Insurance

Understanding Health Insurance and How It Can Work for Therapy

Deciphering health insurance can be baffling, especially regarding mental health coverage. Learn key terms like deductibles, copays, and more. Discover how to select the right plan, making sure you maximize benefits and access quality care.

derek lee grow therapy By Derek Lee, VP of Insurance Operations

Updated on Apr 30, 2024

x icon linked-in icon facebook icon instagram icon


Few things in life are as confusing as health insurance. The terminology, the numbers, the perplexing small print — what does it all mean? And if you don’t understand your own health insurance, how are you supposed to use it to your advantage and get what you’re paying for? Take mental health coverage for example. Maybe you’re considering therapy but holding back because you’re unsure if it’s included in your insurance plan.

We’re here to help you figure it out. In this article, we’ll give you a run down on all the confusing health insurance terms as well as how insurance works and what you can do to learn more about your plan.

How Does Health Insurance Work in Simple Terms?

Health insurance is a legal agreement between you and a health insurance company whereby you agree to pay for a health plan of your choice. This plan will provide coverage for a predetermined range of healthcare services that may be required in the future. It will assist you in paying for these services, reducing the burden of medical bills and expenses on your part.

Not only is health insurance a great way of managing risk if anything unexpected should happen to you or your family, such as an accident or an unexpected illness, but it also includes coverage for preventative services, like visiting your primary healthcare provider for your annual physical, prescription drugs, or even mental healthcare.

Public Health Insurance

The government offers public health insurance programs for low-income individuals or families, the elderly, and other individuals who qualify for special aid. The main public health insurance programs in the US are Medicare, Medicaid, and Children’s Health Insurance Program (CHIP).

Medicare primarily offers federal health insurance to those aged 65 years and over, while Medicaid provides insurance for low-income individuals or families. CHIP is a program that offers children low-cost health coverage, even if the rest of the family earns too much money to qualify for Medicaid.

One advantage of public health insurance is its affordability in comparison to private insurance. However, it is less flexible and limits the options of medical service providers available. This can restrict your ability to select your preferred healthcare provider and location.

Private Health Insurance

Offered by private companies, this type of health insurance is more expensive than public insurance. But on the plus side, there is a large pool of medical service providers, alongside more plans to choose from. In 2021, around 66% of Americans had private health insurance.

Understanding What Your Health Insurance Covers

All health insurance plans need to provide you with a Summary of Benefits and Coverage (or SBC) so that you know what is and isn’t included. Everyone’s health insurance is different, so it’s best to check out the details of your plan in your SBC.

If you still have some questions and want to know how your plan works, reach out to your health insurance provider’s customer service department and speak to an agent. This is especially important if you’re considering therapy and need to know if it’s included in your level of coverage.

Health Insurance Coverage for Mental Health Care

In a 2018 study, 76% of Americans were reported to believe that mental health is just as important as physical health. However, in the same study, 42% of Americans claimed that they don’t access mental healthcare because of costs and poor insurance coverage.

Luckily, the Affordable Care Act (ACA) requires private health insurance sold on the individual and family health insurance marketplaces to include mental health insurance coverage. Medicaid also includes mental health coverage, including individual and group therapy.

Some of the private health insurance companies that offer mental health care are Aetna, Cigna, Kaiser Permanente, and UnitedHealthcare. We’ve got more information about whether therapy is covered by health insurance, and once you’ve clarified with your insurance provider about whether therapy’s included, here’s a helpful guide on how to choose the right therapist for you.

What Do All Those Insurance Terms Mean, Anyway?

Health insurance jargon can be very confusing. In fact, it may be one of the reasons people don’t take out coverage as it can seem nearly impossible to understand what it all means. “Health insurance can be extremely challenging to navigate. There are a lot of terms like ‘provider networks’ and ‘deductibles’ and all of the plans are a little bit different. Some people may find the confusing nature to not be worth it, especially if they are unclear what the tangible benefits are,” says Derek Lee, Grow Therapy’s Head of Insurance Operations.

