Pros and Cons of Using Insurance for Therapy

 Many people understandably want to use health insurance for therapy if they have the benefits. Private pay rates for therapists can be high—and in many cases, use of health insurance benefits is the only thing that affords people the opportunity. The difference between $150 per session out-of-pocket vs. what might be as low as a $10 copay (in some cases less) might be seen as a total no-brainer. That said, when using health insurance benefits for therapy, there are a few things to keep in mind. It’s worth taking a look at the pros and cons of using insurance for therapy to make a well-rounded and informed decision.

Pros
Using health insurance for therapy can make it affordable. Again, the main benefit to using insurance is that of affordability. Oftentimes, even if you have a deductible that needs to be met before insurance will cover sessions, the out-of-pocket expense will be lower than paying completely privately.

It encourages ongoing care and full follow-through. Even people who are fortunate enough to be able to afford private pay rates sometimes find that the cost can really add up over weeks and months. Having lower up-front expenses can make it more reasonable for the average-income person (and even a more financially well-off person) to justify following through and completing their work.

Costs may go toward your deductible. If you have a deductible that needs to be met, paying toward therapy costs (if you don’t just have a copay) might go toward your plan’s overall deductible and help insurance kick in for other medical expenses throughout the remainder of the year.

It can help normalize mental health care. Using insurance benefits for therapy (just like any other medical service) can help decrease the stigma and promote mental health as a form of wellness that is as important as any other health-related issue.

Cons
Reduced privacy. Paying privately for therapy keeps your confidential information between you and your therapist alone. When you bill insurance, many other hands are likely to be involved—including billing staff, insurance reps, and third-party administrators who review treatment plans, process claims, and audit charts and treatment plans. Although all parties are bound by confidentiality laws, using insurance means your information may be shared with insurance representatives and billing staff for purposes like processing claims, verifying eligibility, or conducting audits—just as it would be with other types of medical care.

A diagnosis is required. In order to use health insurance for counseling, therapists are required to submit a diagnosis. This diagnosis becomes part of your medical record, which is standard practice for any healthcare service. While this is typically not an issue for most people, in rare cases it could have implications when applying for certain types of insurance like life or disability coverage, depending on the policies of specific companies.

Limited provider choice. If you are set on using health insurance, it will significantly decrease your pool of potential therapists to work with. Instead of searching for the best qualified for your issue or best personality fit, you’re more likely to be looking for someone that takes your insurance. In some cases (and depending on location), this could bring potential therapist candidates down to a small handful and leave you settling for someone who might not be best equipped for the uniqueness of your situation.

Coverage restrictions. Using insurance for therapy means having to follow coverage rules that might speak to how many sessions you can attend, how long you can go to therapy, and guidelines around what kind of therapy or interventions are “necessary” (as deemed by insurance).

You must meet medical necessity. Insurance requires that therapy services be deemed medically necessary and connected to a diagnosable mental health condition. This means that sessions solely focused on general personal development, coaching, or relationship enhancement may not be covered under many insurance plans.

The Bottom Line
Deciding whether or not to use insurance for therapy is a personal decision that might involve considering your overall financial situation, preferences around privacy, and the type of care you are seeking. For some, the financial accessibility might outweigh any potential downsides. For others—especially those looking for more flexibility or discretion—paying privately might be worth the investment in your well-being.

If meeting with a therapist who accepts your insurance, it’s always wise to see if they offer a free consultation to make sure they’ll be a fit. It’s also an opportunity to ask any questions you might have around insurance (including verifying your benefits) and understanding any insurance-related implications. They cannot (and should not) talk you into or out of any decisions around using health insurance, but should be able to objectively discuss concerns and answer any questions you might have around coverage, out-of-pocket costs, their billing processes, and any requirements around documenting a diagnosis.