Health Insurance and Mental Health

Navigating mental health care can be challenging, especially when considering the associated costs. While seeking therapy is a standard recommendation for those facing mental health issues, the expenses can be significant, particularly when treatment involves medication, hospitalization, or rehabilitation. Fortunately, many health insurance plans in the United States cover mental health services, including therapy. However, the extent of coverage can vary based on the specific plan, and individuals may encounter out-of-pocket costs such as deductibles, copayments, or coinsurance. Understanding the nuances of your insurance plan is crucial to accessing the mental health care you need without unexpected financial burdens.

Does Insurance Cover Therapy?

Most health insurance plans in the United States offer some mental health coverage, but the extent of that coverage can vary significantly. The Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008 mandates that if a health plan includes mental health or substance use disorder benefits, these must be provided on par with medical and surgical benefits ^[1]. This means that financial requirements (like copayments and deductibles) and treatment limitations (such as visit limits) for mental health services cannot be more restrictive than those for medical services. 

Under the Affordable Care Act (ACA), mental health and substance use disorder services are considered essential health benefits. As a result, all non-grandfathered individual and small group health plans are required to cover these services. Covered services may include:

• Psychotherapy
• Emergency mental health services
• Addiction treatment
• Telehealth sessions
• Inpatient care at hospitals or rehabilitation centers

However, it’s important to note that MHPAEA does not require all health plans to offer mental health benefits. The law applies only to plans that already include mental health coverage. Therefore, if a plan does not cover mental health or substance use disorder services, MHPAEA’s parity requirements do not apply. 

This poses a serious challenge to those who require help for mental health issues. For context, about 44 million adults struggle with mental health issues, and about 60% of those don’t get the help they need from professionals ^[2]. This is primarily due to a lack of insurance coverage.

Accessing mental health care can also be challenging due to provider participation in insurance networks. Studies indicate that 25% and 45% of psychiatrists do not accept insurance, often citing low reimbursement rates and administrative burdens ^[3]. This lack of participation can limit the availability of in-network mental health providers, leading to higher out-of-pocket costs for patients.

Despite these challenges, having health insurance significantly increases the likelihood of receiving mental health treatment. For instance, individuals with Medicaid coverage are two to three times more likely to receive treatment for mental illness compared to those without insurance ^[4]. Understanding your insurance plan’s mental health benefits and seeking providers who accept your insurance can help mitigate costs and improve access to necessary care. 

Understanding Mental Health Coverage

Mental health coverage depends on several factors, including an individual’s insurance plan, location, and age. The table below provides a general overview of what mental health services typically cover, based on the kind of insurance.  

Mental Health Coverage by Insurance Type

Type of Insurance	Mental Health Services Covered	Key Considerations
Medicare	Includes therapy, depression screenings, and psychiatric hospital care for eligible individuals.	Out-of-pocket costs such as copayments and deductibles apply; annual limits on therapy sessions may be in place.
Marketplace Plans	All plans must include therapy and substance use treatment services.	Plans must adhere to federal parity laws; however, high deductibles can limit access until thresholds are met.
CHIP (Children’s Health Insurance Program)	Provides therapy, counseling, and medication support for children from low-income families.	Coverage varies slightly by state, but federal law ensures equal protections for mental health services.

The types of therapy and mental health services covered by insurance vary depending on the specific plan. Here’s a breakdown of what is typically included.

Individual Therapy

Most insurance plans cover individual therapy, such as cognitive behavioral therapy (CBT), psychodynamic therapy, or other evidence-based approaches when medically necessary. This generally requires a formal diagnosis from a licensed mental health professional. Some plans may also require preauthorization or a referral, depending on whether the plan is an HMO, PPO, or another type. 

Group Therapy

Group therapy is often covered if it is led by a licensed clinician and considered medically necessary. Insurance providers may limit the number of sessions per year, and group size is often capped between 2 and 12 participants. 

Family Counseling

Family therapy may be covered if one member of the family has a diagnosed mental health condition and the sessions are part of their treatment plan. Coverage varies by plan, and some insurers may limit the number of sessions or require preauthorization. 

