Have you ever wondered why some therapists, despite advocating for accessibility and treating mental health like physical health, don’t accept insurance?

If you’ve ever thought about this – you’re not alone. This article is all about why I don’t accept insurance as a therapist.

Therapists and mental health advocates everywhere keep pushing that mental health IS health – so why would therapy not always be covered by insurance? Well, it’s complicated. I often get asked why I don’t take insurance if I want to help more people; the truth is, it’s a multi-pronged decision/answer. I’ve never taken insurance. My first supervisor in a private practice setting taught me all about why she didn’t accept insurance. After investigating what she shared, I decided that I would not accept health insurance unless something systematically changed. 

Some of the reasons why I don’t accept health insurance have to do with me and my well-being, and most have to do with my clients and THEIR well-being. Many potential and current clients don’t realize that there are several downsides for therapists and clients when using insurance to pay for psychotherapy. AND I empathize with how hard it is to find someone geographically close to you (if you’re going in person), who specializes in what you’re going in for, who you have a rapport with, who is in your fee range, AND who accepts your insurance. 

I can’t possibly speak for every therapist out there, but here are the seven reasons I don’t accept insurance as a therapist working in mental health.

Confidentiality & Privacy Issues (and Treatment Dictatorship)

Okay, so I don’t want to freak you out, but this is among my top two reasons I don’t take insurance. Therapists are legally required to maintain confidentiality, except if the client is at risk to themselves or someone else – or if they’re using insurance.  When insurance companies are paying for your treatment, it means that any of their employees can (and will) audit my session notes and your treatment plan. Why? The employees are supposed to save the insurance company money, so they look for potential fraud and overuse of insurance. For example, if you’re not “progressing fast enough,” they may decline to approve additional sessions. They use what we talk about as the basis for how many sessions you get covered.

Yes, a NON-THERAPIST at an insurance company gets to read about you and say, “they get 6-12 sessions,” and close the chart. If this doesn’t undermine the fundamental values of therapy, I don’t know what does. Your chart could float around an insurance company’s office. It makes my stomach hurt thinking about it. If you’re thinking to yourself, “What?!? I didn’t know this!!” you are not alone! When you go to your therapist or another medical professional’s office, you get a privacy practice HIPAA document, and it’s written in there – but who reads all that fine print? Well, I try to after learning things like this. Isn’t that wild? I hate it. 

The clinical supervisor on my team, Dr. Norman Hering, wrote an article in the magazine THERAPIST in 2000 all about this. You can read it here.

You Have to Have a Diagnosis, aka Assumption of Illness

The second of my top two reasons I don’t accept insurance as a therapist is that insurance companies REQUIRE a diagnosis to cover therapy. Insurance companies operate using a medical model, meaning that every service needs to be a “medical necessity” for them to cover it and to justify medical necessity, they require a diagnosis out of the DSM-5. Often, folks seeking therapy don’t qualify for a diagnosis, which puts both the therapist and client in a very precarious position (see number 4 below). Not only do they require a diagnosis, but it can’t just be any diagnosis – they will only find some a “medical necessity.” So, just with reasons one and two – are you starting to see why I don’t accept insurance for therapy?

Your Diagnosis Can Impact Your Insurance Premiums & Have Other Negative Consequences For You, As the Client

Let’s say you do qualify for a diagnosis that health insurance covers and we submit your file, including your session notes, diagnosis, and treatment plan to the insurance company, and that is now in your medical record. Why could this matter? Well, when you go to get life insurance or apply for a job that requests your medical records as part of the background check process, they may use your diagnosis as a way to say, “this person needs to have higher premiums because of their potential emotional state,” or “we don’t trust this person to manage hedge funds because they have xxx diagnosis.” This infuriates me because it pushes people not to get help. Shouldn’t all humans be able to receive mental health treatment and support without fear that their future will be negatively impacted by getting said help? It’s horrible.

The Potential for Fraud to Be of Service to My Clients

Now, for this example, let’s say you don’t qualify for a diagnosis, but you’ve come in because I’m on your insurance plan, and we hit it off and know it’s a GREAT fit to work together. Our options at that point are for you to pay out of pocket my full fee (which would really suck and be pretty shocking after thinking you were going to use your insurance) or commit fraud by agreeing on a diagnosis to submit to your insurance company that you don’t have.

Do therapists do this? Yes. Is this such a shitty position to be in? Yes. Should you, the client, or me, the therapist, be put in this position? Absolutely not. It’s insurance fraud. I just can’t sleep at night slapping a diagnosis on someone that isn’t real – especially when it can come back to bite you in the butt later. Yet another reason I don’t accept insurance as a therapist.

