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Writer's pictureEmily Rosson, LPC
Aug 14, 20227 min read

The pros and cons about using insurance to pay for therapy

Alright. So it's happening. You've contemplated therapy, you've made the decision to go to therapy, maybe even talked with your primary care physician about therapy. You've been thinking about all the questions you might have regarding therapy, including: "does my health insurance pay for my therapy?".


Another question I want you to consider is: "is it a good idea for me to use my health insurance to pay for my therapy?" I don't think this question gets considered very often because I don't really believe people know that they have an option. Let me explain something very clearly: You are allowed to use health insurance to pay for therapy. You are also allowed to not use health insurance and pay for therapy out of your own pocket instead.


"Why wouldn't I use health insurance to pay for my therapy?!" You're probably asking yourself. And I hear you. It seems like a drastically silly idea - you pay a monthly premium for therapy, your insurance (might, maybe, possibly, probably) cover therapy, and you want help. Using insurance seems like a simple option, almost like it would be stupid not to use it.


The thing is, the decision to use insurance for therapy can be a vastly complicated one. I'm a big believer in people being appropriately informed about the choices they make and any potential consequences. Let me remind you: it is your choice to use, or to not use, health insurance to pay for your therapy. And it is also your right to be informed about what that means for you.


So read on!


Pros of using health insurance to pay for therapy:

  1. Insurance cannot charge you more based on "pre-existing conditions". Under the Affordable Care Act, passed in 2010, it is against the law for health insurance to deny you coverage or charge you more in your monthly premiums based on your diagnoses (meaning a diagnosis you had before the date that your new insurance coverage started). (Note: Unless you have a grandfathered healthcare plan, meaning you individually purchased your own health insurance (not through an employer) before 2010. They do not have to cover your pre-existing conditions.) Insurance not charging more based on diagnosis means that f you get diagnosed with Major Depressive Disorder and switch insurances, that insurance can't decline you or charge you more because you might need therapy. It is important to note that if the Affordable Care Act is repealed then this no longer applies as a pro but as a con, and you could possibly be denied health insurance coverage based on your mental health diagnosis depending on the laws that come into play upon repeal.

  2. You pay less out of your own wallet. I genuinely don't believe this one needs writing or endorsement from me - when you use your insurance, depending on your insurance, you aren't making the bulk of the payment. Your insurance is. We all know how appealing that is!


Cons of using health insurance to pay for therapy:

  1. You will now have a pre-existing, medical condition as part of your health record. A provider must diagnose you with a mental health condition (issue, illness, disorder) due to insurance requirements. Your health record will then forever contain that information. This could possibly affect things like getting life insurance in your future; people have been denied life insurance due to having a mental health diagnosis, or have to pay more per month, as a result of the "risk-based" assessment (Fact check #1, Fact check #2. I'll point out that in some cases a denial can be fixed, but it could take a lot of legwork, going viral on the Internet, or not using employer-provided life insurance).

  2. You might have to wait a long time. Finding a therapist can already be a difficult task. Often times, people (understandably) turn to those who are working with insurance due to reduced costs. This means that you may have to go on a therapist's waitlist, or a clinic's waitlist, in order to be seen. (This can also just a general con for finding a therapist in the first place). It is possible that a therapist who does not take insurance has more openings, and therefore, could get you in quicker. Sometimes waiting isn't a big deal... but I also bet you can remember times where waiting was a big deal.

  3. If your health insurances changes, you could lose your therapist. There are several ways someone could lose health insurance: (#1) losing a job, (#2) turning 26, (#3) divorce from or death of insurance holder, (#4) moving. If your insurance changes, it is possible that the therapist you would be working with would no longer be able to take your new insurance (or work with you over state lines, if #4 applies). It would depend on if your therapist was credentialed with your new insurance.

  4. Confidentiality, an important part of counseling, is reduced. As I mentioned above, medical conditions become a part of your record... forever. This can be seen during government background checks. Some jobs or career paths might not hire people who have certain, or any, mental health diagnoses. It is unfortunate fact that receiving a diagnosis due to health insurance requirements could prevent someone from doing their dream job.

  5. Insurance companies only pay for what they deem is "medically necessary". This means that your therapist has to initially and consistently "prove" to someone outside of the therapy room that you need therapy. Some insurances have a limit on how many sessions a person can attend. Some insurances require that a person be suffering so much so that their life is drastically altered to the point that the person is near crisis or in crisis, and once it improves slightly enough, counseling can end (Kaiser Permanente has recently started to face criticism, and a lawsuit, for a similar reason). Often times people seek counseling for issues they are facing such as grief, difficulties in a relationship, stress associated with school or job, etc., which are not diagnosable conditions. Insurance requires a therapist to provide a medical, mental health diagnosis to justify why a person who is struggling for any reason requires counseling.

  6. The choice to be in therapy is now no longer just between the client and the therapist. There is now a third person in the therapeutic relationship. When insurance is involved... insurance dictates treatment. Or at least, has the majority rule. Therapy is supposed to be between the client and the therapist. Once insurance is involved, that is no longer the case. Insurance decides on the length of treatment, if the diagnosis is appropriate for therapy and if they will pay, even what type of therapy is used. Not only that, but insurance will then have access to all documentation that takes place in the therapeutic relationship. Remember how I mentioned above limited confidentiality? Yeah. That applies to insurance, too. Information from intake, from each session, each treatment plan, etc. These are all required documents to justify the 'medical necessity' mentioned above and measurement of progress, and it is possible for someone (not the client, not the therapist) to be 'evaluating' how well the client is doing and cease services overall. This is information that you have chosen to share privately with your therapist, and immediately upon using insurance, it is no longer private.

  7. Insurance can change their mind. It is not unusual for insurance to pay a therapist for a session, or several sessions, and then... change their mind. Or even years later! This is called a "clawback". Maybe something in the documentation was a little wrong, can be fixed, and no problem (other than your therapist now has not been paid for services performed and has to wait to receive their pay). Or maybe it's because insurance decided they've changed their mind and you 'no longer need' therapy, so they won't pay for it. Or that, even though the therapist verified your insurance with your insurance directly - somehow, they weren't actually your insurance provider at the time? That's great for the insurance company - they get their money back; and terrible for you - you now owe your therapist for the services they have performed. Yikes. That's unexpected.


So there you have it. The pros, and the cons, of using insurance to pay for your therapy. I hope that you see what I'm saying when I write that it's actually a complicated decision. The decision to use health insurance to pay for your mental wellness seems relatively straight forward... until you read about the possible and natural consequences of doing so. If you're the person paying for your treatment then it's your decision to make. If you aren't the person paying for your treatment (maybe your parent or your partner is), then talk this over with them. And you are still welcome to talk it over with those whose opinions you value if you're paying for it yourself!

Take your time. Reflect on what feels reasonable for you. Call your insurance and ask them about what is required for you to be approved for therapy and how much it will cost you to see someone in-network or out-of-network (and read this article here if you want some more info on these terms and how to pay for therapy by kind of using your insurance). Then - make a decision that feels right to you.


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