Psychiatric Emergency Services

Emergency mental health services, such as evaluation and stabilization during a crisis, are typically covered under most insurance plans. Coverage includes emergency room visits, inpatient psychiatric care, and crisis intervention services. However, out-of-pocket costs like copayments and deductibles may apply, and coverage specifics can vary between plans.

It’s essential to review the specific insurance policy or contact the insurance provider to understand the exact coverage details, including any limitations, requirements for preauthorization, and potential out-of-pocket costs.

Emergency Room and Inpatient Mental Health Costs

Emergency room (ER) visits for psychiatric care often carry high out-of-pocket costs. Most insurance plans require a co-pay for ER services, and patients are typically responsible for about 20% of any diagnostic or lab work performed—though exact coverage varies by plan.

Inpatient psychiatric hospitalization can be exceptionally costly. Many insurance providers only begin covering expenses after the patient has met their deductible. Even then, individuals may still be responsible for approximately 20% of the bill until they reach their annual out-of-pocket maximum. Daily hospital costs for psychiatric care can average around $1,000.

Variations in Insurance Plans

Coverage for mental health services, including hospital stays, therapy, and emergency care, differs widely between insurance plans. Some offer lower co-pays and more comprehensive coverage, while others impose strict limits or higher deductibles. Reviewing your plan details or contacting your insurer to clarify your specific benefits is essential.

Coverage for Substance Use Disorder Treatment

Substance use disorders are classified as medical conditions and are generally eligible for coverage under most insurance plans. Treatment may include therapy, detox programs, medication-assisted treatment, and inpatient rehabilitation. However, costs and coverage levels vary, and it’s essential to verify what services are included before selecting a rehab facility.

Government-funded rehab programs are typically free but often have long waitlists and fewer amenities. Private rehab centers offer more immediate care but can be costly, ranging up to $30,000 for a 30-day stay, especially when not fully covered by insurance. Careful planning and comparison of treatment options are crucial to managing recovery and costs.

Inpatient Mental Health Treatment

Most insurance plans offer coverage for inpatient psychiatric care, which typically includes 24/7 supervision, therapy, and medication management for serious mental health conditions such as severe depression, bipolar disorder, or psychosis. However, this coverage often comes with limits, such as a set number of inpatient days per year. It may require pre-authorization, referrals, or multiple co-pays and additional costs.

Government-funded inpatient programs, such as those offered through state mental hospitals, are usually free but often face significant limitations, including long waitlists, underfunded facilities, and reduced access to specialized care.

On the other hand, private inpatient mental health treatment may be covered in part by insurance or require full out-of-pocket payment. These private facilities typically provide more personalized care and better accommodations, but can be prohibitively expensive without adequate coverage. As with any healthcare decision, evaluating all options and understanding the financial obligations is essential.

Medication for Mental Health

Coverage for mental health prescriptions varies depending on the type of insurance a person holds:

• Affordable Care Act (ACA) Marketplace Plans: Under federal law, all ACA Marketplace insurance plans must cover mental health medications as part of their essential health benefits. These plans must also adhere to parity laws, meaning mental health treatment, including medications, cannot be subject to higher costs or more restrictive rules than physical health care.
  
• Medicare and Medicaid: Both programs offer coverage for mental health medications; however, specific drug options, costs, and coverage limits can vary. Medicaid benefits differ by state, while Medicare coverage depends on the selected plan and its formulary.
  
• Employer-Sponsored Plans: Most employer-provided insurance plans include coverage for mental health medications, but coverage may be limited to specific drugs. Individuals must review their plan’s formulary (the list of covered medications) to understand what is included and whether prior authorization is required.

How to Check If Insurance Covers Therapy

Individuals need to contact their insurance provider to clarify what is included in their plan, including out-of-pocket costs and whether therapy or mental health treatment is covered. The following steps can help determine the extent of coverage:

• Call the customer service number listed on the back of the insurance card. Representatives can provide detailed information about mental health coverage, including co-pays, deductibles, and any additional fees.
• Log in to the insurer’s online portal, which typically offers a searchable directory of in-network therapists, saving time when finding care providers.
• Review the insurance policy documents carefully, particularly those detailing outpatient and inpatient coverage and medication benefits.
  

It’s also essential to understand parity laws, which require that mental health benefits be comparable to physical health benefits. For example, if a plan covers 30 physical therapy visits per year, it should offer a similar number of sessions for mental health therapy. This parity should extend to co-pays, deductibles, and prior authorization requirements.

