Billing Insurance vs. Being a Self-Pay Client

By: Dani Hernandez

You’ve decided to find a therapist, and now they ask you a question: “Will you be billing insurance or paying out of pocket?”

An informed choice is important so that you choose the option that best suits your circumstances, and most importantly, gets you the care that you need. 

First, we’ll break down how it works and the implications of using insurance and self-pay. Then we have a graphic showing some of the pros and cons of using self pay and billing insurance, followed by some questions to consider.

How does private pay for therapy work?

1. All payments are made directly to the therapist or practice
2. Treatment decisions are made collaboratively between the therapist and client(s)
3. Some clients may decide to submit a superbill to their insurance company for potential out-of-network reimbursement

• All diagnoses, session notes, and treatment plans remain confidential between the client(s) and the therapist, since there is no need to report or submit that information to an insurance company.

How does insurance for therapy work?

1. Therapist submits a claim to your insurance company
2. Insurance company decides how much they will cover
3. Client pays a co-pay, coinsurance, or deductible depending on their plan

• Your therapist is expected to diagnose you with a mental health diagnosis in the first session

• Insurance companies at that point make decisions about your care, such as:
  • How many sessions you get
    • Certain treatments not being covered at all
    • You will have a label on you that will be on your medical history; important if you ever seek a job with a security clearance. A mental health diagnosis can impact your access to certain benefits as well.

• There is always a risk for insurance to clawback services (meaning demand money for a service that they paid out in the past) which leaves the client owing a large amount.

• Additionally, certain issues may not be covered by insurance because they aren’t “medically necessary.”
  • Subject matters such as sex therapy or couples work are often not covered unless there is a diagnosis that would benefit from couples sessions. This may lead to the therapist operating from a different lens than what may be better suited for the couple or client, since the focus is on the identified client with a diagnosis.

Let’s look at some pros and cons of using self-pay and insurance:

There is no universal right answer; it depends on your situation and your preferences.

Consider the following questions:

What am I looking for from therapy?

• Therapy that is focused on personal growth, life transitions, or relational work that may not fit neatly into a diagnostic category may make you a better fit for self-pay

Because therapy paid for by insurance generally requires therapists to assign a mental health diagnosis to approve coverage, if your goals are related to distress or impairment due to stuck patterns or a previous diagnosis, using insurance may work for you.

Does my insurance plan allow me to see a mental health provider?

Do I have a reasonable deductible, co-pay, and is there a list of available providers for my insurance plan?

Do I have any privacy preferences when it comes to my diagnosis, treatment plans, and session notes being submitted for insurance purposes?

Will a mental health diagnosis on my insurance record impact anything that is important to me?

Do I prefer the cost sharing and structure of insurance? Or do I want more of the flexibility and privacy that comes with private pay?

If you need help making a choice, don’t be afraid to reach out to one of our providers here on our Meet the Team page.