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The Pros and Cons of Using Insurance to Pay for Mental Health Therapy

AJ Davies

Pros and Cons of Using Insurance for Mental Health Therapy 2024


Mental health counseling can be beneficial for individuals dealing with both diagnosed mental illnesses and the normal challenges of life. Access to therapy is crucial, and one consideration is whether to use insurance to cover the costs. This article explores the pros and cons of using insurance for mental health therapy, aiming to help individuals make informed decisions about their mental health care.

Pros of Using Insurance to Pay for Mental Health Therapy:

  1. Reduced Out-of-Pocket Costs:
    • If your insurance plan covers behavioral health services and you’ve met your deductible, therapy may be fully covered.
    • “Parity” laws mandate equal coverage for mental health services, making therapy more accessible.
  2. Improved Consistency in Care:
    • Insurance coverage may allow for more frequent therapy sessions, fostering consistent engagement and faster progress toward goals.
  3. Payments May Help Meet Deductible:
    • Therapy costs may contribute to meeting your deductible, potentially reducing overall out-of-pocket medical expenses.

Cons of Using Insurance to Pay for Mental Health Therapy:

  1. Requirement for Diagnosis:
    • Insurance requires therapists to provide a mental health diagnosis, potentially leading to unnecessary labeling and long-term consequences.
    • Some individuals seeking therapy for life challenges may not meet diagnostic criteria.
  2. Loss of Confidentiality and Access to Benefits:
    • A mental health diagnosis on record will follow you for some time and can impact security clearance, job applications, and other life decisions.
    • Obtaining life or disability insurance may become challenging and expensive with a mental health diagnosis.
    • Insurance companies own clinical documentation and notes, not the provider.
    • If you need PEP, PreP, or 211 (HIV prevention medicines) some insurance companies might consider this ‘high risk’ and may charge more or drop your policy.
  3. Control Shared with Insurance Company:
    • Insurance dictates session lengths and may limit the number of sessions, affecting the flexibility and effectiveness of treatment.
    • Insurance dictates what treatment options are allowed, restricting what modalities a queer therapist can provide to LGBTQIA+ clients
  4. Not All Treatments Covered:
    • Innovative or integrative treatments may not be covered, limiting therapy options.
  5. Difficulty Finding a Therapist:
  6. Insurance Companies Dictate Therapists’ Rates:
    • Insurance companies determine therapists’ rates, potentially impacting the quality of care provided

Another Option Besides Out-of-Pocket or Insurance Pay:

  • Seeking out-of-network reimbursements from insurance carriers for fees paid out of pocket is an alternative.
  • Clients can inquire if their insurance company provides reimbursement for services from out-of-network behavioral health professionals.

In the end, the decision to use insurance for mental health therapy is personal and depends on individual preferences, financial situations, and benefits. While insurance can reduce costs, it comes with potential drawbacks, such as loss of confidentiality and limitations on treatment options. The most important consideration is prioritizing mental health support and treatment. Therapy is an investment in oneself, and navigating challenges presented by insurance is worth the long-term benefits of a healthy mind and life. Individuals unsure about the best option are encouraged to consult with a therapist to make an informed decision tailored to their needs.

Pros and cons of using insurance for therapy

Do we accept insurance? The straightforward answer is no. However, we do provide monthly Superbills for therapy clients who wish to make use of their out-of-network benefits. It’s important to note that coaching services are not covered by insurance. You may still be able to use FSA or HSA funds to cover therapy costs.

Here are several factors to consider regarding the decision not to accept insurance for therapy.

  1. Required Diagnosis:
    • Insurance companies mandate a mental health diagnosis for coverage, a practice that doesn’t always align with our approach.
  2. Loss of Privacy:
    • The exchange of payment for privacy. Insurance companies aim to contain costs through audits that assess the “medical necessity” of therapy. Opting out of insurance helps preserve client privacy, preventing external parties from having access to detailed mental health records.
  3. Loss of Agency Over Treatment:
    • Insurance providers can discontinue coverage if a request doesn’t meet their criteria for “medical necessity.” They also have the authority to limit session time, cap the number of sessions, and access detailed information from mental health records. Avoiding extensive involvement with insurance companies allows for greater protection of client confidentiality and maintains the client’s agency in treatment decisions.
  4. Time:
    • Dealing with insurance demands significant time and effort for paperwork, audits, reimbursement processes, and authorizations for treatment. This time-consuming aspect could be better spent engaging face-to-face with clients, which we find to be the most rewarding part.

Overall, the decision not to accept insurance is driven by a commitment to individualized, client-focused care that prioritizes privacy, agency, and meaningful therapeutic interactions over bureaucratic processes and potential conflicts of interest associated with insurance involvement.

Ready to prioritize your mental health? Explore your options today! Finding the right support is essential. If you have questions or need guidance, our team at iAmClinic is here to help. Contact us to schedule a consultation and take the first step towards a healthier mind and life.

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