Budgeting for therapy outside your insurance network

You may be wondering why the heck you would ever want to pay out of pocket for therapy. After all, you already pay insurance premiums - why not use insurance to cover your therapy, right?

Unfortunately, it’s not quite that simple. In this post, we explain why.

Let’s start by breaking down the three ways to pay for therapy.

  1. In-network insurance. The traditional way of accessing medical help - you go to a doctor who is in your insurance provider’s network, you pay the doctor a set fee, and the doctor works with your insurance provider to receive additional payment. This is generally the cheapest way to pay for therapy.
  2. Out-of-network insurance. If you are on a PPO plan with out-of-network mental health benefits, you can see any licensed therapist. You’ll pay the therapist’s full fee upfront, and submit a bill to your insurance provider. They will reimburse you a set percentage of the fee – often between 50 - 90%. You’ll generally end up paying more than you would to see an in-network provider.
  3. Self-pay. This means you pay the therapist directly, without any insurance involvement.

For most doctors’ appointments, you pay using in-network insurance. Many therapists, though, don’t even accept in-network insurance.

Three reasons why many therapists don’t accept in-network insurance:

  1. Low reimbursement rates. Insurance companies pay therapists far, far less than they do other types of doctors. Their total hourly payment - even after including your copay - can be as low as $50 per appointment.
  2. Extensive paperwork. For a therapist to receive payment from an insurance provider, they must submit paperwork describing your condition and your treatment plan. While other types of doctors have staff to take care of this paperwork, therapists in private practice have to do this time-consuming work themselves.
  3. Regulations about treatment. Insurance companies will often dictate how frequently therapists can see patients, limit the total number of sessions, and require therapists to prove that treatment is medically necessary. Therapists can’t customize treatment to a given patient’s needs.

So what does this mean for you, and why might you want to use out-of-network benefits?

            If you have a PPO plan with out-of-network benefits, you can see any licensed therapist, regardless of whether or not that therapist accepts your insurance. This means you can choose from a much larger pool of therapists. Additionally, you get:

  1. Access to more experienced therapists. Therapists with extensive experience are less likely to take insurance.
  2. Access to more specialized therapists. Therapists with niche specialties are also less likely to accept insurance. If you have a specific medical condition, want an expert in a specific type of treatment like DBT, or want a therapist experienced with your cultural background, you’ll have more luck finding them if you pay with out-of-network benefits or self-pay.
  3. Less time on waitlists. Therapists who accept in-network insurance often have so many patients looking to work with them that they have months-long waiting lists for appointments. If you can use out-of-network benefits or self-pay, you can often see a therapist much more quickly.
  4. More flexible appointments. Since therapists prefer to work with patients who self-pay or use out-of-network benefits, they often will be more flexible with their scheduling for these patients. They may even have evening or weekend appointments available.

The extra benefits of self-pay

So if you can access great therapists by using out-of-network benefits, why wouldn’t you want to use those benefits? Why would you want to self-pay for therapy?

First, some people are on HMO insurance plans. These people must choose between using in-network insurance to pay for therapy, and paying out-of-pocket.

Even for people with out-of-network benefits, though, there are some compelling reasons to pay for therapy directly, without using these benefits.    

  1. Better access. All of the benefits we listed above (accessing experienced or specialized therapists, no waitlists, more flexible appointments) are true for self-pay as well as out-of-network benefits.
  2. Privacy. Insurance plans (both in-network and out-of-network) will only pay for therapy if you have a diagnosed mental illness. In order for your therapy to be covered, your therapist must diagnose you and report this to your insurance provider. You and your therapist may also be required to report your treatment plan and details of your progress. Many people do not want this sort of information on their record. Self-pay ensures that any information about your condition and treatment stays between you and your provider.
  3. Customized treatment plans. Remember how we mentioned that insurance providers dictate what treatment looks like? Self-paying for therapy means that none of these restrictions exist. You and your therapist can design the perfect treatment plan for your needs. Maybe this means seeing your therapist twice a week or having 90 minute appointments. Maybe it means that your therapist comes to your home, instead of you going to their office. Maybe it means they check in with your partner regularly to discuss how your partner can support you. All of these options only exist if you self-pay for therapy - your insurance provider will not cover them.

We hope this helps make the world of payment for therapy a little bit clearer. If you want more detailed information about out-of-network benefits, including a how-to guide, click here.

For a more comprehensive guide on how to find a therapist, click here.