Pros & Cons: Private Pay or Health Insurance?

Dr Laura

Hi, I’m Dr. Laura. You’ve decided to attend therapy to address your concerns but now have a new decision: do I use health insurance or pay “out of pocket” (or private pay)? This blog is dedicated to walking you through common pros and cons to guide you in making the best decision for your needs and circumstances.

Now, let’s take a look at the pros/cons of in-network (e.g. therapy processed and covered by your insurance) and out-of-network services (e.g. commonly referred to as “private pay.”)

Private Pay: Pros & Cons

(1) Confidentiality is a large draw when electing to use private pay for therapy. When using private pay for therapy services, a diagnosis is not required. Also, information on attendance, diagnostic code, and other private information is not on your medical record as it is when using health insurance.

(2) An appealing benefit of private pay when seeking mental health services is the flexibility of choice when choosing a provider that specializes in your concerns and treatment goals. Finding a therapist that is geographically convenient and is a good fit are popular reasons why you may wish to choose private pay.

(3) Additionally, private pay clients also have the freedom to attend as many sessions as they would like. This flexibility also allows you to address multiple treatment goals and establish a long-term working relationship with your ideal therapist.

(4) However, despite these benefits, private pay may not be a viable financial option for some long-term, and using insurance or seeking a community mental health provider aligns more with their financial status.

Insurance: Pros & Cons

1) Using insurance can decrease your cost per session, depending on several factors, including your deductible, copay, and your insurance’s coverage of mental health services (the number of sessions, and which providers are in-network), making in-network therapy cost-effective. It is important to contact your insurance provider first and ask about cost, session limits, and other requirements.

However, when using insurance, there can be session limits per calendar year. This may limit the frequency and duration of treatment. As a result, you may not address all of your concerns but have to prioritize those which you can cover in the limited number of sessions.

(2) Obtaining a referral from your insurance company can initially streamline the search process of finding a therapist in your area.

However, using insurance can also limit your candidate pool of therapists, decreasing your likelihood of finding a good fit. If you are in a rural area, this may limit your access to a therapist that is trained in addressing your specific concerns or finding one that you truly connect with.

(3) A common drawback to using insurance for mental health services is they often only cover “medically necessary treatment” and thus require a diagnosis that becomes part of your medical record. As a result, your diagnosis becomes a pre-existing condition.

Choosing to use insurance or private pay is a personal choice and is decided due to a number of personal and financial factors.

Click below for further reading and resources when making this important decision in your journey to improved mental health: