Does Health Insurance Cover Therapy and Mental Health Services?

Mental health is a crucial part of overall health and is just as important as physical health. Our emotional, psychological, and social well-being all play an essential role in our overall wellness. Mental health conditions can affect our thinking, emotions, and behaviors. They can also affect our ability to handle stress, focus, relate to others, and make healthy life choices. 

Over the years, therapy has become more normalized and readily available. However, the stigma associated with mental health and substance abuse is still a major barrier for individuals seeking treatment. Mental Illness Policy Org estimates that about 50% of Americans with severe psychiatric disorders are not getting the treatment they need. 

While most health insurance plans provide coverage for mental health and substance use treatment, such as psychotherapy, counseling, medications, outpatient services, and inpatient treatment, it’s important to know that coverage can vary depending on the specific plan and insurance company.

Continue reading to learn more about mental health services and what to expect your health insurance to cover.

Does Health Insurance Cover Therapy and Mental Health Services? Understanding Your Coverage

All marketplace plans cover mental health and substance abuse services as essential health benefits (Learn more: “Is Alcoholism a Mental Illness or Chronic Disease?”). By law, all plan coverage must include:

• Behavioral health treatments, such as psychotherapy and counseling

• Inpatient services for mental and behavioral health conditions

• Treatments for substance use disorders (commonly known as substance abuse treatment or alcohol and drug rehab)

• Coverage for pre-existing conditions

• No yearly or lifetime caps on mental health coverage

• Parity protection such that copays, coinsurance, and deductibles for mental health services must be at par with medical and surgical benefits

Your specific behavioral health benefits will depend on your state and the health plan you choose. You’ll see a full list of what each plan covers, including behavioral health benefits, when you compare plans in the Marketplace.

Legality and Insurance: The Mental Health Parity Act

In 2008, federal lawmakers passed the Mental Health Parity and Addiction Equity Act (MHPAEA). This act basically says if health plans do offer mental health and substance use coverage, the benefits must be comparable to medical coverage. For example, if you have a $60 copay to see a specialist such as a dermatologist, your copay for therapy must cost the same or better. The Mental Health Parity Act applies to: 

• Employer-sponsored health insurance coverage for companies with 50 or more employees (Read: “How to Get Health Insurance Without a Job”)

• Individual health plans purchased through the health insurance marketplace under the Affordable Care Act

• The Children’s Health Insurance Program (CHIP)

The Medical Health Parity Act does not, however, apply to employer-sponsored plans for 50 employees or fewer, some state plans (like those that cover teachers), and Medicare; however, Medicare does offer mental health services^[2]. 

Out-of-Pocket Costs for Mental Health Services

To learn your out-of-pocket costs, obtain information from your health insurance company regarding copays, coinsurance, and deductibles. Share this information with your mental health professional’s office. They will help you understand how much their services will cost you out-of-pocket. 

If you are still unclear on what mental health coverage is available to you, call the number on the back of your insurance card to speak with a representative.

Coverage for Mental Health Services Under Different Types of Health Insurance Plans

Employer-Sponsored Health Insurance Plans

Companies with 50 or more full-time employees are legally required to cover their employees with health insurance that includes mental health services. Smaller companies with 50 or fewer employees are not legally required to provide health coverage. If they do, the Mental Health Parity and Addiction Equity Act (MHPAEA) does not apply. However, many small business owners may choose a plan with this coverage included^[1].

In addition, many businesses add optional benefits such as a Flex-Spending Account (FSA), Health Savings Account (HSA), or an Employee Assistance Program (EAP). These accounts can help reduce costs by using funds that are put aside before taxes. These programs support employees in accessing health care at a discount. 

Affordable Care Act Health Insurance Marketplace

As of 2014, under the Affordable Care Act (ACA), all plans purchased through the Health Insurance Marketplace must cover 10 essential health benefits. These include mental health services and substance use disorder services, such as alcohol and drug rehabilitation. The ACA also ended annual and lifetime benefit caps. For individual and small-group markets, the ACA eliminated medical underwriting. This is the process of evaluating a health insurance applicant’s medical history. Plans can no longer deny coverage or impose cost barriers because of preexisting mental health conditions^[6].

Medicaid

All state Medicaid programs provide some mental health services. These services often include counseling, therapy, medication management, social work services, peer support, and substance use disorder treatment. The state decides which mental health benefits to offer under Medicaid^[3].

