ensuring that managers do not improperly access or share private health details.

8. GDPR – General Data Protection Regulation

If your workforce is global, compliance obligations extend beyond the U.S. border. The General Data Protection Regulation (GDPR) is a comprehensive privacy law from the European Union with significant implications.

• Global reach: GDPR applies to employers, including those based in the U.S., with employees in the EU or those using global digital mental health vendors that process EU citizen data.
• Data rights: The law heavily regulates how employee mental health data is collected, processed, stored, and transferred across international borders, granting employees significant rights over their data.
• HR implications: HR teams operating globally must implement robust data processing agreements (DPAs) with vendors. Furthermore, you must ensure that mechanisms for obtaining employee consent for data processing meet the stringent standards of the EU.

9. Excepted Benefits Rules (ACA/ERISA)

Some EAPs can avoid heavy compliance burdens under ACA and ERISA if they qualify as “excepted benefits.” But this status isn’t automatic—it hinges on specific regulatory conditions that limit the scope of services.

• Four-part test: To qualify, an EAP must: (1) not offer significant medical care, (2) not require premiums or cost-sharing, (3) not be a condition of eligibility for another health plan, and (4) not coordinate with another health plan.
• Visit limits matter: While there’s no official cap, EAPs offering a limited number of short-term counseling sessions are more likely to maintain this status. 
• HR implications: Monitor your EAP design carefully. Adding too many clinical features or expanding the scope and duration of services might shift your EAP from “excepted” to “regulated,” triggering additional requirements under ACA and ERISA.

10. Knox-Keene Act (California-specific)

California’s Knox-Keene Act is one of the strictest state-level regulations for mental health and EAP vendors. It can apply even to digital platforms offering bundled or prepaid services to California employees.

• Licensing trigger: An EAP may require licensure if it assumes global risk, meaning it accepts prepaid or bundled payments and arranges, manages, and pays for mental health services.
• Exemption limits: Limited scope EAPs may qualify for an exemption, depending on the totality of the arrangement, including offering no more than 3 sessions in any 6-month period.
• HR implications: If you have California employees, do not assume your EAP is exempt or compliant. You must confirm your mental health solution’s licensing or exemption status and assess how services are delivered (bundled vs. fee-for-service) to ensure compliance.