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Does Insurance Cover Therapy?

When you’re struggling with emotional problems and wish to consult a professional, one of the first questions that might pop into your head is Does insurance cover therapy?

Unlike medical interventions, counseling and mental health services are a bit trickier. For starters, the problems that people bring in therapy are somewhat subjective and difficult to quantify or label. Furthermore, it’s slightly impossible for both insurance providers and counselors to estimate the total number of sessions you need to get back on your feet.

As a result, insurance companies have always provided better coverage for medical conditions than they did for mental health. And this has led in part to a serious crisis, with millions of people struggling with mental health disorders and not affording the help they need.

Fortunately, in 2008, the Mental Health Parity and Addiction Equity Act brought some significant changes. In other words, insurance providers are bound by law to cover services for mental health and substance use disorders.

However, things are not as simple as they seem and to understand how insurance coverage for mental health works, we need to take a closer look at all the available options.

Are You Covered?

When it comes to mental health, behavioral health and substance use disorders, there are several options which, to some extent, guarantee coverage. And I say “to some extent” because the amount of money covered by each insurance plan depends on various factors. So, let’s take them one by one.


Medicare and Medicaid are national health insurance programs, managed by the Social Security Administration. Although both are single-payer insurance programs, there are some notable differences between Medicare and Medicaid.

Medicare is an insurance program that only covers people who are 65 or older. If you’re under 65, you can still benefit from this relatively cheap insurance plan, but only if you’re struggling with disability or End-Stage Renal Disease.

Medicaid is a state- and federally-funded insurance program for children, pregnant women, low-income adults, elderly living in nursing homes. Unlike Medicare – which covers a relatively narrow spectrum of the population – Medicaid provides affordable health care to millions of Americans.

The good news is that both programs cover up to 80% of the total cost of counseling and mental health services, as long as you address a credentialed health professional who participates with the program. [1]

If you wish to find out more about the eligibility criteria, contact your state Medicaid director.

Federal Marketplace Plans

If you don’t have health insurance and wish to purchase one, federal marketplace plans are a viable option that covers both medical conditions and mental health services (including substance use disorders).

The fact that the American insurance marketplace is under state and federal jurisdiction is a considerable advantage, as it provides quality health care plans. Furthermore, having an open and regulated market means there’s just enough competition between insurance providers to generate affordable health care plans.

Purchasing health care insurance through the federal marketplace offers you the freedom to personalize your plan and add various premiums. And the good news is that all marketplace plans cover counseling and other mental health services. [2]

Employer-Based Plans

Employers are more aware than ever of the importance of mental health in the workplace. Stress can lead to burnout, which in turn can lead to depression. It may also negatively impact your physical health. In consequence, your productivity has to suffer, and you may even need to miss out on work.

Thus, it`s understandable why, in the last few years, there has been an increase in spending on insurances that cover mental disorders.

Of course, every company has its policy when it comes to health insurance, so it is best for you to contact your employer regarding the benefits included in your health plan.

Affordable Care Act and Mental Health Parity

The Affordable Care Act and Mental Health Parity – also known as the federal parity law or Obamacare – requires insurance providers to offer the same coverage for mental health and substance-use disorders as they do for medical/surgical services.

In a nutshell, the federal parity law made mental health services way more affordable and accessible than they were before 2008. What’s surprising is that many people know very little about this law and how it applies to mental health services.

Lastly, the federal parity law has eliminated the annual limits on the number of mental health visits. At first, this might seem like a huge advantage but bear in mind insurance companies can still place limits related to “medical necessity.” In other words, what you consider a necessity might not be viewed the same by your insurance provider. [3]

Is Insurance the Best Way to Pay for Therapy?

Although it might sound a bit confusing, insurance isn’t always the best way to pay for therapy. And there are several good reasons for that.

Insurance Requires a Diagnosis

Regardless of your insurance plan, when you opt to pay for therapy using your insurance, you will need a diagnosis. And this can sometimes raise serious issues.

For starters, not every emotional or behavioral problem that we might struggle with falls under a diagnostic category. In fact, most of us choose to see a counselor for specific issues like getting past a tough divorce or dealing with the passing of a loved one.