Children’s Health Insurance Program

The Children’s Health Insurance Program (CHIP) plays a vital role in financing behavioral health services for low-income children^[4]. This program requires that children enrolled in Medicaid receive a wide range of medically necessary services, including mental health benefits. CHIP is administered by states according to federal requirements. It is funded jointly by states and the federal government^[5].

Medicare

Generally, people aged 65 or older, younger people with disabilities, and those who have kidney failure requiring dialysis or transplant, known as End Stage Renal Disease, are eligible for Medicare. Medicare premiums are based on your modified adjusted gross income or MAGI. That's the total adjusted gross income plus tax-exempt interest. Regarding coverage for mental health, here’s the breakdown of what each plan covers according to MentalHealth.gov:

Medicare Part A (Hospital Insurance) covers inpatient mental health services you would receive in a hospital, such as the room, meals, nursing care, and other related services and supplies. There is no additional premium for this health coverage.

Medicare Part B (Medical Insurance) helps cover mental health services that you would generally get outside of a hospital. Examples include visits with a psychiatrist, clinical psychologist, or clinical social worker and lab tests ordered by your doctor. Unlike Part A, everyone must pay for Medicare Part B if they want it. This monthly premium is deducted from your Social Security, Railroad Retirement, or Civil Service Retirement check. If you do not get any of these payments, Medicare sends a bill for your Part B premium every 3 months.

Medicare Part D (Prescription Drug Coverage) helps cover medications used to treat mental health conditions. Each Part D plan has its own list of covered drugs, known as a formulary. Learn more about which plans cover various drugs. Like Part B, the Medicare Part D premium is an additional cost determined by income. Even for low-income Medicare beneficiaries, there are no Medicare Part D plans that are totally free. But there may be no (or a low) monthly premium, no deductible, no coverage gap, and very low drug costs in this case.

If you get your Medicare benefits through a Medicare Advantage Plan (such as an HMO or PPO) or other Medicare health plan, check your plan’s membership materials. You can also call the plan for details about mental health benefits. If you get your Medicare benefits through traditional Medicare and want more information, view the pdf Medicare and Your Mental Health Benefits. To see if a particular test, item, or service is covered, visit the Medicare Coverage Database. 

Types of Mental Health Services Covered by Insurance

Outpatient vs Inpatient Services

Outpatient mental health services are offered while you continue staying in your own home. You go to a facility to attend therapy sessions and appointments. 

Covered outpatient mental health services may include: 

• Depression screening or psychiatric evaluation

• Individual or group psychotherapy sessions

• Family counseling

• Diagnostic tests

• Testing to find out if the current treatment is beneficial

• Medication management

Inpatient mental health services are offered at a hospital or residential facility. Healthcare professionals monitor you around the clock.

Covered inpatient mental health services may include: 

• Medical detoxification during substance abuse treatment

• Overdose treatment

• Emergency psychiatric care or crisis intervention

Therapy and Counseling 

Health insurance plans provide coverage for therapy in different settings, such as individual, group, and family counseling. 

Just like medical health benefits, it’s best to choose in-network providers to keep costs low. Out-of-network mental health professionals may be too costly to sustain ongoing, long-term treatment. 

Medication and Prescription Coverage

When you sign up for a health insurance plan, the insurance company will give you a benefits summary. This tells you exactly what the plan covers. Look under prescription drug benefits to find out coverage and copay for mental health medications. Commonly prescribed medications for mental health conditions include antidepressants, anti-anxiety medications, mood stabilizers, stimulants, and antipsychotic drugs.

If you take a brand name medication, check your plan’s formulary (list of covered drugs) to see if it is listed. Some plans cover generics and limit how much they will pay for brand name medications.

Medicaid and Medicare Part D include prescription drug coverage. Also, if you have prescription benefits under a Medicare Advantage Plan, check your plan benefits to see if your mental health medications are covered.

Understanding Your Health Insurance Plan

HMOs, POSs, EPOs and PPOs: What's the Difference?

Health Maintenance Organization (HMO) 

• Affordable health insurance with low premiums and deductibles.

• Requires coinsurance and fixed copays for doctor visits.

• You must use the chosen primary care physician and specialists who are in the HMO network.

• Good choice for people who don’t have many health issues.

Point of Service (POS)

• Slightly higher premiums than an HMO, but still an affordable plan.

• Allows out-of-network coverage at an additional cost.

