Are Therapists Covered by Insurance?
Can you use insurance for therapy? Here’s a Handy Guide for using health insurance to cover therapy.
American health insurance is complicated! Add to that, trying to find a therapist who accepts your insurance, and it’s super challenging. In this post, I will help you understand how you can use insurance for therapy, and what happens when you don’t.
While it’s definitely easier to find a therapist who is out of network with insurance (more on that in a moment), not everyone has the resources to pay out of pocket for every session. So here is an explanation of in-network versus out-of-network, and insurance terms simplified at the end of the post.
In-Network versus Out-of-Network Benefits
What is In-Network?
If a provider or therapist is in-network with your insurance, it means that you can use your insurance to cover the costs upfront, minus your co-pay or co-insurance, and possibly, a deductible.
Unless you have a high deductible that needs to be met before they will cover services, your costs will be comparable to a regular doctor’s visit. This is because the therapist has agreed to be paid by the insurance company directly.
What is Out-of-Network?
Any therapist who does not participate with your insurance plan is considered out of network.
If your insurance plan offers benefits to see a provider outside of their network, then you can request partial reimbursement for services after you have paid for them upfront. If your plan is a PPO, it most likely offers out-of-network benefits. HMO plans typically do not offer these benefits.
You can generally expect to be reimbursed between 40% and 80% for the cost of your therapy, depending on your insurance company and plan.
The Final Option: Completely Out of Pocket
This is when you meet with a therapist and don’t use insurance at all to pay for services. It is completely out of your own pocket.
Pros and Cons of a Therapist who is In-Network with your Insurance
Pros:
Typically, a lower cost per session, based on your individual plan.
You can call your insurance company for a list of in-network therapists.
Cons:
There are less providers available in-network because insurance companies pay their providers low fees for their services.
Insurance companies have the right to read therapist’s notes and treatment plans if they are paying for services.
Insurance companies have the right to deny treatment if they determine that it is not “medically necessary” according to their in-house medical advisors.
Insurance plans require a mental health diagnosis in order to cover mental health services.
Pros and Cons of a Therapist who is Out-of-Network with your Insurance
Pros:
You have a ton more options when it comes to choosing a provider who is out of network, especially in a big city where most therapists are out of network.
You can typically find highly specialized providers for almost any issue that you’re looking for help with, because they have the freedom to specialize.
Insurance companies can’t deny treatment if they determine that a treatment is not medically necessary.
You can usually start seeing a therapist right away because therapists aren’t chronically over booked like they are when they accept insurance.
Cons:
The cost of sessions is usually higher, depending on how much you can get reimbursed, and you have to pay up front.
Related to above, you have to wait on the insurance company to reimburse you.
It can be challenging to know how to search for a therapist when you’ve never looked before. For help on this, see my post on When to See a Therapist, with a guide on finding a therapist.
Pros and Cons of the Going Completely Out of Pocket
Pros:
All the same pros apply as the out-of-network option, except:
Privacy. Insurance companies have absolutely no right to access your therapist’s notes.
Similarly, your therapist does not need to supply you with a diagnosis code in order for the insurance company to pay for services.
Cons:
It is typically more expensive unless you can find a therapist with a sliding scale. However, sometimes mental health benefits are so scant that it doesn’t really make a difference.
Similar to above, it can be challenging to know how to find a therapist. For help on this, check out my post: When to See a Therapist with a guide on finding a therapist.
A few Important Insurance Terms to Understand.
For a more comprehensive list of terms, take a look here and here.
1) Deductible:
This is a set amount of money that needs to be spent on qualifying medical costs before your benefits will kick in. Some services will be covered before you meet your deductible, but this all depends on your plan. *Note: there is usually a separate deductible amount for in-network versus out-of-network benefits.
2) Co-Insurance:
A set percentage of the cost of services that you must pay per visit. For example, 20% of a session that costs $120 will cost you $24.
3) Co-Pay:
A set amount of money that you will pay for the service that you are receiving. For example, some people have a $20 copay for primary care versus $30 for a specialist.
4) Insurance Premium:
The monthly fee that you (the member) pay for your insurance coverage.
5) When Benefits Reset:
Everyone’s policy has a start date and end date during which their policy applies. For example, if your plan resets at the beginning of the year, then you start accumulating costs towards your deductible as if you haven’t had any doctor’s appointments yet when the new year comes around.
6) Pre-Authorization:
For some plans, your insurance requires your doctor (usually a primary care doctor) to certify that the services are necessary. This sometimes applies to therapy.
Summing It Up!
Again, insurance is complicated! Getting a mental health treatment shouldn’t be. Hopefully you have a much better idea of your options after reading this post. And if you’d like to learn more about the therapy process, then check out the original post that inspired this one: When to see a Therapist or check this one out if you’re New to Therapy.
The contents of this blog are for informational purposes only. This blog is not intended to be a substitute for professional advice, diagnosis, or treatment that can be provided by your own mental health practitioner. If you have any specific concerns about your mental health, you should consult your doctor and you should not delay seeking medical advice, or treatment for your mental health, because of information on this blog.
© Counseling Works NYC
Sabrina Tropper, LMHC
Sabrina Tropper, LMHC is a therapist and the founder of Counseling Works NYC. She works with individuals in New York who are experiencing relationship troubles, life transitions, or trauma.