Is Therapy Covered by Insurance? Everything You Need to Know

Though the stigma around mental health is weakening, concerns about cost are as strong as ever. If you’re wondering “is therapy covered by insurance?” then you’re in good company with millions of other therapy-seekers.

In this blog, we’ll walk you through the things you need to know about using insurance to cover the cost of therapy in 2023. At the end of this blog, you’ll know what treatments are covered, when they’re covered, what laws affect mental health care coverage, and more. 

Let’s get started.

Is Therapy Covered by Insurance?

Therapy is often covered by insurance, but the extent of coverage varies. Coverage can be influenced by the type of insurance plan, the specific insurance panel, and the policy details.

Coverage is typically provided for the treatment of mental health conditions such as anxiety disorders, depression, bipolar disorder, and more.

However, it’s important to note that insurance coverage for psychotherapy often has limitations. These can include restrictions on the number of sessions, types of therapy, or pre-authorization requirements.

Insurance plans may also have networks of preferred providers, and coverage may be higher for in-network therapists compared to out-of-network therapists.

If you’re wondering “is mental health therapy covered by insurance?,” the answer depends on your specific policy. We answer the question “Can I use my insurance for therapy?” below.

Laws that Affect Your Mental Health Coverage

Is therapy included in health insurance? Often, the answer is yes. A lot of health insurance plans cover therapy as part of their mental health or behavioral health coverage.

A few things to keep in mind when seeking to use your coverage for mental health include:

• In-network will likely be less expensive compared to out-of-network
• Not all therapy modalities are covered, so you’ll want to look at the details of your plan
• Some plans require a referral from a physician before you can get mental health treatment
• There are limits on how many therapy sessions you can have per year before coverage ends

Now, let’s discover some laws that affect how mental health care is insured.

The Mental Health Parity Act of 1996 (MHPA)‍

The Mental Health Parity Act, passed in 1996, requires insurance plans to offer mental health benefits on par with medical and surgical benefits.

For example, if your insurance covers 20 trips to your family doctor, it should cover 20 trips to a therapist or other professional. 

The aim is to eliminate disparities and discrimination in mental health coverage, ensuring that individuals have equitable access to necessary care.

‍Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA)

Building on the MHPA, the Mental Health Parity and Addiction Equity Act of 2008 extended parity protections to substance use disorder (SUD) services.

It also imposed stricter requirements on insurance plans to ensure equal coverage for mental health and substance use disorders compared to medical and surgical benefits.

The benefit to therapy seekers is better parity between physical health and mental health coverage, as well as coverage for SUD treatments if needed.

The Affordable Care Act of 2010 (ACA)

The Affordable Care Act (ACA) made it easier for people to get mental health care through their insurance. 

The ACA requires insurance plans to cover mental health and substance use services, treating them equally with other medical services. The ACA also expanded Medicaid, which provides coverage for low-income individuals.

The Health Insurance Marketplace was a major contribution of the ACA. It offers options for mental health coverage, so people can choose a plan that fits their needs.

Overall, the ACA improved access to mental health care and reduced cost barriers.

How Much Therapy Will Insurance Cover?

The answer depends on a few factors. So, let’s break this down in a few different ways.‍

How many therapy sessions does insurance cover?

Insurance plans may have limitations on the number of therapy sessions covered within a specific time period. Some plans may cover a certain number of sessions per year, while others may have limits based on medical necessity or require pre-authorization for additional sessions.

It's essential to review your plan documents or contact your insurance provider to understand the session limits.

How much do insurance companies pay for therapy?

Therapy services may have associated costs such as:

• Copays (a fixed amount you pay per session)
• Deductibles (the amount you must pay out-of-pocket before insurance coverage kicks in)
• Coinsurance (a percentage of the therapy cost you share with the insurance company)

The specific amounts can vary depending on your plan.

Each plan is different, but when you go in-network with a therapist, you generally can expect to pay $30 or less per session, after the deductible is met.

