For some reason, my previous reply got lost with a moderator.......... so I'll give it again.
Elements, up to version 8, did not have its own Layer Mask feature. It came in with Version 9. (Actually it DID have a layer mask but it was a 'hidden' feature..... it could be called by an Action - which has to be created in full Photoshop). There were two solutions for this.....
As Ashleyj says, an Adjustment Layer's Mask works. For example, duplicate your Background image (or the last image layer at the top of the layers palette). Go back to the background and now run an Adjustment Layer (something like Levels works fine) but make no adjustments with it - just OK it. So now you have a stack with (at least) Background, Adjustment Layer and Duplicate (bottom to top). Hold down the Alt button and hover the mouse around the line between top and middle layers..... the pointer becomes a chain symbol. Click and you'll find that you've now 'clipped' the Adjustment Layer to the top (Duplicate) layer. Now activate the top layer and make your own alterations to it. The Mask box in the middle is working on it, so click in that box. With the default colours in the foreground/background paint palettes (press D for default Black and White), paint black over the image where you want to see through the top layer down to the Background - white to reverse it. You can use a Brush (checking the opacity, size and softness), or the Gradient, or Paint pot.
The quicker alternative is to download one of the many free 'Actions' for Layer Masks - this will then appear in the Effects palette and can be used at any time by double clicking there to put it into the active layer. Once there, use it in the same way as above with Brushes, Gradients etc. Check,
for example, this one. Make sure you follow the installation instructions to the letter.