Mental Health Benefits

A Growing Employer Liability

Mental health is becoming a top healthcare cost driver, but the risks go beyond finances. Left unaddressed, inadequate mental health coverage can lead to extended hospital stays, disability, and even suicide.

Mental healthcare is not a luxury, it’s a necessity for a healthy life.

This is not just a compliance issue—it’s a high-risk exposure for employers. State Departments of Labor and Attorneys General are responding to constituent complaints, launching investigations that can be just as costly and time-consuming as class-action lawsuits. One frustrated employee can trigger a government probe into your health plan.

Dependents and younger workers face record anxiety, depression, and burnout—driving lost productivity, rising disability claims, and high turnover. Historically, chronic conditions were an older worker concern. Today, younger employees face their own high-cost health burdens—just with different conditions.

Accessing mental health services is not easy. “Ghost networks” plague provider directories—listing providers who don’t take insurance, aren’t in-network, or aren’t even alive.

At the same time, employers struggle to find better alternatives. There are many vendors with new tech and delivery models like texting with coaches and AI chat bots. Although they claim success (and some are good and better than nothing) most have little to no evidence backing their claims.

The American Psychological Association recently warned of apps “masquerading” as therapists, but programmed to reinforce, rather than to challenge, a user’s thinking, could drive vulnerable people to harm themselves or others.

Employers have to wonder: are we helping, hurting, or just wasting money?

Adding to the complexity, there has been industry pushback against mental health parity regulations, particularly around ghost networks and any requirement for employers to confirm provider availability. The ERISA Industry Committee (ERIC), representing large employers, has even filed a lawsuit against the enforcement of these rules, arguing they exceed the original intent of the 2008 parity law.

Despite these legal challenges, employers cannot afford to ignore mental health access issues. Addressing them proactively is essential for both regulatory compliance and the well-being of employees.

Case Study: When Mental Health Care Fails

A state investigation recently uncovered “ghost networks” within a large employer’s health plan—where employees were directed to in-network providers who either weren’t accepting new patients or didn’t offer the listed services. The result?

🚨 Emergency room visits surged as employees in crisis had nowhere else to turn.
🚨 Disability claims increased as mental health conditions became long-term problems.
🚨 Tragic outcomes occurred, including suicide attempts linked to deferred care.

One complaint to the Attorney General launched the investigation. The employer faced intense scrutiny, plan changes, and reputational damage that could have been avoided.

Four Steps to Improve Benefits and Reduce Risks

1️⃣ Audit Your Mental Health Network

Verify your insurer’s network—don’t assume it’s accurate.
Identify “ghost networks” before regulators or employees do.
Ensure there are sufficient options with reasonable wait times.

2️⃣ Strengthen Employee Support

Establish clear, accessible mental health support channels.
Educate employees on their benefits and how to escalate issues.
Train benefits teams to identify red flags before they become complaints or worse.

3️⃣ Evaluate Mental Health Solutions

The explosion of digital mental health solutions—apps, texting services, virtual coaching—offers promise, but also pitfalls.
Many vendors claim high engagement and success, but few have strong clinical evidence supporting their effectiveness.
Demand data before adopting a solution: What’s the success rate? Are outcomes independently validated?
Consider integration: Does the tool complement or compete with your existing mental health network?

4️⃣ Proactively Ensure Compliance

Monitor state and federal mental health parity enforcement trends.
Conduct independent audits to identify compliance risks.
Maintain records of your efforts to improve benefits and access.

Final Thought

May is Mental Health Awareness month. It’s not too late to work with benefits teams and vendors to highlight available resources. It’s a good fiduciary compliance step and most importantly, it helps avoid harm to employees and their families.