In-Network vs. Out-of-Network?

In-Network will always be cheaper due to provider agreements with insurance companies. Out-of-network will usually require higher out-of-pocket payments and require paperwork for reimbursements. Luckily, there are now services that automate reimbursement claims for you. More on that below.

Different Therapy Modalities?

Everyone’s insurance plan is different. Some modalities are covered while others are not. See the next section for common coverage, then check with your insurance company to see what’s covered in your plan. 

As always, it’s best to review your insurance plan directly for coverage details.

Types of treatment typically covered by insurance

So, what kinds of mental health treatments are typically covered by insurance?

Insurance plans typically cover a range of mental health treatments, depending on the specific plan and its coverage provisions. Here are some common mental health treatments that are often covered by insurance:

• Individual Therapy
• Psychiatric Services
• Treatment for Substance Use Disorder (SUD)
• Group or Family Therapy (though coverage can vary)
• Intensive Outpatient Programs (IOP) and Partial Hospitalization Programs (PHP) if deemed medically necessary

It's important to note that while these treatments are generally covered, specific coverage details, such as copayments, deductibles, session limits, and network restrictions, may vary depending on the insurance plan.

Are there any treatments that may not be covered?

• Coaching or life coaching, as it isn’t deemed medically necessary
• Court ordered or legally required assessments may not be covered
• Out-of-network providers are not covered at the same level as in-network
• Educational assessments such as IQ testing or learning disability assessments
• Couples counseling or marriage counseling, unless considered medically necessary (more on this below)
• Treatments that are not considered “evidence-based” such as acupuncture, hypnosis, and certain holistic practices

Now you should have a good idea of what is and isn’t covered.

When is Therapy Covered by Insurance? What are the Requirements?

Therapy is typically covered when certain requirements are met. These include medical necessity, in-network providers, referrals from a physician, pre-authorization from the insurance company, coverage limits, and cost sharing.

1. Medical Necessity. The therapy must be necessary for the diagnosis, treatment, or management of a mental health condition as determined by a qualified healthcare professional.
2. In-Network. Insurance plans often have a network of preferred providers. To ensure coverage, it is usually required to see an in-network therapist or mental health professional.
3. Physician referral. To ensure that the therapy is appropriate and necessary for your condition, your insurance company may require a physician’s referral.
4. Pre-Authorization. Some insurance companies require you to get their pre-authorization before starting therapy in order to use your benefits.
5. Coverage Limits. Insurance plans often have limits on the number of therapy sessions covered within a specific time period. This can include annual session limits or restrictions based on medical necessity.
6. Cost Sharing. Insurance plans typically involve cost-sharing, which may include copayments, deductibles, and coinsurance. 

Luckily, there are some companies that make it easier to get out-of-network benefits reimbursed. This can be helpful if your therapist doesn’t take your insurance or if they don’t take any insurance at all. More on this in later sections.

‍Types of Coverage‍

In this section we’ll talk about the major ways you may receive insurance coverage. Please skip to the section(s) that are most relevant to your situation. If you’re unsure, contact your HR department or the number on the back of your insurance card for more guidance.

Employer-sponsored insurance in companies of 50+ employees

If you get your insurance from your job, and your job has 50+ employees, this section is for you. 

• Larger employers must provide mental health and substance use disorder benefits that are comparable to medical and surgical benefits. This means that coverage for mental health services should not be more restrictive or limited compared to coverage for physical health conditions.
• Coverage can be for psychotherapy, counseling, psychiatric consultations, and medication management for mental health conditions.
• Your coverage may incentivize you for finding an in-network provider.
• There may be limits on the number of therapy sessions covered per year, specific types of therapy covered (e.g., individual therapy, group therapy), or requirements for pre-authorization or referrals from primary care physicians.
• Copays and deductibles vary by plan, so be sure to check your benefits with our process below.
• Out-of-network coverage may have higher costs or require individuals to meet a separate deductible.