• Requires a referral from your primary care physician to see a specialist. 

• Good choice for people who have one or more conditions where their preferred doctors are not in-network.

Exclusive Provider Organization (EPO)

• Premiums are higher than HMOs, but lower than PPOs. 

• Covers only in-network care but has a larger network than an HMO.

• A referral from a primary care physician may or may not be required. 

Preferred Provider Organization (PPO)

• Higher premiums than an HMO or POS.

• This plan offers the maximum freedom to see out-of-network doctors and specialists without a referral. 

• The copays and coinsurance for in-network doctors are lower. 

Deductibles, Copays, Coinsurance, and Out-of-Pocket Maximums

Your out-of-pocket costs for mental health services depend on various factors. Here is a quick overview of commonly used health insurance terms.

Premium: This is the cost of having health insurance. It is the amount of money deducted from your paycheck every month towards your health insurance plan. 

Coinsurance: This is a cost-sharing agreement between you and the insurance company. It is usually expressed as a percentage. For example, a coinsurance of 20% means you'll pay 20%, and the insurance company will pay 80% of covered medical expenses after you meet the deductible and until you reach the out-of-pocket limit for the benefit period (typically one year). Once you reach the out-of-pocket limit, your insurance will pay 100% of covered services for the remainder of the benefit period. 

Copayment: A copayment or copay is a predetermined amount that you pay for health care services at the time of care. For example, a $50 copay for specialist visits means you will pay $50 out of pocket every time you see a psychiatrist. 

Deductible: This is the amount you pay out of pocket for health care services before your insurance plan starts contributing. For example, if your deductible is $1,000, you'll pay in full for the first $1,000 of health care services. Once you hit $1,000, the cost-sharing benefits will begin. At the end of the benefit period, the deductible resets to zero. As a result, health care costs are higher in the early part of a calendar year until you hit the deductible. 

Out-of-Pocket Limit: This is the maximum amount you pay for covered services before insurance pays 100% for covered services. The out-of-pocket limit includes your coinsurance and deductible. For example, if your out-of-pocket limit is $3,000, once the total of your coinsurance and deductible reaches $3,000, your health insurance company will cover 100% of the cost of all covered health care services. The out-of-pocket max also works on an annual basis and resets to zero at the start of a new policy year. This feature of your health insurance plan protects you from a worst-case scenario, such as an accident or injury requiring extensive medical care. 

Pre-Authorization Requirements

Pre-authorization, pre-approval, or pre-certification means you or your healthcare provider must contact your insurance company and obtain their approval for a specific service, treatment, prescription drug, or medical equipment prior to receiving it. Rules for pre-authorization vary between insurance companies. In general, more expensive services require pre-approval.

Mental health prior authorization may be required for certain prescription drugs. Similarly, higher levels of care, such as intensive outpatient, inpatient treatment, and detox programs, may require pre-certification.

How to Determine What Your Insurance Covers

Read Your Insurance Policy

The key section regarding mental health coverage is the “description of plan benefits”. This section includes information on coverage for mental health and substance use disorders.

Contact Your Insurance Provider

If you have private insurance and are not sure of mental health services coverage, ask your insurance company directly. One of the benefits of employer-sponsored health plans is that there is usually a human resources representative available. This person can help you better understand your medical and mental health benefits. 

Questions to Ask About Coverage for Therapy and Mental Health Services

• Is [your mental health professional’s name] in-network with my health insurance plan?

• Do I need a referral from an in-network provider or a primary care physician to see a mental health professional who is out-of-network?

• What is my copayment for in-network and out-of-network outpatient mental health visits?

• What is my coinsurance for in-network and out-of-network outpatient mental health visits?

• What is my deductible for mental health services?

• How much of my deductible has been met this year?

• Are virtual mental health visits (telemedicine) covered by my plan?

Utilize Online Portals and Apps for Insurance Information

Most health insurance providers have online portals that make it easy to access all of your information in one place. The first step may be creating an account. The good news is that because of the Affordable Care Act, health insurers are required to provide an easy-to-understand summary of health coverage benefits, including mental health services. 

In the portal, you will likely see copay or coinsurance information for various mental and behavioral health services. This is your out-of-pocket cost. You may also have a deductible that must be met before the plan starts paying mental health benefits. The deductible could be anywhere from $500 to more than $5,000, depending on the specific health insurance plan.