If you’re in the dark about these puzzling insurance terms, we’ve broken down several of the important ones so you can understand and get what you need from your plan. Want to grasp these expressions at a glance? Check out our cheat sheet below.

Monthly Premium The set amount you pay each month to access your health insurance plan — like a subscription.

 

In-Network Healthcare providers, facilities, or services that you can access at a discounted rate through your insurance plan.

 

Out-of-Network Healthcare providers, facilities, or services that are not contracted with your insurance plan. Your health insurance plan may not cover the full cost of the care, and you may be responsible for paying a larger portion of the bill, or in some cases, the entire bill, depending on your out-of-network coverage.

 

Deductible A set amount of money you need to pay for certain healthcare services before your health insurance plan starts to pay.

 

Copay Set costs that you pay for various healthcare services after you’ve paid your deductible or for services in which the deductible is waived.

 

Coinsurance A set percentage of healthcare costs that you pay for after you’ve paid your deductible.

 

Sliding Scale A payment plan agreed upon between a therapist and patient where session fees are lower than the normal rate based on the patient’s income.

 

Out-of-Pocket Costs All the payments you make yourself that won’t be reimbursed by insurance, such as deductibles, copays and coinsurance.

 

HMO This stands for Health Maintenance Organization, and is a plan that provides healthcare services from a limited network of providers for a set monthly fee. These plans don’t have out-of-network benefits.

 

Monthly Premium

A monthly premium is the amount of money an individual or their employer pays to an insurance company on a monthly basis to maintain coverage under a health insurance plan. The premium is typically determined based on a variety of factors, including the type of plan, the level of coverage, the age of the insured person, their health status, and their location. The premium can vary widely depending on these factors, with some plans costing just a few hundred dollars per month, while others can cost several thousand dollars per month. It’s important to understand the terms of the health insurance plan and the associated monthly premium before signing up for coverage.

In-Network vs. Out-of-Network

In-network refers to healthcare facilities that have contractually agreed to work with an insurance company to offer patients discounted rates. Most health insurance plans have a network of healthcare providers and facilities that are in-network, and members typically pay lower out-of-pocket costs for their care.

Conversely, out-of-network healthcare providers and facilities don’t have a contract with an insurance company. In other words, if you receive medical care from an out-of-network provider, your health insurance plan may not cover the full cost of the care, and you may be responsible for paying a larger portion of the bill, or in some cases, the entire bill.

It’s important to review your health insurance plan’s network and coverage before seeking medical care to avoid unexpected expenses. If you have questions about your plan’s network or coverage, you can contact your health insurance provider for more information.

Deductible

“A deductible is an amount you pay for included health care services; after this has been met, your insurance plan starts to pay. Prior to hitting your deductible, you will be responsible for paying the total amount of the service. Once you have met your deductible, then your insurance will pay all or part of your bill. We recommend you reach out to your insurance company to see if mental healthcare services are subject to your deductible for your plan,” advises Derek.

For example, if you have a $1,500 deductible, and you need a $1,500 general MRI scan and a $3,000 surgical procedure, you would likely pay $1,500 out-of-pocket for the MRI scan, and then as little as $0 for the surgery. This does depend on whether or not you have a co-pay or coinsurance, as well. It’s possible in some cases you may still have an out-of-pocket cost once your deductible is met.

Copay

A copay (or copayment) is a fixed cost that you pay for different types of services covered by your insurance plan after you’ve paid your deductible. However, sometimes services that have a copay don’t require the deductible to be met.

Here’s an example: you could have a $20 copay every time you visit your primary healthcare provider, a $10 copay for any monthly medications you require, and a $150 copay for a visit to the emergency room (ER).

Coinsurance

After you’ve met your deductible, coinsurance is the percentage of the cost of a plan-included healthcare service that you pay.

For example, imagine your insurance plan allows $200 for a doctor’s visit and your coinsurance is 20%. If you’ve paid your deductible, you’ll pay 20% of the $200, so $40, and your insurance plan will pay the rest. You’ll need to pay the full $200 yourself if you haven’t paid your deductible.

