Using insurance for medical procedures makes sense. Insurance “products” such as HMO’s, PPO’s and POS plans have high premiums and co-pays and since many of these costs are taken directly from your earnings why would you not want to utilize this benefit. In addition, many insurance companies, recognizing the benefit of psychotherapy, have expanded their in-network provider panels to include clinicians of various disciplines to provide mental health services to their members.

However, there are pros and cons using your insurance to cover psychotherapy and it may helpful for you to consider on what it means to use your insurance benefits to cover psychotherapy.

Pros

The benefits of using insurance to pay for therapy generally overshadow the cons. In short, your insurance provider will pay for the majority of your therapy sessions, with only the cost of a co-payment, deductible or both. Some insurance policies may cover ALL of the expense of therapy, at no additional cost to you. Insurance companies generally allow their subscribers a certain number of psychotherapy sessions that do not require a “preauthorization”, or “permitted” therapy sessions.

Cons

Insurance companies will only authorize services which they believe are “medically necessary”, either detecting or preventing disease, or treating either an acute or chronic condition. Your insurance provider will also want to know that your therapy is also "medically necessary." In order for therapy to be considered “necessary”, your therapist must provide a diagnosis to your insurance provider and they will decide, if your benefit will pay for your therapy. The treatment plan must also reflect how the diagnosis is treated, which may not reflect the issues that led to your entering therapy.

Insurance and confidentiality

Using insurance to pay for psychotherapy compromises your confidentiality. When a therapist provides an insurance company a bill for reimbursement, the employees of the insurance company have access to your information, including the processor, case managers and customer services representatives. While this may not affect you, or you may feel this is not problematic, in the moment, there are several situations where your mental health records can be used against you. If you ever decide to apply for life insurance all medical records, including mental health records, are requested. Certain diagnosis such as depression and bipolar disorder can result in the rejection of life insurance applications. If you are summoned in a court proceeding such as a divorce, a custody hearing or as a witness your medical records can also be subpoenaed.

If the number of authorized sessions is exhausted, you may need to contact the panel and discuss your case with a case reviewer to determine if you are eligible for additional sessions. The only information the insurance company has to make their decision is what your therapist provides. The insurance company will make their determination regardless of what you, or your therapist, feels is appropriate. In some cases, the insurance company may recommend that you have a psychiatric medication evaluation if they believe that therapy is not improving your symptom.

In addition, some insurance companies will authorize psychotherapy services and then request a “hard copy” of the record: This means they will require the clinician to provide a third party, someone hired by the insurance company to “audit” the record and provide this third party with a copy of your initial evaluation, treatment plan, treatment reviews, diagnostic information and, in some cases, copies of what was discussed in each session.

What Does This Mean For You?

Before entering therapy, consider the pros and cons of using your insurance to cover these cost; consider the limitations of confidentiality, as well as the possible long term ramifications of using insurance to cover your therapy. Ask yourself it it’s important for you to decide how long you are in therapy, or is you are OK with a third party making this determination for you. Only you can determine what is right for you, and what you are hoping to obtain from entering a therapeutic relationship.