Employer-sponsored insurance in companies under 50 employees

Mental health insurance is treated differently in companies with less than 50 employees (“small group plans”).

• Small group plans are not required by federal law to offer mental health coverage. However, some states have regulations that require small group plans to include mental health benefits.
• Coverage for mental health and substance use disorder services must be on par with coverage for medical and surgical services.
• If the small group plan is offered through the Health Insurance Marketplace, it must include mental health services as one of the essential health benefits. These benefits typically cover therapy sessions, psychiatric consultations, and medication management for mental health conditions.
• In-network providers usually offer lower out-of-pocket costs, while out-of-network providers may result in higher expenses or limited coverage.
• There may be a cap on the number of therapy sessions covered or specific requirements for pre-authorization or referrals.
• Employees may be responsible for copays or coinsurance (a percentage of the total cost) for mental health services. Deductibles can apply as well.

It’s important to check state-by-state requirements for your plan, as benefits and requirements vary.

Medicaid

Medicaid provides health insurance coverage to people and families with low-income. It plays a significant role in ensuring access to mental health services for those who may not be able to afford private insurance.

• Mental health coverage includes outpatient therapy sessions, counseling, psychiatric evaluations, medication management, inpatient psychiatric hospitalization, and other necessary mental health treatments.
• Mental health benefits offered through Medicaid must be equal to or comparable with medical and surgical benefits in terms of coverage, limitations, and financial requirements.
• Medicaid follows the EPSDT program, which ensures that children and adolescents receive comprehensive preventive and diagnostic mental health services. EPSDT covers a wide range of mental health screenings, assessments, and necessary treatments for individuals under the age of 21.
• Medicaid has a network of providers who may be able to help you. Out-of-network services may have limited coverage or require additional costs.
• Medicaid covers a specific number of therapy sessions per year for outpatient mental health services. The number of covered sessions varies by state and individual circumstances.
• Medicaid programs generally have minimal or no cost-sharing requirements for mental health services. This means that you typically do not have to pay copays or deductibles for mental health treatments. Some states may have nominal premiums based on income.
• Medicaid may offer additional wraparound services to support individuals with mental health conditions. These services can include care coordination, case management, peer support, and other community-based programs.

Medicare

Medicare is primarily for people aged 65 and older, as well as certain younger individuals with disabilities or specific health conditions. 

• Medicare covers outpatient therapy sessions, counseling, psychiatric evaluations, medication management, and partial hospitalization programs for mental health treatment.
• Mental health coverage under Medicare must have similar coverage, limitations, and financial requirements as physical health coverage.
• Medicare Part A covers inpatient mental health services received in a psychiatric hospital or general hospital with a psychiatric unit. It includes services like room and board, nursing care, and psychiatric evaluations.
• Medicare Part B covers outpatient mental health services, including visits to psychiatrists, psychologists, clinical social workers, and other mental health professionals. It covers therapy sessions, diagnostic assessments, and individual/group therapy.
• Medicare Advantage (Part C) plans are an alternative to Original Medicare and provide all Medicare Part A and Part B benefits, including mental health coverage. Some Medicare Advantage plans may offer additional mental health services or lower out-of-pocket costs compared to Original Medicare.
• Medicare Part D provides prescription drug coverage, including medications for mental health conditions. It helps offset the cost of psychiatric medications prescribed by healthcare professionals.
• Medicare beneficiaries are responsible for paying co-pays and deductibles for mental health services. Costs vary by plan.
• Medicare covers a specific number of therapy sessions per year for outpatient mental health services. Additional sessions may require additional documentation or approval.

Health Insurance Marketplace Plans

What if you don’t have employer-sponsored insurance or Medicare or Medicaid? Then Health Insurance Marketplace Plans (“Obamacare” plans) may be for you.