Sliding Scale

Sliding scale refers to a payment model used by healthcare providers for individuals who have a low income, or who can’t afford the full price of the session. Depending on your financial situation, your therapist will adjust your fees based on what you can afford.

For example, a therapist may normally charge patients $150 per session, however, if they have a patient who earns $40k a year and can’t afford the full price of weekly sessions, they might slide the cost down to $60 per session.

Out-of-Pocket Costs

Out-of-pocket costs are all the payments you make for healthcare services that won’t be reimbursed, such as deductibles, copays, and coinsurance.

These aren’t to be confused with monthly premiums, which simply allow you to have coverage. Your out-of-pocket costs will kick in when you require a healthcare service.

All insurance plans will have an out-of-pocket limit. This is the maximum amount of money you can spend during your coverage period. Once you’ve spent the maximum, your insurance provider will cover 100% of the costs after that.

HMO

An HMO, or a health maintenance organization, is a type of health insurance plan that usually limits your coverage to care from healthcare providers who work for or contract with the HMO. It doesn’t usually cover out-of-network care, only in an emergency. You might need to live or work in the HMO service area to be eligible for coverage.

How to Choose a Health Insurance Plan

Browsing through the health insurance marketplace can certainly feel overwhelming when needing to select a plan that’s right for you. Next time you’re searching, consider the following points to try and narrow down suitable health insurance companies.

What Do You Need?

Whether you’re considering a health insurance plan for yourself or your family, think about the possible health care needs required for the upcoming year.

For example, do you or your family visit the doctor often?; do you have any major procedures planned in the near future?; do you require regular medication? If so, how much is included in the plan?; and how many people need coverage? These factors need to be considered when choosing the right option.

Are Your Services In-Network?

Is your primary healthcare provider or clinic in-network for the plan you’re looking at? If you’re considering therapy, this will be an important factor. If your preferred healthcare providers and facilities aren’t in-network, check whether there is partial coverage available for out-of-network services.

Can You Afford the Payments?

While it’s important to protect yourself with health insurance, it’s also important to make sure you can afford the financial cost. At the very least, you need to be able to afford the monthly premium which keeps you covered. Other costs you’ll need to pay for, should the situation arise, include deductibles, copays, and coinsurance.

What Is a Healthcare Spending Account?

A healthcare spending account (HSA) is an arrangement you have with your employer where they let you pay for many out-of-pocket healthcare expenses — insurance copayments, deductibles, certain prescription drugs, medical services, and medical devices — using tax-free dollars.

We recommend that you reach out to your employer to see if an HSA is offered.

Takeaways

Once you understand how your health insurance works, hopefully you’ll feel more empowered and less perplexed. The very reason that insurance exists is to protect you if something happens or to give you the agency to take your health — especially your mental health — into your own hands.

And don’t be mistaken by thinking that you can only have therapy if something is “wrong” — there are many reasons to go to therapy, such as to improve your relationships, to explore events from your past that feel stressful, or to learn new things about yourself on a deeper level.

Knowing you have a financial cushion that’s supporting your therapy might give you the nudge you need to take the first step and book a session. And when that moment arrives, our amazing therapists will be waiting for you, either in their office or, if you’d prefer, on the other side of a phone or computer screen. Why not start searching for a therapist who accepts your health insurance plan now?

Frequently Asked Questions

About the author
derek lee grow therapy Derek Lee, VP of Insurance Operations

Derek Lee is Grow Therapy's Vice President of Insurance Operations, overseeing payor relations and success, credentialing and enrollment, new payor launch, revenue cycle management and billing, and insurance operations data analytics.

This article is not meant to be a replacement for medical advice. We recommend speaking with a therapist for personalized information about your mental health. If you don’t currently have a therapist, we can connect you with one who can offer support and address any questions or concerns. If you or your child is experiencing a medical emergency, is considering harming themselves or others, or is otherwise in imminent danger, you should dial 9-1-1 and/or go to the nearest emergency room.

x icon linked-in icon facebook icon instagram icon