If a plan does not meet parity standards, the individual should contact their HR department first. They can also file a complaint with the U.S. Department of Labor.

Finding a Therapist Who Accepts Your Insurance

Once insurance coverage details are confirmed, individuals can begin the process of finding a therapist who accepts their plan by following these steps:

• Use the insurance provider’s online portal to search for in-network therapists:  These directories often allow filtering by location, specialty, and availability. However, contacting the therapist directly is essential, as directories may not always be current.
• Consult the employer’s Human Resources (HR) department if the insurance is provided through work:  HR can help guide employees toward covered providers and may offer additional support.
• Ask about Employee Assistance Programs (EAPs): Many companies provide access to limited free therapy sessions through EAPs before insurance coverage is required.
• Explore reputable national databases: The Psychologist Locator on the American Psychological Association (APA) website or the National Register of Health Service Psychologists allows users to search by specialty, location, and credentials.
• Use resources like the Mental Health Network: This network helps individuals find therapists tailored to their specific needs, with filters for location, modality, and identity-based preferences.

When selecting a therapist, clarifying out-of-pocket expenses is essential, particularly when considering out-of-network providers. Individuals should also verify any limitations on the number of sessions, co-payments, and additional costs. As of 2022, protections under the No Surprises Act also apply, helping to shield patients from unexpected bills when receiving care from out-of-network providers.

Understanding Surprise Medical Bills and the No Surprises Act

The No Surprises Act was created to protect patients from these unexpected costs and help make healthcare more affordable ^[5].

What Is Surprise Billing?

Surprise billing occurs when a patient receives medical care from a provider or facility not part of their insurance network, often without realizing it. Previously, if the insurance plan did not cover the full service cost, the patient could be billed for the remaining balance, a practice known as balance billing.

For instance, if an out-of-network provider charged $1,000 for a procedure and the insurance covered only $250, the patient would have been responsible for the remaining $750 and any applicable co-pays or deductibles.

However, under the No Surprises Act, out-of-network providers are now legally required to provide a “No Surprises Statement” to patients. This document outlines the expected treatment costs in advance, helping protect patients from unexpected bills and offering greater transparency in healthcare pricing.

Alternatives to Insurance Coverage for Therapy

While insurance policies that include mental health benefits are legally required to provide coverage on par with physical health services, not all plans include mental health care, and some individuals may not have insurance. In such cases, traditional therapy can range from $65 to $250 per session, making it financially out of reach for many. Fortunately, several alternative options are available:

• Sliding scale therapists: Many licensed therapists offer sliding scale rates based on a client’s income and financial situation. Individuals can inquire directly with therapists about this option or explore resources like the National Association of Free & Charitable Clinics (NAFCC), which connects people with more affordable care.
  
• Community resources: Local community centers, non-profit organizations, and outreach programs often provide free or low-cost mental health services. Grants or donations may fund these programs and typically offer care on a sliding scale.
  
• University clinics and student therapists: Universities with graduate programs in psychology, counseling, or social work often operate training clinics where student interns provide therapy under the supervision of licensed professionals. These services are frequently offered to the public at reduced rates or even free.

• Online therapy platform: These online resources offer lower rates than in-person therapy. The find a therapist Option on Mentahealth.com is also great for finding an affordable mental health professional. 

Exploring these options can make mental health support more accessible, even for those without traditional insurance coverage.

Navigating a Path Forward

Accessing mental health services through insurance remains a complex and often frustrating process. Although legislation such as the Mental Health Parity and Addiction Equity Act (MHPAEA) requires insurers to provide the same level of coverage for mental health conditions as for physical health issues, these protections don’t always translate into easily accessible or affordable care. Many individuals still face obstacles such as limited provider networks, confusing policy language, or unexpected out-of-pocket costs. That’s why it’s essential to thoroughly review your insurance benefits, ask questions, and understand your rights under federal law.

Despite these ongoing challenges, having insurance significantly increases the likelihood of receiving mental health care. Those with coverage are more likely to access therapy, medication, and other essential services than those without. In a time when mental health care is more critical than ever, securing insurance or exploring alternative, affordable options can be a key step toward receiving the support needed for long-term well-being.