• Marketplace plans are required to cover essential health benefits, which include mental health and substance use disorder services. If you have this plan, be comforted to know that mental health coverage is a mandatory component of these plans.
• Mental health and substance use disorder benefits offered under marketplace plans must be equal to or comparable with medical and surgical benefits. This applies in terms of coverage, limitations, and financial requirements.
• Marketplace plans generally cover a range of mental health services, including outpatient therapy, psychiatric consultations, inpatient mental health treatment, and prescription medications for mental health conditions. However, specific coverage details can vary.
• Depending on their income, individuals and families may qualify for financial assistance, such as premium tax credits and cost-sharing reductions, when purchasing marketplace plans. These subsidies can make mental health coverage more affordable and accessible.
• Marketplace plans typically have networks of mental health professionals. Check your plan's directory to ensure that your chosen mental health provider is included. Out-of-network mental health services may have higher costs or limited coverage, so it's beneficial to choose in-network providers whenever possible.
• Marketplace plans are available for enrollment during specified open enrollment periods, typically occurring once a year. However, you may be eligible for special enrollment periods outside of the regular enrollment period due to qualifying life events, such as losing job-based coverage, getting married, or having a baby.

Children’s Health Insurance Program (CHIP)

The Children's Health Insurance Program (CHIP) is a U.S. government-funded program that provides health insurance coverage to children from low-income families who do not qualify for Medicaid.

• Children enrolled in CHIP have access to mental health treatments and services, such as therapy sessions, psychiatric consultations, and medication management for mental health conditions.
• Mental health benefits provided under CHIP must be on par with medical and surgical benefits in terms of coverage, limitations, and financial requirements.
• Children receive regular screenings and necessary treatments, including mental health screenings and services under CHIP. 
• CHIP provides coverage for a variety of behavioral health services aimed at addressing mental health concerns in children. This can include services such as counseling, therapy, behavioral interventions, and specialized treatments for specific mental health conditions.
• As with other insurances, CHIP has in-network benefits and out-of-network benefits. Check with their directory to see which providers are in-network.
• Though CHIP requires families to pay small co-pays, it aims to keep the cost-sharing amounts affordable for low-income families. Note that costs vary by state.

Families interested in CHIP coverage for mental health services should contact their state's CHIP program or visit the official Medicaid/CHIP website to learn more.

Blue Cross Blue Shield

Blue Cross Blue Shield (BCBS) is a federation of independent health insurance companies operating across different states.

• While coverage details can vary, BCBS plans typically cover a range of mental health services such as therapy, counseling, psychiatric evaluations, and inpatient treatment.
• Benefits are provided on par with medical benefits.
• As usual, using in-network providers can help reduce costs. Co-pays, deductibles, and cost-sharing may apply to mental health services.
• Some plans offer behavioral health management programs and additional services like substance abuse treatment and wellness initiatives.

It's important to note that coverage and availability of services can vary by state and individual plans. To obtain accurate information, individuals should review plan documents, contact their local BCBS company, or consult with their employer's HR team.

Kaiser Permanente

Kaiser Permanente offers comprehensive mental health insurance coverage as part of its integrated healthcare approach.

• Coverage includes a range of mental health services such as therapy, counseling, psychiatric evaluations, medication management, and inpatient mental health treatment.
• Kaiser Permanente operates its own network of mental health professionals, including psychiatrists, psychologists, and therapists. This allows for coordinated care and streamlined access to mental health services within their system.
• Additionally, they often offer same-day or next-day appointments for urgent mental health needs.
• Cost-sharing for mental health services, including co-pays and deductibles, may vary depending on the specific plan and coverage options chosen by the individual.

To see what your coverage includes, contact Kaiser Permanente directly.

How Do I Know if My Insurance Covers Therapy?

