Understanding Your Healthcare Costs
Health insurance costs can feel like a puzzle with too many pieces. This guide explains each component clearly, shows how costs progress through your plan year, and provides realistic examples so you know what to expect financially when starting therapy.
How Healthcare Costs Work
The cost-sharing relationship between you and your insurance
Health insurance is a cost-sharing arrangement. You pay a monthly premium to keep your coverage active, and in return, your insurance company pays a portion of your medical expenses. The exact split depends on your plan's specific terms.
Most plans use a progression: you pay more at the beginning of the year (while meeting your deductible), then costs drop (to copays or coinsurance), and eventually—if you have significant medical expenses—you hit your out-of-pocket maximum and pay nothing more for covered services.
The Cost Progression
Premium (Monthly)
Your monthly membership fee to keep insurance active—paid whether you use services or not
Deductible Phase
You pay the full allowed amount for services until you reach your deductible
Copay/Coinsurance Phase
After deductible, you and your insurance share costs—you pay a fixed copay or percentage
After Out-of-Pocket Max
Once you hit your OOP max, insurance pays 100% of covered in-network services for the rest of the year
Understanding Each Cost Component
What each term means and how it affects your therapy costs
Your premium is the monthly payment that keeps your insurance active. It's like a membership fee—you pay it whether you use healthcare services or not.
How it works:
- • Employer plans: Your employer typically pays 50-80% of the premium, and you pay the rest (often pre-tax through payroll deduction)
- • Marketplace plans: You pay the full premium, though you may qualify for tax credits that reduce your cost
- • Trade-off: Lower premiums often mean higher deductibles and vice versa
Example:
Family premium: $1,200/month. Employer pays $900, you pay $300 per month ($3,600/year). This is your cost before you use any services.
Important: Premiums do NOT count toward your deductible or out-of-pocket maximum.
Your deductible is the amount you pay out-of-pocket each year before your insurance starts sharing costs. Until you meet your deductible, you pay the full "allowed amount" for covered services.
Key concepts:
- • Individual deductible: The amount each person must pay (e.g., $1,500)
- • Family deductible: The combined amount for the whole family (e.g., $3,000). Once hit, the plan shares costs for everyone.
- • Resets annually: Usually January 1, but some employer plans use fiscal years (like July 1)
- • Separate deductibles: Many plans have separate in-network and out-of-network deductibles
Therapy example:
$1,500 deductible with $150/session allowed amount. You pay $150 for each of your first 10 sessions ($1,500 total). After that, your deductible is met and costs drop to your copay or coinsurance.
Note: Some plans waive the deductible for certain services (like preventive care or mental health visits). Check your Summary of Benefits.
A copay (or copayment) is a fixed dollar amount you pay for a specific service. It's predictable and doesn't change based on what the provider charges.
How it works:
- • You pay the same amount each visit regardless of the provider's fee or allowed amount
- • Different copays often apply to different services (PCP visit vs. specialist vs. therapy)
- • Copays may apply from day one, or only after you meet your deductible (check your plan)
- • Copays count toward your out-of-pocket maximum
Therapy example:
$30 copay for mental health visits. Whether the allowed amount is $120 or $170, you pay $30. Insurance pays the rest. For 40 sessions/year, your total cost is $1,200.
Advantage: Copays make budgeting easy because your cost per session is predictable.
Coinsurance is the percentage of the allowed amount you pay after meeting your deductible. Unlike a copay, your cost varies based on what the service costs.
How it works:
- • Expressed as a percentage split: 80/20 means plan pays 80%, you pay 20%
- • Based on the allowed amount, not the provider's full fee
- • Only kicks in after you meet your deductible
- • Your payments count toward your out-of-pocket maximum
Therapy example:
20% coinsurance with $150 allowed amount. After deductible: You pay 20% × $150 = $30 per session. Insurance pays 80% × $150 = $120. Your cost per session is similar to a $30 copay, but it's calculated differently.
