Insurance Coverage And Therapy Costs: Co-pays, Deductibles, and Out-of-Pocket Maximums

So you want to figure out - how much does therapy cost? Trying to understand the insurance coverage for the cost of therapy is almost always confusing, with terms like co-pays, deductibles, and out-of-pocket maximums. No need to worry – understanding health insurance is chaotic but with a little bit of effort, achievable. In this post, we'll dive in to how insurance works to help you figure out how much therapy costs, and what to do in the circumstances where you cannot locate an in-network therapist for your mental health treatment.

How Do I Figure Out the Cost of Therapy

If you've used your insurance, you have encountered co-pays, deductibles, or out–of–pocket payments. These three components are the essentials most people are familiar with. Before diving into these terms and their meanings, remember to think of them as building blocks of your insurance plan.

Co-Pay: A co-pay refers to a fixed payment you owe when receiving a specific service and is part of the out of pocket costs in your healthcare plan. For instance, if your insurance coverage indicates that you have a $25 co-pay for therapy, it means you will pay $25 to your mental healthcare professional for the therapy session. This is the part that you are responsible for, and your therapist’s office will bill the rest of your therapy cost to your insurance.

Deductible: This refers to the figure you are liable for prior to the insurer coming in to pay for health services. Take for example, if your deductible is $1,000, you will be responsible for the first $1,000 worth of mental health services (or whatever healthcare services are included in the plan). As soon as you reach this limit, the insurance plan will pay for the rest. This is where it gets interesting, you may still be responsible for a portion of each session until you reach your out-of-pocket maximum.  

Out-Of-Pocket Maximum: This is the magic number that represents the most you'll have to pay for covered healthcare services in a given plan year, including deductibles and co-pays. Once you reach this amount, your health insurance covers 100% of additional covered therapy costs for the rest of the year. If you have a high deductible plan, you may already be paying out of pocket for many medical expenses before insurance even kicks in—meaning therapy costs might not feel as overwhelming as you think.

Every dollar you spend on mental health services brings you closer to reaching your deductible, which you would need to meet before insurance coverage starts contributing anyway. In some cases, choosing to pay out of pocket for an out of network therapist now could mean that other necessary medical care later in the year is fully covered by insurance. Instead of seeing therapy as an added expense, think of the cost of therapy as a strategic investment in your mental health that also helps you reach the threshold where your insurance starts covering more of your healthcare needs.

Once you understand these basic terms you will have a better estimate of the possible cost of therapy and be able to identify when your insurance is able to assist you with your mental health care. But what if your provider for healthcare provider happens to be out-of-network? Let's take a look!

When Therapy Insurance Coverage Claims To Cover Health Services 100% (But Do They?)

Sometimes insurance plans with out of network benefits indicate they will cover healthcare services at 100%. Sounds too good to be true? Spoiler alert: it is. Well, sorta. So how much does therapy cost with an out of network provider? Let's get into the details!

When your mental health coverage claims to cover services at 100%, they actually mean that they will cover the cost of therapy within reason, like “reasonable and customary” charges for a service. This term can be confusing in figuring out the actual cost of therapy. "Reasonable and customary" is a term used by health plans to determine how much they'll pay for mental health care services with an out of network (non-contracted) provider. It refers to the amount that is generally considered to be normal or typical for the cost of therapy in a specific geographic area or provider network. Healthcare companies use this concept to decide the insurance reimbursement rate for a medical or therapy service, and it doesn't always align with the actual fees charged by your therapist.

As an example let’s use the case where your mental health professional charges $200 for a session and your health insurance company places $150 as the reasonable and customary charge for therapy services under their area. If their policy covers 80 percent, they will probably pay $120 to you as part of your mental health coverage, so you will be left to pay $80 of the $200 therapy cost. If you are seeing an in-network therapist that is contracted with your healthcare plan, that means the therapist has agreed to the rate dictated by insurance.

If you possess a PPO plan, this is extremely critical. PPO plans allow members to visit out-of-network providers, however, they usually pay a lower amount of money for mental health counseling. Generally, you will pay the full fee to the provider for their services and then submit a claim for reimbursement from the health insurance plan after paying any co-payments or deductibles. The insurance company will decide how much they will reimburse to you for the therapy cost.

Your Insurance Company and Therapy: Are You Covered?

Now, let’s face it, most plans will include mental health therapy coverage and coverage for medication management. However, you may not be able to just stroll into a therapist's office and expect them to cover the expenses. Each health insurance coverage plan has varying terms and policies related to mental health care coverage, which is why you may face challenges. Here are some of the insurance requirements related to mental health coverage:

• The Diagnosis Requirement: Most healthcare plans will require a formal mental health diagnosis before they agree to cover mental health services and authorize any therapy payments. If you are seeing an in-network therapist, he/she will have to provide them with a claim code which includes a mental health diagnosis for reimbursement. Most of this takes place during your intake or assessment session.

  
  

• Pre-authorization: At times, you may have to obtain pre-authorization for therapy sessions to be eligible for coverage of the cost of therapy. In simpler terms, you cannot simply go to a mental health professional's office and expect the insurance to pay for it. You’ll have to go seek approval prior, and it may take some time. The therapist is typically ther person that calls to request authorization for therapy services.

