How Health Insurance For Therapy Works: A Comprehensive Guide

When you begin looking for a therapist, one of the first decisions you need to make is how you'll pay for sessions. Using your health insurance plan to pay for therapy can be confusing, but it's a good option for many folks, as it can save you a lot of money.

This guide outlines all the ways insurance can be used to pay for therapy so you can learn how to maximize your plan and find a therapist who fits within your budget!

  1. Options for paying for therapy
  2. In-network vs. out-of-network therapists: What's the difference?
  3. In-network: How to pay for an in-network therapist
  4. Out-of-network: How to pay for an out-of-network therapist
  5. Insurance alternatives: Sliding scale, HSA, FSA
  6. Glossary and final thoughts

1. Options for paying for therapy

When it comes to paying for therapy, you have a few different options:

(a) In-network therapists

When you think of finding a therapist who "takes your insurance," you're thinking of in-network therapists. Finding an in-network therapist is generally the most affordable way to get therapy and are a good option if:

(b) Out-of-network therapists

Consider seeing an out-of-network therapist if:

(c) Sliding scale, HSA, FSA

There are various alternatives to health insurance too, including sliding scales and HSA and FSA plans. These are good options if:

We'll look at each of these options in-depth in this article!

2. In-network vs. out-of-network therapists: What's the difference?

What does it mean to be in-network vs. out-of-network?

A therapist is in-network if they have a contract with your health insurance company to be part of their network of providers and accept a predetermined payment amount per session.

You might also hear terms such as: take your insurance or accept your insurance.

A therapist is out-of-network if they don’t have a contract with your health insurance company and set their own fees.

You might hear this referred to as: don't take or don't accept your insurance, accept PPO plans, or accept out-of-network benefits only.

Therapists decide which insurance networks they want to join; they can choose to accept some insurances but not others, only a few insurances, or none at all.

When looking for a therapist, deciding whether you are only looking for in-network therapists, or if you are open to expanding your search to include out-of-network therapists is an important first step.

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In-network therapists: Benefits and downsides

Working with an in-network therapist is typically more affordable but can severely limit the number of possible providers in your therapist search.

Benefits of seeing an in-network therapist include:

Downsides to limiting your therapy search to in-network therapists include:

Out-of-network therapists: Benefits and downsides

Including out-of-network therapists in your search will allow you to prioritize fit, expertise, and convenience, but often requires you to pay more for sessions and provide payment upfront.

Benefits of seeing an out-of-network therapist include:

Downsides to seeing an out-of-network therapist include:

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Why therapists choose not to be in-network with health insurances

Therapists choose not to take insurance because they are paid less, have less time with clients, and lose autonomy over patient care and privacy.

Despite these issues, in-network therapists work with insurances to serve a diverse clientele, especially those who could not otherwise pay for a session. It is also easier to build a caseload as an in-network therapist because therapy seekers typically prioritize finding a therapist who takes their insurance.

By being out-of-network, therapists are able to earn more, avoid the logistical hassles of insurance paperwork, and preserve more patient privacy.

3. In-network therapists: How to find and pay for an in-network therapist

How to find a therapist who takes your health insurance

If you are in New York City, Boston, Rhode Island, Chicago, or Connecticut, check out Zencare.

Make sure to select your insurance company under "Payment Options" to view therapists who are in-network with your insurance.

Why aren't all insurances listed?

We are expanding our network of insurance-accepting providers, however, particularly in major cities, it can be difficult to find therapists who take insurances and are accepting new clients. Some insurance networks are also region-specific; for example, The Empire Plan network is only available in New York State.

How do I find an in-network therapist outside of these regions?

If you are outside these regions, check the list of therapists who have been recommended to us, or ask your primary care physician for a recommendation.

You can also go to your insurance company's website and browse their list of in-network therapists, or search other therapist directories; however, be sure to verify with each therapist that they do in fact take your insurance, as these lists are often out of date. Also note that it can be very difficult to find therapists who take insurances and are accepting new clients, particularly in large cities.

How payment for in-network therapy works

You can find complete information regarding your insurance coverage in your "Summary of Benefits." This chart is typically on your insurance company website or in a new member's packet:

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There are two key terms that determine your payment amount:

When you see a therapist who is in-network with your insurance plan, you pay them a copay at each therapy session. Then, your therapist sends a claim to the insurance company to receive the remainder of the fee they're owed.

In this example, the therapist's session fee is $100. You pay your therapist a $25 copay at each session, and your therapist gets paid the remainder of the session fee, $75, by the insurance company:

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Beware of the deductible!

While in-network payment may seem straightforward, you also need to consider your deductible to determine the total cost of a therapy session.

Any medical expense, such as a doctor's visit or medication prescription, contributes to reaching your deductible. When you have paid enough in medical costs that the sum of costs equals your deductible, it often referred to as "meeting your deductible."

You pay the therapist’s full fee at every session until you've met your deductible amount. Let's say you haven't had any medical costs so far this year:

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The therapist's session fee is $100, so you pay the full $100 fee for three sessions, at which point you've met your $300 deductible. At subsequent sessions, you pay only the $25 copay per session, and your insurance company pays the remaining $75 per session.

4. Finding and paying for an out-of-network therapist

Whenever possible, try not to limit your therapist search by insurance. By using out-of-network benefits, you can typically have a portion of each session fee reimbursed by your insurance company, making it more affordable to prioritize therapist fit and start therapy sooner.

There are many benefits to including out-of-network therapists in your therapist search.