What if you have insurance but you’re not sure about it’s mental health coverage? To make it easy for you, we’ve created this 5-step process you can use to gain clarity on your coverage:

1. Review Your Insurance Plan Documents: Start by reviewing your insurance plan documents. Look for sections related to mental health coverage, behavioral health, or psychological services.
2. Understand Coverage Terms: To understand your coverage, get familiar with terms like copayment, coinsurance, deductibles, out-of-pocket maximums, and session limits. Understanding the financial aspects of your coverage will help you make good decisions.
3. Identify Mental Health Benefits: Look for information specifically related to mental health services, therapy, or counseling. Note the type of therapy covered (individual, group, family) and any requirements, such as referrals or pre-authorization.
4. Verify In-Network Providers: Check if your insurance plan has a network of preferred providers. Look for online resources that list mental health professionals who are in-network for your plan. You can usually find this information on the insurance company's website or by contacting their customer service.
5. Contact Your Insurance Provider: If you still have questions or need clarification, contact your insurance provider's customer service. They can provide specific information about your coverage, answer questions about therapists in-network, and guide you through the process of accessing mental health services. Be prepared with specific questions about therapy coverage, session limits, and any potential out-of-pocket costs.

By following these steps, you can gain a better understanding of your insurance plan's coverage for therapy. Remember to document important information, such as names and contact details of in-network providers, coverage limits, and any authorization or referral requirements. This will help you make informed decisions when seeking services.‍

Pros and Cons of Using Insurance to Cover Therapy

Using insurance to cover therapy has both pros and cons. Let's explore some of them:

Pros of Using Insurance to Cover Therapy:

• Insurance coverage can help alleviate the financial burden of therapy by reducing out-of-pocket costs.
• Insurance coverage can provide access to a wider network of mental health providers.
• Laws discussed above ensure that mental health coverage must be on par with coverage for physical health conditions. This helps combat discriminatory practices and promotes equitable treatment for mental health conditions.

Cons of Using Insurance to Cover Therapy:

• You may be required to see an in-network therapist to receive full coverage. This can limit your choices and may make it harder to access therapists who specialize in certain areas or have specific expertise.
• Insurance claims and mental health records are subject to privacy laws, but using insurance for therapy requires sharing personal information with the insurance company. Some individuals may have concerns about the privacy and confidentiality of their mental health treatment records.
• Insurance plans may have limitations on the number of therapy sessions covered or require pre-authorization for continued therapy.
• Insurance coverage often requires a diagnosed mental health condition and evidence of medical necessity. This means therapy may be covered only if deemed medically necessary by the insurance company, which can result in challenges for individuals seeking preventative or supportive therapy.
• Dealing with insurance paperwork, claims, and navigating the reimbursement process can be time-consuming and require ongoing coordination with the insurance provider.

It's important to carefully weigh these pros and cons based on your individual circumstances and preferences. Consider factors such as your financial situation, desired therapist options, privacy concerns, and the specific coverage details of your insurance plan when deciding whether to use insurance to cover therapy or explore alternative payment options.

Out-of-Network Benefits: What if I Can't Find a Therapist Who Takes My insurance?

And that concludes things you need to know about using your mental health insurance for therapy!

Now you understand different laws, coverage plans, and factors that affect your coverage.

But what if you still can’t find a therapist who takes your insurance?

Luckily, there’s Thrizer, a payment app that makes out-of-network therapy much more affordable.

When you choose a therapist who accepts payments with Thrizer, you can use your insurance benefits even if even if your therapist doesn’t take insurance.

Thrizer links to your health insurance and verifies how much your insurance is covering with your out-of-network benefits. You only pay what you owe while they while they cover the rest of the provider's fee and wait for reimbursement for you.

To learn more about Thrizer, visit our website at thrizer.com!

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This blog post is provided for informational purposes only and is not intended as legal, business, medical, or insurance advice. Laws relating to health insurance and coverage are complex, and their application can vary widely depending on individual circumstances and state laws. Similarly, decisions regarding mental health care should be made with the guidance of qualified health care providers. We strongly recommend consulting with a qualified attorney or legal advisor, insurance representative, and/or medical professional to discuss your specific situation and how the laws apply to you or your situation.