Retroactive Claim Denials

Also known as clawbacks, insurance companies can ask the therapist to give the money back that they paid out. They can do this years later. Imagine the company you work for asking you to return income you made seven years ago…. I know. And this is a common practice! Isn’t that insane? If they find any inconsistencies in the therapist’s diagnosis, treatment plan, or other paperwork (including punctuation, margins, etc.), the insurance company will request that the therapist return the paid fees. This has literally bankrupted therapists. The largest one I’ve ever heard about was $300,000 with a 30-day time limit. WHAT. THE. FUCK. IS. THAT. I can’t. No.

Low Rates with Delayed Payments (or No Payment at All)

So, if everything goes smoothly, it’s an average of 3-6 months for the therapist to receive the fee the insurance company has promised. It’s usually longer. (Companies like Alma are trying to improve this, thank goodness.) A colleague wrote an article about their reasons for not taking insurance and describes this perfectly; It takes about 90 minutes of unpaid work outside of a 50-minute session to get the insurance paperwork done, so we’re looking at 160 minutes, or just over 2 ½ hours for an average of $20-$60 per session fee. 2 ½ hours for let’s say $50. It’s terrible. After my Master’s program in Clinical Psychology, I had over $200k in student debt. Making $50 for 2 ½ hours of work isn’t going to pay that and pay rent (home and office) and living. It’s not realistic. And it leads to my final reason for not accepting insurance… burnout. 

Burnout / Quality Can Go Down (Not Always, Of Course)

The therapist who was my supervisor at my first private practice internship (the one that told me never to accept insurance and taught me much of this) was so burnt out. She was resentful of her situation and struggled to pay her bills while taking a salary for herself. I saw her exhausted and knew she couldn’t provide the care she COULD give her clients.

She was spending SO much of her time on insurance paperwork that she couldn’t bring on more clients. She was stuck in a loop of burnout, and I watched her switch her practice around not accepting insurance. I watched her clients get better care (we met about both of our client loads, which they knew about and signed a consent form!) This doesn’t always happen, some therapists can afford to make $30/hr, or they simply don’t burn out. But, more often than not, I see this over and over and over again.

So, why do some therapists take insurance, even with all of the above? Well, a few possible reasons:

  1. They Want to Work with Folks on Medicare/Medicaid
  2. They Don’t Want to Market Themselves
  3. They’re Just Starting a Private Practice 

What about couples therapy?

It’s usually not covered because “relationship problems” or “learning how to communicate better” are not diagnosable mental illnesses. There are a few tricks around this, but remember the pros/cons of using insurance we discussed above because they’ll apply here. You can use one partner’s individual insurance plan to cover sessions (if they have a diagnosed mental illness), you can ask the therapist to bill it as family therapy, or submit for reimbursement and see if your plan has out-of-network benefits. 

But what if someone/you can’t afford to pay the full fee but also want to ensure you get a great therapist without using insurance? Fortunately, there are two pretty good in-between options.

Out-of-Network Benefits / Reimbursement

Some insurance plans reimburse claims at varying percents for out-of-network providers, meaning that if you see a therapist at $400 a session and your insurance plan reimburses 50%, you’d be paying the $400 out of pocket but receive a check for $200, for each session. This isn’t usually available with HMO plans, but flexible PPO plans often have this. PLEASE call them to verify how much your plan reimburses for out-of-network therapists – I’ve had clients be under the impression they reimburse only to find out that they don’t and be in a crappy situation. If your plan does reimburse, your therapist can provide you with a superbill to submit to your insurance company. Note: Some insurance companies require a diagnosis on your superbill, even if doing it out-of-network – talk to them and your therapist about this.

Sliding Scale

Many therapists (myself included) reserve a certain number of slots on their client roster for sliding-scale clients. Sometimes it’s for a specific population; sometimes, it’s for anyone who makes under a certain amount annually; and for others, it’s just if a client asks. For example, if a therapist’s typical fee is $345 a session, they may keep two client slots open at $90-$190 and 2 client slots open at $200-$300. This is something that helps me feel even better while I don’t accept insurance as a therapist.

Use Your FSA/HSA Work Benefits, If Applicable

Many jobs provide you with a Flexible Spending Account or Health Savings Account, and many therapists are set up to accept those cards. This way, even if you’re paying out of pocket, it’s pre-tax, ultimately saving you money.

In Conclusion…

Only you can truly decide if using your insurance for therapy is worth it – if you have a diagnosed mental illness already and have been using your insurance and love your therapist, I am by NO means telling you to switch things up. In fact, I’m really not advising you to do anything besides learn and make an informed decision. Most of my clients and potential clients have no idea about the cons of using their insurance, so I hope this can help you decide what feels important to you. And, as usual, reach out if you have any questions.

Want to work with me or someone on my team? Fill out this consultation form, and I’ll match you with the right person for your needs. 

I can’t possibly speak for every therapist out there, but here are the seven reasons I don’t accept insurance as a mental health therapist.