Expanding your therapist search beyond insurance allows you to:

How payment for out-of-network therapy works

Let's return to the Summary of Benefits we saw before, and focus on out-of-network costs:

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Now, we have a new term to introduce:

To use insurance benefits for sessions with an out-of-network therapist, you first pay the full session fee* at your therapy session. Afterwards, mail, fax, or submit a claim online to the insurance company, and receive reimbursement in the form of a check. The claim may be submitted after every session, or in aggregate every month.

As a result of the reimbursement from your insurance company, you ultimately pay only a set percentage of the therapist's fee; in this example, 20% of the session fee.

*Therapy session fees typically range between $80 - $150 in smaller cities and $100 - $250 in big cities like Boston, New York City, and San Francisco; session fees are typically higher for psychiatrists.

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Note that in this example there is still a $300 deductible, so you would not receive insurance reimbursements until you've paid $300 in total medical costs.

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Beware of the allowable amount!

The actual amount you are reimbursed by your insurance company is not based on what the therapist charges per session; rather, reimbursement is based on a predetermined amount that the insurance company sets.

The allowable amount varies by geography and therapist degree type; unfortunately, insurance companies do not disclose this amount so you won't know exactly how much of your session will be covered until you submit your first claim and receive reimbursement.

In this example, the therapist's fee is $100, so you pay $100 per session upfront. However, let's say the insurance company sets the allowable amount at $80 per session.

This means that the insurance company will reimburse you at a rate of 80% of $80. You will ultimately be responsible for 20% of $80, plus 100% of the remainder of the actual cost of therapy ($20).

The math behind the "allowable amount"

Let's break down the math behind the allowable amount to determine your total cost for ongoing therapy sessions, after meeting your deductible:

This means:

  1. You pay $100 upfront and submit a bill for the session to your insurance company.
  2. The insurance company reimburses you for 80% of the allowable amount:

    80% x 80 = $64
    You are reimbursed $64.
  3. You have paid:

Coinsurance (20%) x Allowable amount (80) = $16
Plus the difference between Session Fee ($100) - Allowable amount ($80) = $20

$16 + $20 = $36
= Your total payment is $36.

How to find out your out-of-network benefits

The best way to fully understand your out-of-network coverage is to call your insurance company. The number for member services is typically on the back of your insurance card.

When you call your insurance company, be sure to ask:

Beware of high deductible plans

Recall: a deductible is the total cost you need to pay before your insurance coverage begins.

So far, we've looked at how payment works to see an in- and out-of-network therapist when the deductible is set at $300.

Unfortunately, a deductible can be much higher. A high deductible heavily influences how much you pay for therapy.

For example, let's say the three people below are all seeing the same therapist in-network with the same insurance company, but different deductible plans:

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Ally pays only $15/session.

Ben pays the full session fee of $100/session for 4 sessions to meet his $400 deductible, and then pays $15/session.

Chris pays the full session fee of $100/session for 40 sessions to meet his $4,000 deductible, and then pays $15/session.

Let's look at some options to make therapy more affordable when you have a high deductible health insurance plan.

5. Insurance alternatives: Sliding scale, HSA, FSA

If you're struggling to find available in-network therapists, can't afford average out-of-network therapist session fees, and/or have a high deductible plan, there are still ways to afford therapy.

Option 1: Sliding scales

A sliding scale represents the range of fees a therapist typically charges per session.

For example, while a therapist's standard fee may be $150 per session, they might list a sliding scale of $80 - $150 per session. This means that they are willing to work flexibly within your budget and offer lower fees based on financial need. If you can only afford $100 per session, they might be willing to work with you at that amount.

Therapists typically list a lower limit in order to ensure they earn a livable annual salary. Likewise, while they may reserve a few sliding scale slots for clients who would not otherwise be able to seek therapy, these slots are typically limited; not all clients can pay the lowest limit fee at any given time.

You might ask about sliding scales on your initial call with a therapist if you know you have a high deductible. Just be aware that your request may be declined, depending on how many clients a therapist already has paying low fees.

Option 2: HSAs and FSAs

Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) are two ways  employees can pay for health-related expenses, including copayments and coinsurances, through a tax-free account.

HSA and FSAs allow you to set aside funds for medical expenses while reducing your taxable income. In most cases, you receive a debit card for your account and use it to pay for qualifying expenses throughout the year. While you can’t enroll in both types of accounts, employers may offer the choice of both options.

HSAs allow you to contribute up to $3,450 per year, roll over unused balances to the next year, and transfer balances you as you change employment; however, there are eligibility requirements, such as having to be enrolled in a high-deductible health plan.

FSAs don't have eligibility requirements; however, they are capped at $2,650 and you forfeit any unused balances in a given year.

This great chart from Nerdwallet outlines the major differences between HSAs and FSAs:

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6. Glossary & Final Thoughts

Phew! That was a lot of ground to cover.

If your brain isn't bursting yet, below are definitions for some other terms you may come across in your insurance journey.

Insurance plans terms

Therapy-specific terms

Now my brain is bursting. What should I do?

That's completely understandable — navigating health insurance is complicated!

First, know that you're not alone. Even our team members at Zencare get confused when using our own health insurance plans for therapy!

Second, choose the route that feels most manageable for you right now: 1) find an in-network therapist, 2) find an out-of-network therapist, or 3) find therapists who offer alternatives like a sliding scale.

Third, speak with your therapist. After seeing hundreds of clients, therapists are well-versed in how insurances work. They may not have all the answers, but can help guide you in the best next step. If you're in college, you might also try asking Counseling Services for guidance.

Finally, even though it's everyone's least favorite option, calling your insurance company often clears up a lot of confusion, once you get a human on the line. To make it less daunting, consider preparing a list of questions ahead of time. You've got this!