Does Health Insurance Cover Therapy: A Simple (But Complete) Guide

Years ago, it was difficult to find an insurance company that covered mental health issues. Fast forward to today and a majority of insurance plans cover therapy almost as well as they cover physical health issues, thanks to the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act or Mental Health Parity law.

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Keep reading to learn everything you should know about health insurance and therapy.

What is the Mental Health Parity Law?

In layman’s terms, the Mental Health Parity law requires insurance companies to treat physical and mental health disorders equally. In other words, they can’t provide better benefits for physical ailments than they offer for mental health issues.

While there will still be differences and limits on your mental health coverage, they should be much less than before. For example, the co-pays for a visit to the doctor and a therapist should be equal. Insurance companies also cannot limit the number of visits you can have in a year, unless the restrictions have to do with proving medical necessity of the treatment.

Do All Insurance Plans Cover Mental Health?

Unfortunately, the law doesn’t require insurance companies to offer mental health benefits. It only covers those plans that offer mental health coverage. In other words, you may have a plan that doesn’t offer mental health benefits at all and this is within the law.

If you do have mental health coverage, though, the benefits must be equal to or better than the coverage offered for physical issues. The insurance company does still have the right to exclude certain illness or issues as they pertain to mental health.

How to Tell if Your Insurance Covers Therapy

In order to tell if your insurance plan covers therapy, you have a few options:

• Call the provider – You can call the customer service number on your insurance card and inquire about your mental health benefits. Ask about the specific type of provider you plan to see, such as a licensed clinical social worker, psychologist, or psychiatrist so that you receive a helpful answer.
• Read your plan benefits – Your insurance provider should give you documents that detail the services they cover and at what percentage. Mental health benefits typically have their own section, so make sure you read the entire document to ensure that you understand your mental health coverage.
• Ask Human Resources – If you get your insurance plan through work, you can also contact your HR Department. The person in charge of insurance should be able to help you understand your mental health benefits and how they pertain to the services you need.

The Deductibles and Co-Pays

Knowing that you have coverage for therapy is great, but you still must consider the financial aspect of it. Most insurance plans have a deductible and co-pays for each service that applies to all medical services received, including mental health services.

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Start by understanding your deductible. This is the amount you must pay out of pocket before your insurance will cover their portion. For example, if you have a $500 deductible, you will pay the first $500 of your medical bills before insurance will pay their portion. Once you reach the $500 threshold, the insurance will start paying. Let’s say your insurance covers 80% of the cost of service after the deductible. This would leave you with responsibility for 20% of the bill.

The parity law requires that insurance companies only give one deductible for both physical and mental health services. This means you can’t have a deductible for physical health services and a separate one for mental health services. This can help you get the coverage you need for therapy must quicker.

Co-pays are the fixed amount you must pay for the service no matter how much of the deductible you met. Let’s say you have a $30 co-pay for every office visit, whether your primary care physician or a mental health professional. Every time you go to the doctor, you would owe $30 for the visit plus any amount that you owe after the insurance pays their portion (back to the 80/20 coverage).

What if Your Insurance Doesn’t Cover Therapy?

The parity law doesn’t require insurance companies to provide mental health services. If your plan doesn’t cover it, you can still make it affordable:

• Ask for the cash rate – If you don’t ask, you won’t know that your therapist offers a ‘cash rate.’ Insurance companies only pay a portion of the amount a therapist bills. If they bill $200, they may only receive $120. If you pay cash, the therapist may give you a lower rate than the amount they’d bill insurance and they’d still walk out ahead.
• Ask for a payment plan – If you can’t afford the full rate the therapist charges, ask for a payment arrangement. Therapists work with patients without insurance often. A caring therapist will have alternatives for patients that don’t have insurance coverage.
• Check with your employer – Many employers offer mental health benefits free of charge for its employees. If you have an Employee Assistance Program, ask HR about the benefits. You may have free counseling appointments at your disposal.

If your insurance offers mental health services, the coverage should be similar to the physical health coverage. Discuss your coverage with the insurance provider themselves or your employer. If you don’t have coverage, talk with your therapist as they often have ways to help patients get the help they need without breaking the bank.

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