Seeking mental health treatment is a sign of courage and bravery on your part. However, being courageous and brave doesn’t pay for therapy. That either comes out of your pocket or from your insurance company.
While it may seem like using health insurance to pay for therapy is the obvious choice, that’s not always the case. Submitting the bills and claims to insurance comes with risks and tradeoffs you may not have thought about. That’s not to say self-pay is the right choice either. That, too, comes with a set of advantages and disadvantages.
So, what should you think about before committing to self-pay versus insurance for therapy?
What’s the Difference Between Self-Pay and Insurance?
Self-pay, also called private-pay, is when you elect to cover the cost of therapy out of your own pocket. You don’t use your insurance for any part of the bill, and are 100% responsible for paying it.
Insurance-based therapy is when you use your health insurance to pay for some or all of your therapy costs. It works the same as any other part of your health insurance. You receive services and possibly pay co-insurance or a copay at that time, the provider submits a bill to the insurance company, and you pay the provider for anything the insurance company didn’t cover.
Advantages of Self-Pay for Mental Health Services
While choosing self-pay may be a bit of a financial stretch for some, it comes with some significant advantages you don’t get when you opt for insurance-based therapy.
Choose Any Therapist
Insurance companies vet every professional in their network, ensuring you’re working with a licensed professional who accepts your insurance. However, you’re generally limited to working only with the providers in the network. If you can’t find an in-network therapist you’re comfortable working with, your treatment may not be as successful or productive.
Going the private-pay route means you can see any therapist you want, ensuring you’re able to work with the individual you’re most comfortable with and making it more likely you’ll experience the most personal growth.
Negotiable
Just like the insurance company negotiates rates with providers, you may be able to negotiate what you pay. Some therapists are more than happy to negotiate when you self-pay. In some cases, you may pay less than what you’d pay using insurance — especially if you agree to pay the bill the same day you receive services.
More Control
Insurance plans may only pay for a limited number of therapy sessions per week, month, or year. With private-pay therapy, you have much more control. You can usually see your therapist as often as you want (and as long as they are available).
Confidential
As part of the agreement with the insurance company, your therapist must submit documentation to receive payments, including your mental health diagnosis and, in some cases, certain records from your treatment plan. Like your therapist, the insurance company is required to keep these mental health records private and secure. However, there’s no guarantee the insurance company won’t be hacked and leaked publicly. Even if your insurance provider is never hacked, those records can be used to increase your (or your employer’s) rates.
When you use private-pay therapy, your records stay with the therapist. Your insurance company never knows about any of it, and your diagnosis and treatment don’t become a part of your permanent medical record.
Disadvantages of Self-Pay for Mental Health Care
While choosing to self-pay for your mental health treatment may seem like the right choice, that’s not always the case. Here’s what to think about before committing to private pay.
Cost
When you choose self-pay therapy, everything is out of pocket. Even when your therapist offers sliding scale fees or payment plans to make your treatment more affordable, people with limited resources may still find the cost puts therapy out of reach.
No Reimbursement
Self-pay therapy means you are essentially going to an out-of-network provider for your care. While some health insurance companies reimburse for out-of-network costs, not all do, meaning they won’t apply your therapy costs to your out-of-network or out-of-pocket maximum.
Pay at the Time of Service
When you self-pay for therapy, many therapists will require you to pay for treatment at the time of service. You may be able to pay cash or leave a credit card or HSA card on file. But no matter what kind of payment your therapist accepts, these recurring payments are something you have to budget for. Over time, this expense may become too much of a financial burden.
Advantages of Using Health Insurance for Mental Health Care
While private-pay therapy sounds appealing, the advantages of using insurance-based therapy shouldn’t be overlooked.
It’s Equal
When you use your health insurance to pay for mental health treatment, your insurance provider is required to treat your mental health care exactly the same as any of your other medical care, as outlined in the Mental Health Parity and Addiction Equity Act (MHPAEA). For example, if your insurance plan requires you to pay a $40 copay when you see your primary care physician, the same insurance plan can’t require you to pay an $80 copay for seeing a mental health therapist.
May Be More Affordable
Depending on the specifics of your mental health coverage, it’s likely you’ll pay less out of pocket for your care compared to if you private-pay therapy. This is especially true if your insurance plan has a low deductible or copay, or if you’ve already hit your deductible for the year.
Reduced Rates
Even when you have a high deductible plan or haven’t hit your deductible, using your insurance may still make more sense. Depending on the rate your therapist and insurance company negotiated, the amount you’re responsible for after the insurance pays its share may still be less than what you’d pay at the self-pay rate.
Disadvantages of Using Health Insurance for Mental Health Services
For many people, choosing insurance is the easy choice. However, that doesn’t always mean it’s the best choice. Here’s what to think about before submitting a claim for mental health treatment to your insurance company.
Not All Plans Cover Mental Health Therapy Sessions
Under the Affordable Care Act (ACA), mental health and behavioral services are considered essential health benefits. While the insurance coverage specifics vary, insurance plans from:
- State ACA exchanges
- Small group plans (under 50 employees)
- Medicaid
Must provide mental health services that are equal to other medical services.
However, this requirement does not apply to all insurance plans. Any plan that’s:
- A short-term, limited-duration plan
- Grandfathered
- A niche or limited benefit plan (like an accident-only coverage plan)
does not have to provide any insurance coverage for mental health services. What’s more, large employer plans — particularly self-funded ones — are also not required to cover mental health services. Many employer-sponsored plans include mental health services, but they are allowed to drop those services at any time.
Requires a Mental Health Diagnosis
Health insurance companies often require a formal mental health diagnosis to pay for services. However, not everyone who seeks therapy wants or needs a formal diagnosis. The diagnosis requirement may stop people without a diagnosable condition from seeking the mental health care they want and need.
Your Best Choice
One other way to navigate the self-pay versus insurance for therapy debate is to ask your therapist to provide you with a superbill. A superbill is an itemized receipt you can submit to your insurance company for possible reimbursement for seeing an out-of-network therapist.
Choosing between self-pay and insurance for therapy ultimately comes down to your priorities. Cost, of course, is a major factor, but so is privacy, flexibility, and control. In the end, the right or best choice is the one that allows you to meet with the therapist you’re most comfortable with and can afford.
Anchor Light Therapy doesn’t accept any insurance because we want to give you the freedom and flexibility to seek mental health services on your terms. Contact us today to learn more about us and connect with a provider you’re comfortable with.
