On June 7, 2023, CMS issued guidance on the sunset of the MHPAEA opt-out for self-funded nonfederal governmental plans and related collective bargaining agreements (CBAs). The Consolidated Appropriations Act, 2023 (CAA 2023), signed into law on December 29, 2022, eliminated the annual opt-out provision from the MHPAEA previously available to self-funded state and local governmental group health plans. Specifically, new opt-out elections are not permitted and existing elections expiring on or after June 27, 2023, cannot be renewed.
Under CAA 2023, a limited exception was noted for certain collectively bargained plans. That is, a self-funded nonfederal governmental group health plan subject to multiple CBAs of varying lengths that had a MHPAEA opt-out election in effect on December 29, 2022, which expires on or after June 27, 2023, may extend the opt-out election until the expiration of the last CBA. The new CMS guidance provides specific instructions for plans to request the extension, including providing CMS with existing CBA details on the term and applicability to the group health plan for which the extension is being sought. After receiving CMS approval, the plan must then submit a renewal opt-out election to extend the plan's existing opt-out.
Sponsors of collectively bargained and self-funded nonfederal governmental plans with existing MHPAEA opt-out elections should carefully review the CMS guidance and consult with legal counsel on application to their specific plan.