Deciding to start therapy is a significant step toward better mental health. But for many people, the next question quickly becomes: "How am I going to pay for this?" Understanding your insurance benefits can feel like learning a foreign language, full of confusing terms and fine print.
The good news is that once you understand a few key concepts, navigating insurance for therapy becomes much more manageable. This guide will walk you through the essential terms and give you practical steps to make the most of your mental health benefits.
Why Understanding Insurance Matters
Mental health care is covered by most insurance plans, thanks in part to laws requiring parity between mental health and medical benefits. However, "covered" doesn't mean "free"—and the specifics of your coverage can significantly impact what you pay out of pocket.
Taking time to understand your benefits before you start therapy helps you:
- Avoid unexpected bills
- Choose providers strategically
- Budget accurately for your care
- Advocate for yourself when issues arise
Key Terms You Need to Know
Premium
Your premium is the amount you pay every month to keep your insurance active—like a membership fee. You pay this whether or not you use any services. If you have employer-sponsored insurance, part of your premium is often deducted from your paycheck, and your employer pays the rest.
What to know: A higher premium often means lower costs when you actually use services, but not always. Compare the full picture when choosing a plan.
Deductible
Your deductible is how much you pay out of pocket for covered services before your insurance starts sharing costs. If your deductible is $1,000, you'll typically pay the full cost of therapy sessions (up to the "allowed amount") until you've spent $1,000 that year.
What to know: Some plans apply deductibles to mental health services; others don't. Always ask: "Is outpatient mental health subject to my deductible?"
Copay vs. Coinsurance
A copay is a fixed dollar amount you pay per visit—like $30 per therapy session.
Coinsurance is a percentage of the allowed cost. If your coinsurance is 20%, you pay 20% of each session's allowed amount, and your plan pays 80%.
What to know: These kick in after you've met your deductible (or from the start, if your plan doesn't apply a deductible to therapy).
Out-of-Pocket Maximum
This is the most you'll pay in a year for covered, in-network services. Once you hit this limit, your plan pays 100% for the rest of the year.
What to know: Premiums don't count toward this limit. If you expect to use a lot of mental health services, a plan with a lower out-of-pocket maximum might save money over the year.
In-Network vs. Out-of-Network: Why It Matters
In-Network Providers
An in-network therapist has a contract with your insurance company. They've agreed to accept negotiated rates and follow certain billing rules. When you see an in-network provider:
- Your copays and coinsurance are lower
- The therapist cannot bill you above the "allowed amount" for covered services
- Claims are filed for you
- Your payments count toward your in-network out-of-pocket maximum
Out-of-Network Providers
An out-of-network therapist doesn't have a contract with your plan. If your plan covers out-of-network care at all:
- You'll likely have a separate, higher deductible
- Your coinsurance will be higher (often 40-50% instead of 20%)
- You may be "balance billed" for charges above the plan's allowed amount
- You might need to pay upfront and submit claims yourself for reimbursement
Example: An out-of-network therapist charges $180. Your plan's allowed amount is $110. With 40% coinsurance, you'd pay $44 (40% of $110) plus potentially $70 (the difference between $180 and $110) in balance billing—$114 total versus perhaps $30 in-network.
How to Verify Network Status
Don't assume—always verify before your first appointment:
- Check your plan's online provider directory
- Call the number on your insurance card
- Confirm directly with the therapist's office
- Document when you called and who confirmed (in case of disputes later)
Understanding Your Explanation of Benefits (EOB)
After you receive therapy, your insurance company sends an Explanation of Benefits. This is not a bill—it's a summary showing:
- What your therapist charged
- The "allowed amount" your plan recognized
- What your plan paid
- What you may owe
Always compare your EOB to any bill from your therapist to make sure the numbers match. If something seems wrong, call both your insurance company and your therapist's billing office.
What Is a Superbill?
If you see an out-of-network therapist, you may pay upfront and receive a superbill—a detailed receipt containing:
- Your therapist's credentials and tax ID
- Dates of service
- Diagnosis codes
- CPT codes (procedure codes for therapy sessions)
- Amount you paid
You submit this to your insurance company to request reimbursement. Not all plans reimburse for out-of-network care, so check your benefits first.
Prior Authorization and Session Limits
Some plans require prior authorization—advance approval—for therapy, especially after a certain number of sessions. Your therapist may need to submit documentation explaining why continued treatment is medically necessary.
What to know:
- Ask your plan: "Do you require prior authorization for outpatient therapy?"
- If yes, ask: "After how many sessions? What's the process?"
- Keep track of approvals in writing
Practical Steps to Take Before Starting Therapy
1. Call Your Insurance Company
Have your insurance card handy and ask:
- "Is outpatient mental health therapy a covered benefit?"
- "Is it subject to my deductible?"
- "What is my copay or coinsurance for an in-network therapist?"
- "Do you require prior authorization for therapy?"
- "Is [specific therapist name] in-network for my plan?"
2. Know Your Numbers
Write down:
- Your deductible (and how much you've already met this year)
- Your copay or coinsurance for therapy
- Your out-of-pocket maximum
- Any session limits or prior authorization requirements
3. Ask the Therapist's Office
When scheduling, ask:
- "Do you accept my insurance plan?"
- "What will I owe per session?"
- "Do you verify benefits before the first appointment?"
- "If you're out-of-network, do you provide superbills?"
4. Budget for the Real Cost
Based on what you learn, estimate your actual out-of-pocket cost per session. This helps you plan financially and avoid surprises.
When to Consider Out-of-Network Care
Despite higher costs, some people choose out-of-network therapists because:
- They specialize in a specific issue
- They're a better fit for your needs
- In-network options have long wait times
- Privacy concerns (out-of-network claims may be more limited)
If you go this route, understand your potential costs upfront and ask about sliding scale options or payment plans.
What If You Don't Have Insurance?
Many therapists offer:
- Sliding scale fees based on income
- Reduced rates for self-pay clients
- Payment plans
Community mental health centers, training clinics (where supervised graduate students provide care), and some nonprofits offer lower-cost therapy options.
You Deserve Support
Insurance shouldn't be a barrier to getting the mental health care you need. By understanding these key terms and asking the right questions upfront, you can navigate the system more confidently and focus on what matters most: your wellbeing.
If you're ready to start your therapy journey, we're here to help. Our team can assist with verifying your benefits and explaining your coverage options.