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Pros and Cons of Using Insurance to Pay for Therapy

Updated: Feb 7, 2023

Mental health counseling has numerous benefits, both for those who suffer with debilitating mental illnesses and for those who struggle with normal ups and downs of life. In other words, you do not need to have a diagnosable mental health disorder that limits your ability to accomplish daily tasks in order to find great benefit from seeing a therapist who listens, validates, and acts as an objective party to help you navigate challenges.

Women paying for mental health counseling services in Colorado. Pros and Cons of Using Insurance to Pay for Therapy

Since therapy is a service that has value no matter your current situation or mental and emotional state, it is important that the cost of this potentially life saving service can fit into your regular budget without becoming a stressor in itself.

Using your medical insurance plan is one way to help reduce the cost of acute or ongoing mental health care. However, there are many reasons why some may find that using insurance is not the best option for them.

Pros to Using Insurance to Pay for Mental Health Therapy

1. Reduced Out of Pocket Cost to Make Treatment Accessible

If your insurance plan includes coverage for behavioral health services and you have met your deductible, then the cost of therapy may be fully covered by your insurance plan. There are federal and state laws called "Parity" laws which require that health insurance companies cover services for mental and behavioral health conditions the same way they cover other medical conditions, like diabetes or heart disease.

Due to Parity laws, there is a good chance that your plan has some coverage for therapy services, but how much money this will save you compared to paying out of pocket will vary based on the plan you have. Your therapist can provide an overview of plan coverages, copay, and deductibles that you are responsible for paying if you use your insurance plan for counseling services. A conversation with a therapist will help you determine if using your plan will save you enough money to overlook some of the cons below.

2. It May Help Improve Consistency in Care

Since health insurance may cover all or part of the cost of therapy services, you may be able to afford to attend therapy sessions more often, like on a weekly basis, rather than biweekly or once per month. Consistent engagement in therapy can help you to make progress and meet therapy goals faster or more efficiently.

Meeting with your therapist often and on a routine basis means that your therapist is able to get frequent updates on your life and can assess how well interventions are helping you to progress toward accomplishing goals. Filling your therapist in on events that happened during the past week, rather than the past three weeks, allows for more session time to be spent on deeper processing of emotions and thinking patterns related to those events.

3. Payments May Help You Meet Your Deductible

Benefits of using insurance to pay for mental health therapy services

Therapy may be just one of many medical services you are needing to thrive. When this is the case and you have a high deductible, it can be difficult to reach that deductible so that insurance start kicking in payments towards medical care. If you use insurance for counseling services and are paying a copay for that therapy, you continue to have an out of pocket cost . . . but at least that cost may be applied towards meeting your deductible and reducing overall out of pocket medical expenses later in the year.

Cons of using Insurance to Pay for Mental Health Therapy

1. Insurance Requires your Therapist to Give You a Diagnosis

In order for a therapist to submit a claim to your insurance company, that claim form must include a mental health diagnosis for which you are receiving evidence based care to treat. The bad thing about this is: 1. you may not meet the diagnostic criteria for the type of diagnosis insurance companies require and 2. this diagnoses goes on your permanent health and insurance record.

For many people seeking therapy, they reach out for help to deal with a specific challenge or transition happening in their life - divorce, job loss, relocation, diagnosis, birth of a child, death of a loved one, etc. These are the normal ups and downs we all experience at one point or another that require the extra support and expertise a therapist can offer.

However, struggling with these type of challenges doesn't necessarily mean that you qualify for having a mental health disorder. For these situations, therapists often use "Z codes" in their diagnosis and treatment plans, as these are codes noting conditions that cause distress and are a focus of clinical attention, but are not considered mental disorders.

Women completing insurance paperwork to pay for teletherapy services in Denver, CO. Cons of using insurance to pay for mental health therapy and counseling in Colorado and New York

Others may present to counseling with higher level mental health disorders caused by maladaptive coping to life experiences, trauma, or even genetic/biological predisposition. These diagnoses fall under "F codes" according to the Diagnostic and Statistical Manual of Mental Disorders (DSM-5).

Insurance companies only pay out and can be billed for "F code" mental health disorders. So even if your situation and struggles really only meet criteria for a "Z code" issue, insurance companies essentially don't regard those as worthy or severe enough to pay for treatment. Therapists are ethically obligated to issue the lease severe/restrictive diagnosis and to only issue a diagnosis when a client truly and fully meets diagnostic criteria according to the DSM-5. The fact that insurance companies put restrictions on what diagnostic codes they will pay for and which they won't, creates an ethical conundrum for your therapist and may limit what care is covered.

2. Loss of Total Confidentiality and Access to Other Benefits

Having a mental health diagnosis on your record means that you will forever have a pre-existing condition that is accessible by insurance companies or government agencies. If you need security clearance for work, want to join the military, are applying for jobs that require a criminal background check, are involved in a Workman’s Comp case, or even in divorce proceedings, all your mental health information and this diagnosis may be accessed and used in these decisions. If you’re ever sued, the opposing party could subpoena your medical and mental health records to build a case against you.

You may also want to apply for life or disability insurance or get a quote with a different company for these type of plans. Health care laws are continually evolving, but having a mental health diagnosis on your record may make buying health, disability, and life insurance harder and more expensive because you may only qualify for limited, high deductible plans with high co-pays.