Copay vs. Coinsurance:
A $30 copay is always $30. With 20% coinsurance, you pay $24 if the allowed amount is $120, or $36 if it's $180. Coinsurance costs vary; copays are fixed.
Your out-of-pocket maximum (OOP max) is the most you'll pay for covered in-network services in a plan year. Once you hit this limit, your insurance pays 100% of covered costs for the rest of the year.
What counts:
- ✓ Deductible payments
- ✓ Copays for covered services
- ✓ Coinsurance payments
What does NOT count:
- ✗ Monthly premiums
- ✗ Balance-billed amounts from out-of-network providers
- ✗ Non-covered services
- ✗ Out-of-network charges (separate OOP max)
2025 Limits:
For Marketplace plans: $9,200 individual / $18,400 family. Employer plans may have lower limits.
Why this matters for therapy:
If you have a major medical event (surgery, hospitalization) that pushes you to your OOP max, your remaining therapy sessions for the year become free. You've already paid your maximum.
How Costs Progress Through the Year
A real-world example of therapy costs from January to December
Sample Plan Details
Deductible: $1,500
Coinsurance: 20% (you) / 80% (plan)
Out-of-pocket max: $5,000
Allowed amount: $150/session
Phase 1: January–April (Deductible Phase)
You attend weekly therapy sessions. Each session costs $150 (the full allowed amount) because your deductible isn't met yet.
| Session | You Pay | Plan Pays | Toward Deductible |
|---|---|---|---|
| Sessions 1-10 | $150 each | $0 | $1,500 total |
After 10 sessions: $1,500 paid → Deductible met!
Phase 2: May–August (Coinsurance Phase)
Your deductible is met. Now you pay 20% coinsurance ($30 per session) and insurance pays the remaining 80% ($120).
| Session | You Pay | Plan Pays | Running Total (You) |
|---|---|---|---|
| Session 11 | $30 | $120 | $1,530 |
| Sessions 12-20 | $30 each | $120 each | $1,800 |
After 20 sessions: $1,800 paid (you) / $1,200 paid (plan)
Phase 3: If You Hit Your Out-of-Pocket Maximum
Suppose in September you have a surgery with $20,000 in allowed charges. With your $5,000 OOP max:
Already paid (therapy): $1,800
Remaining until OOP max: $5,000 - $1,800 = $3,200
Surgery cost (you pay): $3,200 (to hit OOP max)
Surgery cost (plan pays): $16,800
Rest of year: All covered in-network care—including therapy—is 100% covered!
Timing Tip
If you've had significant medical expenses earlier in the year (from other care), you may have already met or nearly met your deductible. Starting therapy later in the year could mean lower per-session costs. Ask your insurance how much of your deductible you've met so far.
Cost Scenarios: What You'll Pay for 10 Sessions
Different plan structures lead to very different costs
The following scenarios show how much you'd pay for your first 10 therapy sessions under different plan types. All assume a $150 allowed amount per session.
