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Understanding Insurance

What you need to know

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Both you and your counselor have a choice as to whether to participate in the managed mental health care system. Many who would gladly use insurance for physical health benefits elect to pay out of pocket for counseling. Likewise, if you start your provider search on the internet, it won’t be long before you find that many counselors, and a growing number of psychiatrists, are not on insurance panels. You owe it to yourself to consider the pros and cons of using managed care.

Using insurance with a therapist is NOT like using it with a medical doctor


In VS Out

of network

To get started, you need to understanding the difference between in and out of network coverage and how much your insurance company covers for each. Depending on your plan and deductible, it may be a complete wash either way. Here are some basics.


In-Network Providers:

  • means that the insurance company has contracted with a group of therapists who have agreed to offer their services, usually at a discounted rate, so that clients can pay a co-pay (often between $20 – 40/session) and have the rest covered by their insurance company
  • there is often a deductible that you need to pay in full before your insurance company begins paying for treatment, often around $250 – 2,000 per contract year before they begin paying for therapy beyond your co-pay amount
  • insurance companies also have the right to audit client files for in-network providers so there’s less confidentiality/privacy & more paperwork to fill out and submit

Out of Network Providers:

  • there’s a lot more freedom with out-of-network providers because you can basically see any therapist that’s willing to provide you a monthly statement for reimbursement (called a Superbill)
  • means that the insurance company — usually a PPO like Blue Shield/Cross, Aetna, Cigna, United and not an HMO plan like Kaiser — will pay a certain percentage of the cost of a session for therapist outside of their in-network panel
  • what rate they’ll cover and for how many sessions depends on your insurance plan, but usually it’s somewhere between 30% – 80% of whatever full fee they determine is appropriate for the area (usually a fee that is less than the therapist’s normal rate)
  • In this case, usually the therapist will give you a monthly statement for you to submit directly to your insurance company for reimbursement. Therefore, you receive a check directly from the insurance company.

Benefits VS Drawbacks

of Using Insurance for Therapy

While there are obvious financial benefit to involving a third party to assist in payment for therapy, ie your inurance company, there are also some risks as well, especially if your provider is in-network. Let's look at the benefits and drawbacks.


Benefits:

  • The most obvious and largest benefit of using your insurance company, is a decreased out-of-pocket expense for you, once your deductible is met.
  • Many wouldn’t otherwise be able to afford counseling, unless they use their insurance or go to a public health clinic or non-profit agency for lower cost treatment.

Drawbacks

  • There’s decreased privacy and confidentiality when an insurance company is involved because they require a mental health diagnosis to justify it being medically necessary for you to have therapy. This stays in your medical record permanently.
  • There’s also increased paperwork and a subsequent paper-trail that stays in your medical record and can be accessed for certain legal court hearings or when applying for things like life insurance.
  • It can sometimes be difficult to determine how many sessions you’ll actually be given per year, as they sometimes require continuing paperwork to justify that therapy is still needed and yet also is effective.
  • Sometimes there’s a care manager that’s involved and determining the course of treatment besides just what the client and therapist deem necessary.
  • In essence, I work for your insurance company, not for you... and am required to look out for their best interest over yours at times.

So What now?

How to proceed

While this may seam daunting, the best thing you can do is ask lots of questions of your insurance company, especially if they pay for out-of-network providers! Here are some helpful ones to guide you.

Also, it can be helpful later on to get the name of the insurance representative you speak to and record the date/time.


Questions to ask:

Do they pay for out-of-network providers (i.e. HMO or PPO plan)?

What is your deductible and has it been met?

What percentage of the fee do they cover?

Do they cover the therapist’s full fee or do they determine what a “usual, customary, reasonable fee” (UCR) is for the area your therapist is located in?

How many sessions per year do they pay for? Do they give you these upfront or do they require you to incrementally ask for more until you reach the maximum amount per year?

When does your insurance coverage for a year begin/end? When do your benefits renew?

Do you need pre-authorization?

What address do you send monthly invoices to?

What is their turn-around time for sending you a reimbursement?

Watch a video

James Guay, LMFT put together this info in a video format.

 

Conclusion

How to decide

In the end, it’s really a balance of privacy and cost.


Benefits:

  • The most obvious and largest benefit of using your insurance company, is a decreased out-of-pocket expense for you, once your deductible is met.
  • Many wouldn’t otherwise be able to afford counseling, unless they use their insurance or go to a public health clinic or non-profit agency for lower cost treatment.

Drawbacks

  • There’s decreased privacy and confidentiality when an insurance company is involved because they require a mental health diagnosis to justify it being medically necessary for you to have therapy. This stays in your medical record permanently.
  • There’s also increased paperwork and a subsequent paper-trail that stays in your medical record and can be accessed for certain legal court hearings or when applying for things like life insurance.
  • It can sometimes be difficult to determine how many sessions you’ll actually be given per year, as they sometimes require continuing paperwork to justify that therapy is still needed and yet also is effective.
  • Sometimes there’s a care manager that’s involved and determining the course of treatment besides just what the client and therapist deem necessary.
  • In essence, I work for your insurance company, not for you... and am required to look out for their best interest over yours at times.
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