Does Insurance Cover Therapy Costs in the United States?

Although mental health is just as important as physical health in promoting overall well-being, many insurance companies in the past did not agree with that viewpoint. This is shown by the fact that, for many years,  a large percentage of insurers provided better insurance coverage for physical issues than mental health issues.

However, in 2008, the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (also called the federal parity law or the mental health parity law) was passed. This law stipulated that coverage for substance addiction, behavioral health and mental health conditions should be comparable to the coverage provided for physical illnesses.

Although the law has been in effect for more than a decade, many people are unaware that it exists and how they may be impacted by it. A survey conducted by the American Psychological Association (APA) in 2014 showed that more than 90 percent of American citizens did not know the basic details of the mental health parity law. This general lack of knowledge has led many people to ask key questions such as:

• Is therapy covered by insurance in my state?
• How do I know if my insurance plan provides mental health coverage?
• Does insurance cover therapy for specific mental health issues that affect me?

But before those questions are addressed, it may help to review the mental health parity law.

What Does the Mental Health Parity Law Do?

The mental health parity law requires insurance companies to treat the financial requirements of mental health, behavioral health, and substance-use coverage equal to (or better than) medical or surgical coverage. That means your insurer cannot charge you a $100 copay for visits to your psychologist if it charges only $25 for the majority of medical or surgical office visits.

The law also prevents insurance companies from putting a fixed limit on the number of mental health visits you are allowed each year. However, your insurer may implement limits based on your medical needs.

Is Therapy Covered by Insurance in My State?

The mental health parity law is effective nationwide. It applies to the following types of health insurance:

• Children’s Health Insurance Program
• Health coverage purchased by your company (if it has 50 or more employees)
• Coverage obtained under the Affordable Care Act 
• Most Medicaid programs

Please note that Medicare is exempt from the mental health parity law. The same is true for some other government programs and plans. Some state government employee plans, such as those that provide coverage for teachers and employees of state universities, may opt out of the parity requirements.

How Do I Know if My Insurance Plan Provides Mental Health Coverage?

If you are not sure if your insurance covers mental health issues, it is best to check the benefits of your plan. In addition to checking your plan yourself, you may also speak with the Human Resources department at your company or contact your insurance provider directly. If you have Medicaid, you can contact your state Medicaid director to find out if the mental health parity law applies to your Medicaid plan.

Does Insurance Cover Therapy for Specific Mental Health Issues that Affect Me?

It is important to understand that not all insurance plans offer mental health benefits. The mental health parity law ensures that insurance companies provide comparable benefits if both mental health and physical health coverage are offered.

The mental health parity law applies to all mental health, behavioral health and substance use issues covered by your health plan. However, your insurer is allowed to exclude specific diagnoses from coverage. These exclusions should be made clear to you in the benefits of your plan. Speak to your insurance company if you are not sure if your plan excludes any diagnoses.

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