$30 Copay, No Deductible for Mental Health
Plan design: Flat $30 copay per therapy visit, no deductible for mental health services
First 10 sessions:
- • Each session: $30
- • Plan pays: $120 per session
- • Your total: $300
Most predictable and affordable option
$1,500 Deductible, Then 20% Coinsurance
Plan design: $1,500 deductible, 20% coinsurance after, $4,000 OOP max
First 10 sessions:
- • Sessions 1-10: $150 each (full allowed amount)
- • Plan pays: $0 (deductible phase)
- • Your total: $1,500
Session 11+: $30 each (20% coinsurance)
Higher upfront costs, then drops significantly
High-Deductible Plan ($3,000 HDHP)
Plan design: $3,000 deductible, 20% coinsurance after, HSA-eligible
First 10 sessions:
- • Sessions 1-10: $150 each (full allowed amount)
- • Plan pays: $0 (deductible phase)
- • Your total: $1,500
- • Deductible status: Only 50% met
Would need 20 sessions ($3,000) to meet deductible
Lower premium, but pay full cost for many sessions
Out-of-Network Provider
Plan design: $1,000 OON deductible, 50% OON coinsurance
OON allowed amount: $120 (provider charges $180)
First 10 sessions (before OON deductible met):
- • Allowed toward deductible: $120
- • Balance bill: $180 - $120 = $60
- • Each session: $180 (you pay it all)
- • Your total: $1,800
Most expensive option—even after deductible, $120/session
| Scenario | First 10 Sessions | Sessions 11-20 | 20-Session Total |
|---|---|---|---|
| A: $30 Copay | $300 | $300 | $600 |
| B: $1,500 Deductible | $1,500 | $300 | $1,800 |
| C: $3,000 HDHP | $1,500 | $1,500 | $3,000 |
| D: Out-of-Network | $1,800 | $1,200 | $3,000 |
Key Takeaway
Plan structure dramatically affects your costs. Scenario A costs $600 for 20 sessions while Scenarios C and D cost $3,000—5× more for the same care. If you attend therapy regularly, a copay plan with higher premiums often costs less overall than a high-deductible plan.
In-Network vs Out-of-Network: Cost Comparison
Why staying in-network saves significant money
In-Network
- ✓Provider has contracted rate (allowed amount) with your insurance
- ✓Cannot balance bill you above the allowed amount for covered services
- ✓Lower deductibles and copays/coinsurance typically apply
- ✓Payments count toward your in-network out-of-pocket max
Example session cost:
Fee: $180 → Allowed: $150 → You pay: $30 copay
Out-of-Network
- ✗No contracted rate—plan uses internal "usual and customary" amount (often lower)
- ✗Provider can balance bill you for the difference between their fee and allowed amount
- ✗Separate (usually higher) deductible and higher coinsurance
- ✗Balance-billed amounts don't count toward OOP max
Example session cost:
Fee: $180 → OON Allowed: $120 → You pay: $60 + $60 balance = $120
Bottom Line
Staying in-network can reduce your per-session cost by 50-75% compared to out-of-network. For regular therapy, this adds up quickly. Learn more about out-of-network options →
Tips for Managing Your Healthcare Costs
Practical strategies to minimize therapy expenses
1. Verify Benefits Before Starting
Call your insurance and ask: What's my deductible and how much have I met? What will I pay per therapy session? Is this provider in-network? See our verification guide →
2. Know Where You Are in Your Deductible
If you've had other medical care this year, you may have already met part or all of your deductible. Log into your member portal or call to check your current status.
3. Plan for Beginning-of-Year Costs
Deductibles reset annually (usually January 1). Budget for higher out-of-pocket costs in early months if you have a deductible before copays/coinsurance kick in.
4. Consider Session Frequency
Discuss with your therapist: Would biweekly sessions work for your treatment goals? Reducing from weekly to biweekly cuts costs in half while still maintaining therapeutic progress.
5. Use HSA/FSA Funds
If you have a Health Savings Account (HSA) or Flexible Spending Account (FSA), therapy copays, coinsurance, and deductible payments are all eligible expenses. Using pre-tax dollars saves 20-30%.
6. Choose Plans Wisely at Open Enrollment
If you expect regular therapy, a plan with a higher premium but lower mental health copay may save money overall. Do the math: Premium difference vs. expected session costs.
Quick Cost Estimate Formula
To estimate your annual therapy cost:
If copay plan:
Copay × Expected sessions = Annual cost
$30 × 40 sessions = $1,200/year
If deductible + coinsurance:
Deductible + (Coinsurance × Remaining sessions × Allowed amount)
$1,500 + (20% × 30 sessions × $150) = $1,500 + $900 = $2,400/year
Questions About Your Costs?
We're here to help you understand your financial responsibility
Insurance costs can be confusing. Our billing team is happy to help you understand what you can expect to pay based on your verified benefits. Contact us before your first appointment to discuss your specific situation.
Contact our billing team:
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