Challenges of Denied Claims

Common Reasons for Denied Mental Health Claims

• Lack of understanding of your health insurance policy.

• Incomplete or inaccurate documentation.

• Choosing an out-of-network provider.

• Failure to get pre-authorization.

• Missed deadline for claims submission.

Appealing a Denied Insurance Claim

The following are the steps for filing an appeal with your insurance company:

• Review the Explanation of Benefits (EOB)

• Understand the reason for the denied claim

• Gather supporting documentation

• File an appeal

• Request an external review

Additional Assistance and Resources

If your insurance claims for mental health services are denied again and again, you should consider seeking guidance from a third party, patient advocacy group, or qualified legal professional. These individuals have specialized knowledge in navigating the complexities of health insurance claims. Their expertise can help you obtain rightful coverage, especially in complicated or challenging cases.

Conclusion and Next Steps

The Importance of Understanding Your Coverage

Most insurance plans cover mental health services, although specific coverage can vary. Remember to check your plan’s membership materials or call your insurance company for details about your specific mental health benefits. 

Take Action for Mental Health Care Needs

You should never avoid seeking mental health services because you think you can’t afford them—there are always options. In addition to insurance coverage, there are more resources available than ever to help you work on your mental health. 

Popular mental health service apps are on the rise, offering talk therapy, meditation, and telehealth. You may be surprised to learn that there are a number of mental health services available inexpensively or even for free. This is true for a formal diagnosis such as depression and anxiety or if you just need someone to talk to. 

The last thing you should do is put off seeking mental health treatment because you assume that it would not be affordable.

Mental Health Coverage is Continuously Evolving

Insurance coverage for mental health services has improved greatly in the past decade. It is something everyone should consider taking advantage of. Check and compare the various plans available in the Marketplace every time your health insurance is up for renewal. Choose a plan that covers mental health and substance use treatments.

FAQ

Will my insurance cover all types of mental health professionals?

Your insurance will cover licensed mental health professionals who are in-network for your plan. If you get care from an out-of-network provider, it may not be covered, or it may cost more out-of-pocket because of a higher copay or coinsurance for out-of-network providers.

How do I know if a specific therapy type is covered?

Insurance usually only covers “medically necessary” services. Therefore, your insurance company may require a mental health diagnosis before paying claims. If you have a mental health diagnosis, health insurance plans typically cover therapist visits, including individual, group, and family counseling. 

The level of coverage will depend on your specific plan. In addition, certain services may require pre-authorization, for example, in-patient treatment for a substance use disorder.

Can insurance cover online or virtual therapy sessions?

Check with your insurance provider to see if your plan covers online or virtual therapy sessions. There may be different requirements or conditions, such as a limit on the number of sessions covered per month. Also, keep in mind that even if your plan will cover mental health services provided virtually, not every online therapy service will accept your insurance provider or plan. 

How much does mental health treatment cost in the US?

The typical cost of a therapy session is $100 to $200 in the U.S. without insurance. The cost of therapy can be significantly reduced with insurance coverage. Commonly prescribed medications can cost between a few dollars to several hundred dollars per month, depending on prescription drug coverage under your insurance plan. Newer medications, such as long-acting injectable antipsychotics, can cost thousands of dollars without insurance.

Is mental health care free in the US?

988 is the three-digit dialing code for the 988 Suicide & Crisis Lifeline (or 988 Lifeline). 988 Lifeline is a free and confidential helpline for people in distress. You can call, text, or chat with them online. They provide immediate support in a crisis and can refer you to mental health services nearby.

Notably, 988 Lifeline was previously known as the National Suicide Prevention Line and could be reached at a 10-digit number (1-800-273-8255). This 10-digit number was transitioned to the three-digit 988 on July 16, 2022. However, the 10-digit number will remain available. 

In addition, Community Mental Health Centers offer free or low-cost services on a sliding scale basis. This includes emergency services, therapy sessions, and psychiatric care. You may have to go through an intake interview to determine the severity of your mental health condition and the type of care you need. 

Why is mental health therapy so expensive?

Mental health therapy is expensive because:

• Mental health professionals must undergo years of education and training before they are licensed to practice.

• Operational costs for therapists are high.

• One-on-one therapy sessions provide hands-on, dedicated care and are time-consuming. The cost per therapy session reflects this.

Check out: I Can’t Afford My Medication Even With Insurance - 7 Options to Know