Understanding health insurance benefits and mental health care

Health insurance benefits can be confusing sometimes, making it difficult for you to know exactly what you will end up paying for your mental health care if you choose to use your health insurance. Here’s a few things you need to know if you plan to use your health insurance to pay for therapy.

Mental Health Parity: Health insurance companies must provide equal medical and mental health benefits under the The Mental Health Parity Act of 1996 (MHPA). This act requires that large group health plans cannot impose annual or lifetime dollar limits on mental health benefits that are less favorable than any such limits imposed on medical/surgical benefits. There are some exceptions to this, notated here: https://www.cms.gov/CCIIO/Programs-and-Initiatives/Other-Insurance-Protections/mhpaea_factsheet#Fact_Sheets_and_FAQs

In-Network (INN) or Out-of-Network (OON): Every insurance company has a process by which therapists apply to become “empaneled”, meaning that they accept the health plan’s pre-determined payment rates and the members of that insurance plan will be able to use their health care plan benefits to pay for therapy from that therapist. Therapists choose which insurance companies to “go In-Network with”, apply for the panel, and then insurance companies either accept, or reject, the therapist’s application. Some therapists choose to remain Out-of-Network for most or all insurance plans. Some therapists are INN with some insurance plans, and OON with others.

  • In-Network therapists are required to accept the terms of your health plan per their contract with your insurance company. Your insurance company determines the rates that they will pay a therapist, and the therapist takes that rate, regardless of whether their actual rates are higher than the insurance has in their contract. INN therapists may not engage in what is called “Balance Billing”. INN therapists have access to information about your deductible, copayment or coinsurance, and limitations of your plan are, and they will charge you accordingly.
  • Out-of-Network therapists are not required to accept the terms of your health plan. They set their own rates, and will charge you accordingly. Some OON therapists are willing to provide what is called a “Superbill”. When you ask for and receive a superbill, you pay the therapist out of pocket for the full amount, and then you submit your superbill to your insurance plan and apply for reimbursement. You may or may not have “Out of Network Benefits” and you should contact your health insurance plan before you plan to pay for therapy in this way to confirm this, otherwise, you may be fully financially responsible for the charges with no chance of reimbursement.

Understanding Cost-Sharing: Cost-sharing is the amount you will pay out of pocket for your medical and mental health care, as defined by your health care plan. There are several types of cost-sharing, including:

  • Deductible: This is the fixed dollar amount you pay for covered health care services before your insurance plan starts to pay. With a $2,000 deductible, for example, you will pay your therapist (or other provider) $2,000 directly before your insurance company begins to pay your therapist. You don’t pay your therapist $2,000 in one large lump sum; instead, you pay their full rate out of pocket until the total reaches $2,000. Some health insurance plans include separate deductibles for medical and mental health services.
  • Copayment: This is the fixed dollar amount you pay for a single covered health care service after your deductible has been met. With a $2,000 deductible and a $20 copayment, for example, after you pay down the deductible, you pay your therapist $20 per week directly, and your insurance plan pays your therapist the rest of their contracted rate.
  • Coinsurance: This is the fixed percentage that you pay of a single covered health care service after your deductible has been met. With a $2,000 deductible and a 10% coinsurance rate, for example, after you pay down the deductible, you pay your therapist 10% of the rate they’re contracted to receive through your health insurance plan. If, for example, you attend a 55 minute therapy session (coded as 90837), and your insurance contracts with your therapist to pay them $125 for that session, then you would pay your therapist $12.50 for each session.
  • Out of Pocket-Maximum: This is the maximum amount of money you should pay in a benefit year through your insurance plan. With a $4000 out-of-pocket maximum, and a $2000 deductible, and $20 copayments, once you’ve paid your therapist a total of $4000 after deductible and copayments, your insurance company will begin paying your therapist their full contracted rate, and you will not need to pay any more directly in that benefit year.
  • Explanation of Benefits: This is a document your insurance company will send to you to explain exactly what you owe your therapist. You should check these regularly to ensure that you are being charged correctly.
  • Explanation of Payment: This is a document your insurance company will send to your therapist to explain to them exactly what you owe them, typically 2-4 weeks after a service has occurred, but sometimes longer. Your therapist should compare what they have charged you against the Explanation of Payment that they receive, and they will adjust your statements accordingly (if, for example, they have undercharged you, or overcharged you).

The best way to know what your deductible, copayment, coinsurance, or other plan terms are is always to call your health insurance company directly and ask. You’ll need your health insurance card, and other basic identifying information as well.

Good Faith Estimate and the No Surprises Act

You have the right to receive a “good faith estimate” that explains how much your medical care and mental health care will cost. Under Section 2799B-6 of the Public Health Service Act, health care providers and health care facilities are required to inform individuals who are not enrolled in a plan or coverage or a Federal health care program, or not seeking to file a claim with their plan or coverage both orally and in writing of their ability, upon request or at the time of scheduling health care items and services, to receive a “Good Faith Estimate” of expected charges.

Under the law, health care providers need to give patients who don’t have insurance or who are not using insurance an estimate of the bill for medical items and services.

  • You have the right to receive a Good Faith Estimate for the total expected cost of any non-emergency items or services. This includes related costs like medical tests, prescription drugs, equipment, and hospital fees.
  • Make sure your health care provider gives you a Good Faith Estimate in writing at least 1 business day before your medical service or item. You can also ask your health care provider, and any other provider you choose, for a Good Faith Estimate before you schedule an item or service.
  • If you receive a bill that is at least $400 more than your Good Faith Estimate, you can dispute the bill.

I hope this brief primer has helped you to understand a little more about the world of insurance and mental health coverage. I find that it’s best for a solid therapy relationship when everyone is clear up-front about finances, rights, and responsibilities. Check out https://www.healthcare.gov/glossary/ for more terms and definitions to help you understand your health insurance benefits.

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