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Dr. Cassidy Blair, Psy.D. Licensed Clinical Psychologist | PSY 22022

Dr. Cassidy Blair, Psy.D.

mental health treatment
Why You Shouldn’t Use Insurance to Pay for Therapy

If you’ve ever struggled with anxiety or depression, or just needed a little help to manage the stress in your life, mental health treatment may have been a life-saver. In fact, 42% of all Americans have seen a counselor at some point in their lives.

We know therapy works. What is less clear is how to pay for it. For those of us with insurance, it seems logical that we would use it for therapy. But that isn’t always the best idea. We’ve put together the top 9 reasons why you shouldn’t use insurance to pay for mental health treatment.

1. Loss of Confidentiality 

The decision to see a therapist is highly personal. You may not want to share that decision with anyone, much less explain why you need to see a professional mental health counselor.

But, once you involve the insurance company, your privacy goes out the window. The reason is pretty simple. For the insurance company to pay for your therapy session, you have to get it approved. It’s often referred to as prior authorization.

That means you’ll have to explain to the company exactly why you feel you need therapy. Typically, you’ll fill out some forms or at the very least, you’ll talk to someone on the phone. Those people now know what struggles you’re facing.

2. Insurance Requires a Diagnosis

Insurance companies require a diagnosis before they will agree to cover all or part of your treatment. If you need surgery to repair a broken arm, you’ll need to give the insurance company paperwork from your doctor that confirms your broken arm. 

Mental health treatment works the same way. Before insurance will cover counseling, your therapist will have to submit a diagnosis. Here’s the problem with that: insurance companies typically cover only treatment that is considered medically necessary.

46 million adults in the U.S. experience mental illness every year. Many of them struggle with schizophrenia, bipolar disorder, and other serious mental health issues. For them, securing counseling that is “medically necessary” may not be challenging. 

But what about the millions of us who struggle to manage stress, the death of a loved one or a job loss? We may need crisis counseling to help us cope with these issues, but they may not rise to the level of medically necessary. Millions of couples seek out marriage counseling to save their relationship, but that won’t qualify as medically necessary.

When you handle the payment yourself, so-called private-pay, you don’t need a diagnosis to see a therapist. 

3. Mental Health Treatment Becomes Part of Your Permanent Record

Let’s say you visited a therapist to talk about the issues you’re facing, you received a diagnosis and the insurance company agreed to pay for Cognitive Behavioral Therapy to deal with childhood trauma.

All that information is now a part of your permanent medical record. It can be accessed by other insurance companies if you have to switch to a new one. If you’re applying for a job that requires a specific security level, the employer may have access to the records from your mental health treatment.

Your mental health issues are now considered a preexisting condition.

4. Insurance Companies Determine Your Treatment

When the insurance company approves your treatment, it also approves a specific duration. That means, the insurance company determined how many sessions you need. You and your therapist don’t get to decide how often you see each other, or for how long. 

The insurance company also has the right to review your treatment records any time to monitor your progress. The company can decide when your treatment should end, regardless of what your therapist says.

5. Long Wait Times

Finding the right therapist can be challenging. Finding one that takes your insurance is even more difficult. For example, about half the therapists in California take insurance.

As fewer therapists work with insurance companies, the ones who do have jammed-packed schedules. It’s not unusual to wait two months or longer for an appointment.


6. Insurance Changes May Affect Therapy

As we’ve discussed, your insurance company will approve a specific course of treatment with a specific counselor. If you change jobs and/or change insurance companies, you may have to start all over again.

There is no guarantee a new insurance company will approve your treatment. Your current therapist may not be considered an in-network provider anymore.

If you’ve ever had to change insurance companies, you know the stress that comes with having to find all new doctors who aren’t familiar with your medical history and who may work out of an office that’s not convenient for you. 

7. Deductibles Can Affect Your Cost

In most cases, your insurance coverage comes with a deductible. That’s the amount of money you have to pay out of pocket before your insurance pays anything. If you have a high deductible, you’ll still have to pay a significant portion of your therapy bills before insurance will cover anything.

Here’s an example: let’s say your annual deductible is $5,000. Your therapist charges $200 per session. You’ll have to pay for 25 sessions before your insurance will cover anything. You may have other medical expenses that will eat up some of your deductibles, but you can see that having insurance pay for therapy doesn’t guarantee you’ll save any money.

8. Episodic Therapy Sessions Might Not Be Covered

You may seek therapy to help you cope with specific events or triggers that don’t affect your daily life. For example, you may struggle with anxiety every time you go home for a visit with your extended family. Outside that, you feel great.

It’s unlikely that insurance will cover one or two sessions every couple of years, even if you and your therapist feel it would be beneficial for your overall mental health.

9. Insurance Companies Can Withdraw Approval 

Even if your insurance company approves coverage for your therapy sessions, it’s not a guarantee. It’s possible the company can withdraw approval, even before you’ve finished your sessions.

You are ultimately responsible for payment, so you could be on the hook for hundreds of dollars if your insurance company backs out.

Final Thoughts

Some mental health treatment providers will offer something called a sliding scale for people who need help paying for therapy. In this case, the therapist might give you a lower rate, if you can demonstrate financial need.

We’re here to answer any questions you have about the therapeutic process or to schedule an appointment. Please contact us at any time. We’re here to help. 

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