But since most insurance plans require a diagnosis, counselors and mental health professionals are often forced to give one, even if it doesn’t quite fit your problem.

Now, imagine how you might feel if you walk into a counselor’s office to deal with a breakup and he/she would have to diagnose you with clinical depression so that you can be covered by insurance.

Treatment Becomes a Part of Your Permanent Medical Record

Another issue you might face when choosing to pay for therapy through your insurance plan is the fact that treatment becomes part of your permanent medical record. In other words, your treatment will become a pre-existing condition on your medical records, something that will follow you for the rest of your life. [4]

From a therapeutic perspective, this approach can have detrimental effects on your perceived sense of health and well-being, not to mention the stigma associated with being ‘branded’ with a diagnosis that might not reflect the true nature of your problem.

Lastly, keep in mind that once your diagnosis and treatment become part of your permanent medical record, you grant insurance providers access to sensitive data about your personal life. Is that something you’re truly comfortable with?

Limited Options for Providers

At first glance, paying for therapy using your insurance plan might seem like the easiest and most affordable approach. And in a way, it is. However, if you choose this approach, you will soon discover that your options are relatively limited.

In other words, you don’t get to choose your counselor or therapist. Instead, your insurance provider will refer you to a mental health professional. And this, once again, raises a whole new set of issues.

For example, if you don’t ‘click’ with your therapist or his/her approach, the only option left is to find another counselor which you will most likely have to pay out of your pocket.

What Else Can You Try?

Fortunately, insurance isn’t the only viable option to receive proper mental health services.

Private Pay

Private pay is perhaps one of the most popular alternatives to insurance plans. As you’ve probably figured out, going with this option means you’ll have to look for a counselor and pay the full cost of therapy out of your own pocket.

Although it may be somewhat more expensive compared to copay, private pay offers you the freedom to choose whichever professional you feel is best suited for your needs.

If you value your privacy and wish to have total freedom over the therapeutic process, then out-of-pocket pay is definitely the right option for you.

Community Mental Health Centers

Community mental health centers provide access to mental health services for people living in a specific area. Instead of treating mental illness in a psychiatric hospital, these centers are designed for people in a domiciliary setting.

Community mental health centers offer both inpatient and outpatient care. Although in general, these centers are funded and run by government organizations there are also cases when private or charitable groups invest in centers that address different specific categories. For example, rehab centers for substance-use disorders or centers for victims of abuse.

A quick google search and you can easily find a community mental health service near you where you can receive the support you need.


We’re living in a digital era where most of us spend a significant part of our lives in the online environment. Given this radical shift, counselors and mental health professionals have begun to change their approach.

Nowadays, there are plenty of online mental health platforms where you can where you can benefit for quality mental health services. And one such platform is ThriveTalk.

ThriveTalk provides access to affordable top-quality counseling services via a user-friendly platform where you can chat with licensed professionals who are trained and eager to offer the support you need.

Whether you prefer online or ‘live’ therapy, rest assured knowing there are plenty of options to choose from.

As you’ve probably figured out by now, the answer to the question “Does insurance cover therapy?” isn’t simple. There are numerous factors to consider before choosing the right approach.


[1] S. Mott, “Does Medicare Cover Counseling?,” Medicare, 12 September 2018. [Online]. Available: https://medicare.com/coverage/medicare-cover-counseling/.

[2] E. Kubis, “Does my insurance cover therapy?,” BernardHealth, 15 January 2016. [Online]. Available: https://blog.bernardhealth.com/does-my-insurance-cover-therapy.

[3] A. P. Association, “Does your insurance cover mental health services?,” American Psychological Association, n.a.. [Online]. Available: https://www.apa.org/helpcenter/parity-guide.aspx.

[4] E. Barbash, “REASONS YOU SHOULD NOT USE INSURANCE FOR MENTAL HEALTH TREATMENT,” Tampa Therapy, 25 January 2017. [Online]. Available: https://tampatherapy.com/2017/01/25/reasons-not-use-insurance-mental-health-treatment/.

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