Cost is a factor in any major purchase. Most of us pay dearly for our medical insurance benefits. Therefore, many of us assume that we should pick a counselor from a provider list or call the insurance company for a counselor near our zip code. Not so fast. It may be in your best interest to slow down a bit, read up on the subject, and consider all the pros and cons of using insurance for counseling. This article should help start you on that journey.


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, as well. You owe it to yourself to consider why some of us avoid managed care.


Ivan J. Miller, a provider in Colorado, recently responded to some of the issues of concern. Though written mostly for providers, you may want to read his article: In my opinion, he does well to lay out the problem of the current disparity between mental and physical health insurance in this country. Though you may or may not agree with his solution of a “single unified, transparent health care system” he does a good job of arguing for mental health parity. This means that mental health benefits should be treated on par with physical health benefits. Until such a time, I believe we need to understand the difference and be informed consumers and providers. I believe we providers have an ethical obligation to do just that.


Whenever there is third party involvement, confidentiality is out of the control of the therapist. Information about the content and progress of treatment is required on every claim. The insurance company does not spell out how they will communicate that information or protect you. Once information enters the company computers, others have access to your personal information.


You almost always have a deductible. This is the amount you are expected to pay out-of-pocket before your insurance covers anything. Know what it is. You might be able to see a therapist for several visits without touching your insurance if the deductible is high.


Your health insurance may not include mental health benefits. If you have coverage, you may have an entirely different policy for mental health or a different insurance provider altogether than you do for your physical health benefits. To get accurate information, get the right company for your questions about counseling.


Every insurance claim must include a diagnostic code. That is like saying everyone who sees their general practitioner must be diagnosed with a cold, at least, when they may or may not have one.


Therapists use the Diagnostic Statistic Manual for diagnosing. Though the DSM provides guidelines for diagnosis, coding by the practitioner is somewhat subjective. I collaborate with my client when giving a diagnostic code, but not all providers discuss the diagnosis with their clients. Since you generally don’t see the complete filing of your claim, you might want to ask about the diagnosis before it becomes part of your permanent record.


The therapist on the insurance panels is most often a generalist. The individual may or may not have expertise in the area of counseling that you need.They may see children one hour and a couple the next. Sometimes a GP is entirely appropriate and sometimes it helps to see a specialist. I think you should decide who you need to see, not an insurance company.


Insurance companies often limit the number of sessions they will cover. This may be before you are ready to end therapy. Some folks would feel like there is something wrong with them or their therapist if an issue is not resolved within a certain number of sessions. People are different and they can decide when they are ready to leave therapy or work on another area of concern.

A diagnosis could be less or more severe when managed care is involved than if the client self-paid. Clinicians generally know which diagnostic codes insurance covers and which are more questionable. Though all clinicians use the DSM-IV for diagnosis, the use of a specific code is still somewhat subjective.


As Andy Pomerantz, a colleague in Psychotherapy St. Louis, writes,“I have been particularly interested in the way that payment method (insurance/managed care vs. out-of-pocket) influences the client, and in my academic position at SIUE I have had the chance to run several empirical studies on this question. Specifically, my colleagues and I have surveyed psychologists in private practice and asked them to respond to  vignettes describing clients whose symptoms either put them on the border of
“diagnosability” (they’re very close to the minimum DSM criteria) or who fall well below the line (they’re nowhere near the minimum DSM criteria). In each study, we provided half of the participants with vignettes that said that the client was paying out of pocket; in the other half, the client was paying via insurance/managed care. Otherwise, the vignettes were identical.They covered a range of common presenting problems such as those related to depression, generalized anxiety, ADHD, and social phobia. Our main question was whether the method of payment would influence whether the psychologist
would diagnose the client with a DSM disorder at all; secondarily, we were interested in what particular diagnosis they would assign. In every study,payment method made a huge difference. In some cases, clients paying via insurance/managed care were almost twice as likely to receive a DSM diagnosis than identical clients paying out of pocket (!). Adjustment disorder diagnoses in particular were far more likely when a client paid via insurance/managed care than out of pocket.

If you want more info, here are links to the abstracts of each of these

Most insurance policies do not cover couples counseling. Though I am a professional mental health provider, I specialize in relationship counseling. Couples counseling is considered a V-Code which are generally excluded from the list of covered services. Most of us know that poor relationships contribute to anxiety or depression, but it still is excluded from most policies.


A therapist on an insurance panel is working for both client and the insurance company. This is a potential conflict of interest. If a therapist gets referrals from the company, he/she needs to remain in good standing and work within the parameters of managed care. Occasionally, even out-of-network providers have been asked specific questions about their treatment of their client by insurance companies. Of course, the therapist need not respond and should discuss the matter with their client. I believe it is important you can make the decision as to whether or not your are receiving an effective course of treatment.


It is difficult for therapists to run a quality practice based on the low reimbursement that insurance companies usually set for counselors. Instead of spending my time and energy on the extensive reporting required to file insurance claims, I’d rather be caring for you directly or learning something new.


Hopefully, you now have some things to consider when thinking about insurance.  I trust you can better understand some of the reasons why I’m not on panels. Please call your insurance company so you know the provisions and limitations of your particular policy. If you have any other questions of me personally, I would be glad to discuss it with you further,