Most everyone these days wants to use health insurance to offset, if not cover, the cost of psychotherapy. The U.S. health insurance system is fragmented and confusing, and making sense of your benefits and coverage can be a challenge. If you want to use your insurance, understanding basic terminology and your benefits are essential first steps.
Unlike a clinical or outpatient hospital setting, where a separate billing department researches your insurance, many therapists in private practice aren’t able to do that. In these cases, you are responsible to find out what your benefits are, how they work, and what portion of the cost is your responsibility.
Here are some questions to ask:
- Does my insurance limit me to only those providers on its panel, or can I go out-of-network?
- What is my share of the cost if I stay in-network? If I go out-of-network?
- Do I have to first satisfy a deductible before my insurance will pay for therapy? How much is my deductible?
- Given these factors, can I consider absorbing a higher percentage of therapy’s cost if I go out-of-network?
Here are some basic terms relevant to mental health insurance coverage:
- Allowable: the set amount the insurance company agrees to reimburse the therapist for her services.
- Provider panel: the therapist has a contract with the insurance company, is on their provider panel, AKA “in network”, and agrees to accept a set amount, the “allowable”, which varies depending on the insurance company.
- Out-of-network: the provider doesn’t have a contract with the insurance company, is not on the provider panel, and can charge you the difference between the insurance company’s allowable and her full fee. (See “Balance billing”)
- Co-pay: the dollar amount per session you are responsible for.
- Co-insurance: the percentage of the allowable per session you are responsible for.
- Deductible: The amount your insurance company requires you to pay before they begin paying for your therapy. For example: if your deductible is $1000, and the insurance company allowable is $100, and you are working with a therapist who is in-network with your insurance, you would need to pay the full $100 per session for 10 sessions. If you are working with a therapist who is not in-network, you may also be responsible for the difference between the $100 per session plus the difference between the insurance company allowable and the therapist’s full fee. For example: if your deductible is $1000, and the insurance company allowable is $100, and your therapist’s full fee is $120, you would pay $120, but only $100 would count toward your deductible.
- Balance billing: when a therapist is out-of-network, in addition to copay or co-insurance, you may be responsible for paying the difference between the allowable and the therapist’s full fee. For example, if a therapist’s full fee is $150, and the allowable is $110, and your co-insurance is 40% of allowable, you will pay $44, plus $40 for the difference between the allowable and the therapist’s full fee, totaling $84.
While it can be puzzling when a therapist is not on your insurance company’s panel, there are several reasons why this may be the case: the therapist may be protecting your privacy/confidentiality (insurance companies require information such as a diagnostic code, and in some circumstances, treatment plans and progress notes, in order to reimburse your therapy); a therapist may be concerned about insurance dictating the length or frequency of therapy; and she may not accept the insurance company’s reimbursement (some insurance companies pay only 30-40% of the therapist’s fee). Additionally, a therapist may be willing to join an insurance panel but not be able to get on the panel; some panels are closed to new therapists in a saturated geographic area like Seattle.
It’s important that you understand your therapist’s payment arrangements and insurance company’s policies when you begin therapy. Most therapists include this information in their office policy/disclosure statement, but if anything is unclear to you, be sure to ask her.