When people call or inquire about counseling services, one of the first questions they often ask is: “Do you take my insurance?”
Sometimes, the answer is yes, allowing them to apply their benefits to reduce out-of-pocket costs. Other times, the answer is no.
It’s increasingly common for private practice therapists to remain out of network with insurance companies.
This may come as a surprise to clients who assume insurance is the default payment method for mental health care.
However, there are several reasons why many therapists choose not to work with insurance providers and understanding these reasons can help clients make a more informed decision about their mental health care.
Why Many Therapists Opt Out of Insurance
1. Protecting Client Privacy
When therapy is covered by insurance, the company has the right to audit a client’s health records to determine whether sessions are “medically necessary.”
This process can lead to limitations on the number of covered sessions and gives an external party the power to decide what is or isn’t necessary for a client’s mental health.
For many therapists, this raises serious privacy concerns.
Personal therapy discussions, often deeply sensitive, shouldn’t be subject to review by insurance auditors who have no direct relationship with the client.
2. The Requirement of a Mental Health Diagnosis
To qualify for insurance coverage, clients must receive a mental health diagnosis, which becomes a permanent part of their health record.
This can be problematic, especially for individuals seeking therapy for reasons such as:
- Life transitions (career changes, moving, or starting a new chapter in life)
- Relational conflicts (family, friendships, or romantic relationships)
- Grieving the loss of a loved one
For these clients, receiving a clinical diagnosis, even if temporary, may feel unnecessary.
Unfortunately, mental health diagnoses still carry stigma, and in some cases, they can impact life insurance eligibility.
Without the requirement of an insurance diagnosis, clients can engage in therapy without the concern of having a long-term label attached to their medical record.
3. Low and Unfair Reimbursement Rates for Providers
Not all insurance companies operate the same way, but many offer low reimbursement rates for mental health providers, particularly for Master’s-level clinicians.
For therapists to make a sustainable living under these rates, they must increase their client load, which can eventually lead to burnout.
When clinicians overextend themselves, the quality of care may suffer.
Since most mental health professionals are only compensated for face-to-face sessions, the financial strain of low reimbursement rates can make it challenging to maintain a healthy, balanced practice.
4. Long Waitlists for In-Network Providers
Therapists who accept insurance often have longer waitlists due to high demand.
While many clients prioritize using insurance, they may not realize that paying privately could allow them to start therapy much sooner, and that private pay options may be more affordable than expected.
5. Understanding the Pros and Cons of Insurance
If you’re considering therapy, it’s important to fully explore what your insurance covers and what it doesn’t.
Many clients assume that using insurance is always the best financial decision, but that isn’t always the case.
- High deductibles – If you have a high-deductible insurance plan, you’ll likely pay out-of-pocket until that deductible is met. In this case, working with an out-of-network provider might make more sense, since you control the type of care you receive without insurance-imposed restrictions.
- Choice of therapist – Many insurance plans limit who you can see, whereas private pay clients have the freedom to choose a therapist whose style, experience, and approach aligns best with their needs.
Insurance is a complex system, and while it can reduce costs for some, it shouldn’t be the only factor in choosing a therapist.
Understanding why many providers opt out of insurance can help clients make informed decisions about their care.
Ultimately, therapy is about finding the right therapist-client connection, not just about whether a provider is in-network.
Know the full story, evaluate your options, and choose the path that best supports your mental well-being.
Edited By: Ebrima “Abraham” Sisay