4. Control of Your Treatment is Shared with Insurance Company

Insurance companies determine the time intervals that they will pay for and the therapeutic modalities they will accept. Most companies pay for the standard 50-60 minute therapy session. But what if you are in crisis and need a 90 min session that day? Your plan may or may not pay out for that extra time, potentially requiring you to pay out of pocket or for your therapist to provide you a service during time they are not compensated for.

Some insurance plans also cap the amount of overall sessions they will pay for during a given time frame. Let's say you come into counseling for support through a breakup - typically, you may reach your goals and feel more adjusted to your life as a single person in 12 weeks. But what if you also experience the loss of a family member on week 10? You now need additional grief support and are feeling worse than ever, yet your insurance will only pay for two more sessions, leaving you to pay out of pocket to continue accessing care.

Women talking about therapy cost and payment. Why you may not want to use insurance to pay for counseling in Colorado

Lastly, not all types of treatments are covered. Best practice is for therapists

to use only evidence based therapeutic modalities with clients. However, new modalities are being developed all the time by innovative practitioners and researchers. Maybe your therapist is also a trained yoga teacher and you both agree that combining yoga and talk therapy would be beneficial. Your insurance company may not agree to pay for new, integrative, or innovative treatments.

5. Wait Times and Difficulty Finding a Therapist that is a Good Fit

Another obstacle you may run into is finding a therapist who both takes your insurance and is a good fit. Research shows that the most important element to successful counseling is a positive therapeutic relationship between the therapist and client. This is why it isn't a good idea just see any therapist assigned to you. You should find a therapist that specializes in your presenting issues and has a style and personality that you click with. In other words, the vibe need to be right.

Female therapist working with insurance pay client

It is not easy for a therapist to get paneled with an insurance company as a provider. It requires the therapist is fully licensed (meaning they've gained at least 2 years of supervised experience post graduate degree) and have passed applicable competency and state law jurisprudence exams. Then, the therapist has to apply to be a provider with the insurance company. If they are accepted, this start a months long process of getting paneled and set up to submit claims for services provided. A lot of great therapists are not willing to go through the hassle, which means someone who specializes in what you need may be considered an out of network provider.

6. Insurance Companies Dictate your Therapists Rate

This is not really a con for you as a client. Yet, as noted above, a positive therapeutic relationship with your therapist is important and that relationship is based on mutual trust, respect, care, and collaboration. So it is natural for you as a client to also wonder and want the best for your therapist.

In many cases, using insurance versus paying out of pocket on a sliding scale will help increase your therapists income. Yet, it also might not.

Your therapist may have advanced qualifications to charge $200 or more an hour for the service they provide, but that is not what insurance companies will pay them. Insurance companies decide what rate they will pay therapists based on a combination of valid qualifications (degree, licensure type, languages spoken) as well as arbitrary factors (zip code, how many clinicians they have in that city, etc). At the end of the day, it is the goal of your insurance company to pay out providers as little as they can get away with.

Is There Another Option Besides Out of Pocket or Insurance Pay?

A third, somewhat combined option, is to seek out of network reimbursement for fees you have paid out of pocket. In this scenario, your therapist does not take insurance at all, or isn't paneled as a provider with your specific company or insurance plan. In this scenario, you can call your insurance company and ask if they provide reimbursement to you as a customer for medical services provided by out of network behavioral health professionals.

Using insurance to pay for mental health therapy services

If they say no, sorry. Not much we can do about that. You'll have to pay out of pocket or find a therapist in your network.

If they say yes, great! Ask your therapist to provide you with a "superbill" to submit to your insurance company. This is an invoice type document that you can send into your insurance company.

Once your insurance company receives the superbill listing approved mental health services, you'll receive all or part of that fee paid back to you.

To Use Insurance, Or Not to Use Insurance?

In the end, it is a personal choice based on your preferences, financial situation, and benefits. If your finances are so limited that using insurance is the only way you’ll get the therapy you need, then please use it. Getting the mental health support and treatment that you need is always the priority.

Remember, above all therapy is an investment in yourself. Look at it this way . . . you live inside your head and in your life 24/7. The time, money, and benefits you employ to make sure your mind and life are happy places to exist is far more important than money and is worth navigating any challenges presented by insurance.

Online Counseling for Women Covered by Insurance in Colorado and New York

If you are not sure if using insurance coverage to pay for therapy is right for you, please schedule a free consult call with a therapist at Her Time Therapy. If you are an existing client considering new ways to pay for therapy, please bring up this question in session so your therapist can provide guidance and support in making a decision that is right for you.

Teletherapy for Women in Colorado and New York

Her Time Therapy, LLC is an integrative group counseling practice comprised of highly trained Colorado and New York based therapists who specialize in providing convenient and empowering online counseling services that improve women's mental, emotional, and physical health. Women experience a unique set of biological, environmental, economic, and social challenges that have a significant impact on their mental health. We believe that you deserve to lead a happy and fulfilling life and are here to help you reach your goals.

We help women overcome anxiety, reduce depression, process trauma, and improve relationships. Those struggling with poor self care, chronic illness, cancer, caregiver stress, and acute or anticipatory grief will also find specialized support at Her Time. Because we operate from feminist lens and are passionate about helping our clients to break glass ceilings, we also provide counseling on how to succeed academically, find your dream career, advocate for yourself in the workplace, and overcome gender based oppression and biases in all areas of life.


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