Should I Use Insurance for Therapy? Pros, Cons, & What to Consider

If you’re looking for a therapist, you might have asked yourself:

“Why is therapy so expensive?”

“Why is it so hard to find someone who takes my insurance?”

You’re not alone—those are incredibly common questions. And the answers aren’t always straightforward. As a licensed therapist who accepts some insurance plans and offers private pay options, I want to help you make an informed decision about what’s best for you.

While insurance can make therapy more accessible, there are also important limitations to understand—both for you and your provider. In this post, I’ll walk through the pros and cons of using insurance for therapy, why some therapists don’t accept insurance, and how private pay therapy may offer added flexibility, privacy, and long-term value.

The Benefits of Using Insurance for Therapy

1. Lower Cost Per Session Using in-network benefits or out-of-network reimbursement can make therapy more financially manageable. For many people, this makes starting care possible in the first place.

2. Access to a Provider Network Insurance directories can help you identify therapists within your plan. While not always up to date, they provide a starting point for your search.

3. May Contribute to Your Deductible or Allow Use of HSA/FSA Funds Therapy costs often count toward your deductible, and you may be able to use a Health Savings Account (HSA) or Flexible Spending Account (FSA) to pay for sessions.

The Drawbacks of Using Insurance for Therapy

1. A Diagnosis Is Required To bill insurance, a therapist must assign a formal mental health diagnosis (e.g., Generalized Anxiety Disorder, ADHD, Major Depression). That diagnosis becomes part of your permanent health record and may have implications for future life, disability, or health insurance applications.Private pay allows you to seek support without the need for a medical diagnosis.

2. Care Must Be “Medically Necessary” Insurance companies require therapy to meet criteria for “medical necessity.” This means goals related to personal growth, relationships, or navigating life transitions may not be covered—even if they’re meaningful and valid reasons to seek therapy.

3. Reduced Privacy and Confidentiality To maintain coverage, therapists may be required to submit treatment plans, notes, or updates to your insurance provider. This can reduce the level of confidentiality some clients prefer in therapy.

4. Limits on Frequency and Duration Some plans cap how many sessions you can have or limit how often you can be seen. These restrictions can impact the therapeutic process, especially when working through deeper emotional concerns or trauma.

The Administrative Burden on Therapists

This part may be less obvious, but it’s important: working with insurance involves a lot of behind-the-scenes adminstrative work on the therapist’s end. That includes:

• Verifying benefits

  • Before therapy even begins, and before every session with a client, therapists (or their staff) must contact insurance companies to confirm that a client has mental health coverage, what the copay or deductible is, whether prior authorization is required, and how many sessions are allowed.

• Submitting and Resubmitting Claims

  • Each therapy session must be coded and billed correctly. Therapists must enter dates of service, CPT codes, diagnosis codes (ICD-10), provider information, and more — all accurately — or the claim can be rejected or delayed.

• Handling denials

  • Insurance companies frequently deny claims without clear reasons. Therapists then must spend time invesitaging the reason, correcting and resubmitting claims, and writing appeal letters — sometimes multiple times.

• Managing Payment Delays

  • Even when claims are accepted, payments can take weeks or months to arrive. This creates financial uncertainty and cash flow issues for small practices and private practice therapists who do not have the admistrative and billing departments of larger health clinics and hospitals.

• Undergoing Insurance Audits

  • Therapists may be subject to random audits requiring the submission of complete treatment notes, diangoses, and documentation. Audits are time-consuming and can lead to clawbacks (repayment requests) if records don’t meet freqently-changing criteria.

• Complying with Varying Documentation Standards

  • Each insurance provider has slightly different requirements for what must be included in notes and treatment plans. Therapists must tailor their documentation accordingly — even for the same service.

• Managing Insurance Portals & Communication

  • Therapists often have to log into multiple portals to check claim status, submit documents, download EOBs (explanation of benefits), or communicate through secure messaging with insruance reps.

• Handling Coordination of Benefits (COB) Issues

  • If a client has multiple insurance policies, therapists may need to coordinate between payers, which often results in bounced claims or delays while the correct order of payment is verified.

• Resolving Billing Disputes with Clients

  • When insurance miscalculates or unexpectedly denies a claim, clients may be billed in error. Therapists then have to mediate and clarify misunderstandings — a delicate and often relationship-straining process.

These tasks require time, energy, and specialized knowledge—and that time could otherwise be spent deepening our clinical skills or being more present with clients.

This isn’t shared to guilt anyone for using insurance. In fact, I’m happy to support clients in whatever way makes therapy most accessible to them. But the reality is: the admin work connected to insurance does impact how many clients a therapist can take on, and how much energy we can invest in our care relationships. When you pay privately, it allows me to focus more of my energy on you, your process, and creating a meaningful, collaborative therapeutic relationship.

Therapist Education vs. Insurance Reimbursement

Therapists typically hold a master’s degree or higher, complete thousands of hours of clinical supervision, and participate in ongoing training throughout their careers. Many pursue advanced certifications to better serve clients.

Despite this investment, insurance reimbursement rates do not reflect the level of education, expertise, or responsibility required in clinical work. In fact, mental health professionals are often reimbursed at much lower rates than other healthcare providers with comparable education—making it difficult to sustain a private practice.

Again, this is not your fault as a client—but it is part of the larger picture.

Why Are Therapy Sessions So Expensive?

Private pay therapy may seem costly—and that’s understandable. But it’s important to know that therapy isn’t a 9-to-5, 40-hour-a-week job. Most therapists can’t (and ethically shouldn’t) see back-to-back clients all day due to the emotional and cognitive demands of the work.

Each session involves deep presence, emotional attunement, active listening, regulation, and complex decision-making. Between sessions, therapists:

• Write notes and treatment plans

• Engage in active case planning

• Engage in continuing education

• Attend supervision or consultation

• Maintain licensure

• Communicate with clients as needed

• Run the administrative side of their practice

Many therapists choose private practice after working in agency settings where they were underpaid, overworked, and often burned out. Most of us didn’t enter this field with the goal of “running a business” — I know I didn’t. Personally, I find it difficult to think of this work in transactional terms. Still, offering private pay services allows me to provide high-quality, personalized care without sacrificing my own wellbeing or the quality of the therapeutic relationship.

Why Some Clients Choose Private Pay Therapy

Paying privately can offer benefits that are harder to access through insurance:

✅ More control over your health information

✅ Flexible session length and frequency

✅ Freedom to explore personal goals without needing a diagnosis

✅ A deeper, less rushed therapeutic relationship

✅ Working with a therapist aligned with your values and needs

It’s not always the right fit for everyone—but for many, private pay therapy creates a more spacious, customized, and confidential experience.

I Do Accept Insurance — And I Value Transparency

At Cadenza Counseling Colorado, I accept a limited number of insurance plans and also provide superbills for clients seeking out-of-network reimbursement. I’m happy to help you understand your options and weigh what works best for your needs.

Whether you use insurance or pay privately, my goal is the same: to offer ethical, compassionate care grounded in a strong therapeutic relationship.

If you have questions about working together, I’m here to help you find the path that feels right for you.