Insurance for mental health, best explained by our panel of experts.
In an ideal world, healthcare payment processes would be simple and straightforward. However, in reality, understanding the intricacies of healthcare payments can be quite confusing. This is particularly true for therapy, as seeking out-of-network mental healthcare providers is common. Many patients are more likely to see therapists who do not accept their insurance, or any insurance at all, compared to primary care physicians or ob-gyns. If you find yourself unsure about whether or when it makes sense to see an out-of-network therapist, Cognosis Health is here to provide guidance.
Our comprehensive guide to paying for therapy will equip you with the necessary knowledge to find a provider who fits your treatment needs and budget, whether you plan to use insurance, pay out of pocket, or are still considering your options.
Payment Options for Therapy
Depending on your insurance situation and the therapist you choose, you have several payment options:
- Insurance for in-network care: If you see an in-network provider, your insurance will cover at least a portion of your therapy costs. The extent of coverage depends on your insurance plan, which may either cover the full cost or require you to contribute through copayments or coinsurance. Check your plan’s summary of benefits to understand your cost-sharing responsibilities.
- Insurance for out-of-network care: When you see an out-of-network provider, your insurance will cover a predetermined amount, usually a percentage of the therapist’s fee. Typically, you would pay the bill upfront and then seek reimbursement from your insurance after the session.
- Out of pocket: If you choose an out-of-network therapist and your insurance plan does not provide out-of-network coverage, you will be responsible for paying the full cost of care out of pocket. Some therapists may offer adjusted rates or sliding scales based on your financial situation. You can pay using funds from your bank account or utilize pre-tax healthcare accounts like an FSA or HSA, if available.
- Employee assistance programs: Some employers offer employee assistance programs that cover a limited number of therapy sessions, usually for short-term issues like work-related anxiety. These programs are not suitable for long-term treatment needs such as generalized anxiety disorder or clinical depression.
Coverage of Therapy by Insurance Plans
The majority of private and government-funded insurance plans provide some level of coverage for therapy. This is largely due to the Mental Health Parity and Addiction Act of 2008, which mandates equal coverage for mental health and physical health by insurance providers. Mental parity laws make it illegal for insurers to offer better coverage for physical health services compared to mental health services. Additional federal laws and state-specific regulations have further expanded and strengthened mental health coverage requirements. It’s important to note that outpatient therapy is just one aspect of mental health services.
For individuals with private (commercial) insurance
Most private plans, including employer-based plans and individual plans obtained through insurance exchanges like Obamacare, must comply with mental health parity rules. Non-qualified short-term plans are the main exception to this rule. While these plans may be cheaper, they are not required to cover mental health services. It is essential to review the coverage offerings of non-qualified plans before enrolling.
If you have private insurance, you can generally expect to have mental health coverage. The specific cost-sharing arrangements between you and your insurer depend on your plan’s design. Health Maintenance Organization (HMO) plans typically have lower monthly premiums and out-of-pocket costs for both physical and mental healthcare. Preferred Provider Organization (PPO) plans, on the other hand, often have higher monthly premiums but allow you to see both in-network and out-of-network providers.
Cognosis tip: if you have a high-deductible health plan, consider setting up a health savings account (HSA) for tax advantages if you haven’t already — especially if you anticipate spending on therapy without reimbursement. Contributions made through payroll are pre-tax; additional contributions made later aren’t pre-tax but are tax-deductible when you file, which still reduces the effective cost of care.
If you have a desire to see an out-of-network therapist but cannot afford the full rate, you can ask about a sliding scale. Sliding scales are relatively common among providers, especially those who don’t accept insurance or are seeking to expand their client base. You can ask your current or potential therapist if they are open to a pay-what-you-can arrangement. Generally, therapists won’t verify your income, and there is no fixed formula for determining the amount you should pay — it’s important to be honest about what you can afford.
In some cases, the amount you can reasonably pay may not align with your provider’s sliding scale. If a therapist is unable to accept another sliding scale patient due to limited availability, they may refer you to another therapist who can accommodate your financial situation. Every therapist has their own guidelines regarding the number of sliding scale clients they can take on and the lowest rate they can offer — it’s always worth asking if they have availability.
If sliding scale options aren’t available, there are alternative ways to pay for therapy. Direct-to-consumer therapy platforms are sometimes more affordable than private practice therapists. Individuals with Medicaid or Medicare, or those who are uninsured, can also look into community mental health centers as a cost-effective option — search for your county’s mental health community clinic to find openings. A number of nonprofit organizations aggregate therapists willing to offer reduced-fee sessions to specific communities as well, so it’s worth researching what’s available in your area.
When it comes to insurance coverage, mental health parity laws generally do not impose limits on the number of therapy sessions allowed. Your insurance provider may review your records after a certain number of sessions (for example, 20) to evaluate the necessity of further care — but if your therapist believes you require ongoing support, you should be able to continue.
There is one exception to this, which applies if you’re using your employer’s employee assistance program. In that case, check beforehand how many sessions are allowed so you’re not surprised — if your allotted sessions are exhausted, you may need to cover additional sessions yourself.
Coverage for telehealth sessions compared to in-person sessions varies depending on your insurance plan and has been subject to change in recent years. It’s worth checking with your plan for specific details on how telehealth sessions are covered.
This article is general information, not a guarantee of coverage or a substitute for advice from your insurance carrier. Every plan is different — our billing team can walk you through your specific coverage before treatment begins.
Where Do Psychiatrists Fit In?
Within the realm of mental health professionals, there are various types. Psychologists and licensed clinical social workers often offer therapy as part of their services. Psychiatrists, on the other hand, are medical doctors specializing in diagnosing and prescribing medication for mental health conditions. While psychiatrists do receive training in psychotherapy and may conduct therapy sessions themselves, their primary focus is typically on consultations and medication management visits — for therapy, they often refer patients to other types of providers.
Psychiatrist appointments are categorized as outpatient mental health treatment, subject to mental health parity rules. However, similar to therapists, it is common for psychiatrists to not accept insurance due to low in-network reimbursement rates. It is generally easier to find in-network therapists than psychiatrists, and psychiatrists who do accept insurance often don’t offer therapy as part of their services. Paying to see psychiatrists who are out-of-network or don’t accept insurance works similarly to therapists.
It is common for individuals to consult a psychiatrist for medication management and a therapist for behavioral therapy. However, if you are seeking a provider who can offer both services and is more likely to accept insurance, consider a psychiatric nurse practitioner (NP).
Cognosis Health Team · Reviewed by Dr. Justin K. Liegmann, MD