  
  

• Session Limits: Under some health insurance plans, patients are only allowed to use a limited number of mental health services per year. Therefore, even if your therapist happens to be in-network, there’s no guarantee you’ll be approved for more than a certain number of visits. If that number is exceeded, you’ll have to pay for the extra therapy cost for additional visits.

These limitations for mental health issues can be frustrating if you’re looking for more flexibility and privacy in your treatment..

I Can' Find a Therapist in My Insurance Network. Now What?

It's common to feel like locating your in-network therapist is as challenging as finding a needle in a haystack. The therapists in your insurance network and might not match your mental health needs, or those therapists covered by your mental health plan may not have availability. Either way, you have some alternatives:  

Single Case Agreement (SCA): If all efforts to find an in-network therapist fail, you could request that your insurance pays an out-of-network mental health practitioner through a Single Case Agreement (SCA). This is a specialized arrangement between your healthcare plan and your therapist, where the insurance covers the costs of seeing an out-of-network provider for therapy sessions..

How Do I Request A Single Case Agreement?  

• Step 1: You initiate by dealing directly with your insurance provider. Call them and let them know that you’re in search of an in-network therapist, but there is not a qualified therapist available that meets your requirements.  

• Step 2: Inquire if they have Single Case Agreements and which prerequisites must be met. More than likely, you’ll need to explain your mental health conditions, your necessity for an out-of-network therapist, and describe their professional credentials.  

• Step 3: If they agree, the insurance provider will inform you of the next steps. Likely, the next step is for the therapist to contact your insurance to authorize the therapy sessions. You will have to find an out-of-network therapist that will agree to do this additional work in setting up the agreement with your insurance provider. Many therapists may not work with single case agreements, so ask about this when you are seeking therapy with an out of network provider.

  
  

Privacy Issues: Where Do My Medical Details Go?

Now here is where it gets slightly complicated: if you use your insurance for therapy, your insurance company might already have access to your personal information about your mental health treatment. This includes the diagnosis you received and possibly even the details of your mental health issues provided in a therapist’s notes during their sessions. Feel free to bring that up with your therapist if it makes you feel anxious. You can talk about what information will be sent to the insurance company and which details of your sessions can be kept private.

Why Do Some Therapists Choose Not to Work With Insurance Plans?

Like I’ve already mentioned, things are not always easy when it comes to insurance. Many therapists prefer not to deal with an insurance and it’s beyond just them not wanting to deal with too much paperwork. Multiple factors for this include:

1. Reimbursement Rates Are Too Low: Insurance providers tend to reimburse therapists less than the therapist's fee, and this causes a major problem. Therapy costs vary depending on geographic location, the therapist's level of experience, and specialized training and expertise, and health insurance companies may not take all of these factors into account. Many therapists struggle to afford their own basic expenses and provide proper treatment to their patients.

2. Administrative Hassles: They are really burdensome.Therapy offices can get bogged down with time-consuming insurance pre-authorizations and records requests. If you've tried to call your insurance company, you probably understand the long hold times and multiple transfers that can happen!

3. Treatment Restrictions: Insurer's dictate the treatment duration and decide which mental health conditions they will/will not authorize for therapy sessions. Insurance is referred to as "managed care" for a reason; they manage the care you will receive. Your health insurance benefits may also have stipulations regarding online therapy versus in-person therapy, meaning some some companies may not cover mental health care for online therapy services.

4. Delayed Payments: Claims take ages to process and therefore payments for work done can remain elusive for months which is challenging for therapy practices, adding to the reasons a therapist may not accept insurance to cover therapy cost.

Conclusion: Navigating the Maze of Insurance Companies

It's best to learn exactly what terms of your insurance apply to therapy and medication management so as not to be presented with surprise bills afterward. Mental health insurance coverage can be a maze that is difficult to navigate. In cases when an in-network provider is unavailable, perhaps asking for a Single Case Agreement is a good strategy. Talk to the out-of-network therapist you would like to work with to see if he/she is willing to do the work involved for a Single Case Agreement. Understand clearly how therapy charges relate to your insurance: copays, deductibles, and the like.

At the end of the day, your mental health and wellbeing are what’s most important, so knowing your insurance policy details will help you receive the necessary treatment for mental health concerns without added pressure (or surprise expenses).

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For more tips and mental health support, and online therapy sessions visit www.sleep-anxiety.com. Fill out the contact form to schedule a free 15-minute consultation with Anissa Bell, LMFT, and find out if online therapy is right for you (currently not offering in person therapy). Providing online therapy throughout California. Click HERE for more information about online therapy and therapy costs.

Additional Mental Health Resources:

988 Suicide & Crisis Lifeline - Call 988 for mental health crisis support.

Crisis Text Line - Text HOME to 741741 to be connected with a trained crisis counselor.

NAMI Helpline - NAMI is a mental health organization that offers support and resources for mental health issues. Call 1-800-950-6264 for help with various mental health concerns, including access to low cost therapy, community mental health clinics, and other mental health services.

California Affordable Care Act information HERE.