Paying for Therapy: Private-Pay vs. Insurance-Covered

Yay, you — you must be looking to change some things! Therapy is a great resource for developing insight into how you’ve been showing up to do life and the ways in which you’d like to shift. If you are looking into starting therapy, you will have a few important decisions to make, and one of the biggest will be your choice of therapist. Research continues to tell us the therapeutic alliance is the most significant factor in making progress toward your goals, so there are several things you will want to consider in making your choice.

One of the first things you may be wondering about is how you will pay for therapy. Most clients will either use their health insurance coverage, or they will pay privately for care. If health insurance is an option for you, there are some things you may want to consider before opting to use the coverage.

Let’s go ahead and acknowledge that thinking this through can feel overwhelming, especially when you’re already struggling emotionally. Read on for some guidance that I hope will help you to decide which payment method feels more appropriate for your individual situation.

Is private-pay therapy the better choice?

Reasons private-pay therapy may be right for your needs

1. Private-pay therapy supports your privacy and confidentiality. In order to cover your care, insurance companies often require therapists to submit detailed records, including diagnoses, which impacts your privacy. When you pay privately, there is no insurance company involvement. So, therapy can be strictly confidential between you and your therapist.
2. Paying privately allows you more freedom in choosing your therapist. Since you are not limited by insurance networks, you can choose any therapist you feel meets your needs and preferences. You can focus on factors like specialization, experience, personality or style, and culture — all important considerations in the fit between client and therapist.
3. Paying privately avoids requirements for diagnoses. Insurance typically requires at least one mental health diagnosis to cover therapy, but not all clients who seek therapy meet diagnostic criteria for a mental health disorder. If you’re really just looking for personal growth, there’s no true “billable” diagnosis for that. Even if you’re struggling with deep relational or self-worth issues that could arguably meet insurance criteria, consider whether those labels might be ones you want to wear indefinitely for the immediate financial benefit. Paying privately avoids the need for a formal diagnosis.
4. Private-pay therapy is subject to less restrictions. Paying privately allows you and your therapist to tailor treatment to your needs without the constraints of insurance requirements, which might impose limits on the number and frequency of sessions and on the types of treatment they will cover.
5. There can be less stigma associated with private-pay therapy. Re-read point #3. You might prefer to avoid having a (possibly unnecessary) mental health diagnosis follow you into future healthcare or employment situations.

Reasons private-pay therapy may NOT be right for your needs

1. Private-pay therapy will likely result in higher out-of-pocket costs. Paying privately means you will be fully responsible for all therapy fees. Therapy rates are often significantly higher than insurance co-pays.
2. Financial constraints may make private-pay therapy less sustainable. Paying privately for regular therapy, especially for long-term treatment, may be financially challenging or even unaffordable. The out-of-pocket cost may negatively impact how long you can remain in treatment.
3. If you’re hoping to seek reimbursement for out-of-pocket session fees, you should know that there are no guarantees on reimbursement. Some insurance companies offer partial reimbursements for out-of-pocket care. Your therapist may provide a superbill if you wish to request reimbursement, but you will have to initiate and follow up on the claims yourself. This will likely also require that your therapist assign a formal diagnosis (see points 3 and 5 above). Even with a diagnosis, there is no guarantee your claim will meet criteria for reimbursement, and you could still end up being responsible for 100% of the costs.

Is insurance-covered therapy the better choice?

Reasons insurance-covered therapy may be right for your needs

1. Insurance-covered therapy may result in lower out-of-pocket costs. Insurance generally covers a significant portion of therapy costs, leaving you responsible for only co-pays and/or deductibles.
2. You will have access to a network of covered providers. Insurance plans typically offer a list of in-network therapists, which allows you to explore options and can provide some direction in finding a covered provider.
3. Insurance-covered therapy may make long-term care more affordable. For clients needing covered types of long-term therapy, insurance can help make consistent care more affordable. This is an important consideration if you need access to specialists, including psychiatrists.
4. Insurance-covered therapy comes with an additional layer of accountability. You might appreciate having an insurance plan monitor the necessity of care, which can encourage goal-oriented, evidence-based care.

Reasons insurance-covered therapy may NOT be right for your needs

1. You will have less freedom in choosing your therapist. You may have fewer therapist options, as you must choose from in-network providers. This can make it harder to find a therapist with the right expertise who also feels like a good personal fit.
2. Your insurance plan may require a diagnosis to cover treatment. Insurance companies often require a formal diagnosis to cover or reimburse for treatment. This may not align with your goals for seeking therapy. Also, consider your comfort level with having mental health diagnoses on your medical record.
3. Insurance-covered therapy is subject to the plan’s treatment restrictions. Your plan may limit the number of sessions, types of therapy, or frequency and duration of visits. This might impact your ability to meet the treatment goals applicable to your unique situation before coverage ends.
4. Your therapy process will involve less privacy and confidentiality. Insurance companies often require specific documentation, diagnostic information, and updates on progress. Any of these can compromise the confidentiality of the therapy process.

The choice is yours.

Ultimately, you are the only one who can determine your priorities concerning treatment. Below are some questions you might want to consider:

• What are your therapy goals?
• How much choice and flexibility do you prefer or expect to need during your treatment? Remember that this might apply to anything from the therapist’s personal characteristics and treatment modalities to the frequency and duration of sessions.
• How much privacy and confidentiality do you prefer during your treatment?
• How affordable is therapy for your budget right now?

Most therapists are required by our codes of ethics to offer clear, upfront information about session fees and practice policies regarding no-shows, late cancellations, and other non-therapy-related fees. However, in an effort to make general healthcare more transparent, the government passed The No Surprises Act (NSA) in 2022, requiring that healthcare professionals, including psychotherapists, provide private-pay clients with a Good Faith Estimate (GFE). GFEs provide an overview of the cost you can reasonably expect to pay for your care over a specified period of time. If you are considering paying for private therapy and are unclear about the therapist’s fees or policies, do not be afraid to ask for a GFE.

Other options for accessing private-pay therapy

If you decide that paying for private therapy is your preference but are unable to find any therapists whose fees align with your budget, you can ask whether the therapist you like offers a sliding fee scale and/or pro bono services. These therapists may have an internal process to confirm your eligibility for a reduced fee, or they may work with organizations like Open Path Psychotherapy Collective. If a therapist does work with you at a reduced fee, pay attention to the number of sessions for which that fee is valid, and be open to revisiting it should your financial situation improve. Therapists who offer reduced fees usually have only a limited number of spots for doing so in order to meet their own financial and business needs while providing a valuable service at less than market value.

Other options might include grant programs, such as The Loveland Foundation, which provide vouchers to cover your therapist’s session fee so that you can work with them at no out-of-pocket cost; you can apply here.

Starting therapy can be an impactful turning point in your life! It may be challenging to balance the cost of care with your desire for change, but when you find the right fit with a therapist who really understands you and your struggles, the investment in your personal growth can make all the difference!

Do you think private-pay therapy with me might be right for you?