Should you accept insurance as a therapist in 2024?

Accepting insurance as a therapist isn’t an easy decision.

Thirty years ago it was more of a no-brainer. You’d get credentialed, gain new clients, earn a good reimbursement, and walk off happily into the sunset.

But in 2024, accepting insurance isn’t so straightforward.

More and more therapists are weighing the pros and cons before making a choice. Should you accept insurance as a therapist in 2024? 

Our nuanced answer may surprise you.

This blog is co-authored by Upheal and Thrizer. Thrizer is an out-of-network insurance reimbursement platform that transforms out-of-network therapy into an in-network experience for clients. It helps clients instantly verify their out-of-network benefits, offload all the insurance stress onto Thrizer, and even allows them to just pay their co-insurance for sessions instead of paying in full and waiting several weeks for reimbursement - all while clinicians receive their full fee upfront. Try Thrizer for free using this link or use code upheal to receive waived fees for your first $2500 in charges!

Pros of accepting insurance

There are some good reasons to accept insurance.

And in certain circumstances, it may be the best option for enjoying a stable practice.

Check out these 5 reasons you may want to accept insurance:

1. Accessibility for rural clients: If you serve clients in rural or underserved areas, accepting insurance can be crucial. Many of these clients might not have the financial means to pay out-of-pocket for therapy. By accepting insurance, you make it possible for them to access the care they need, ensuring that geographical or economic barriers don't stand in the way of mental health support.

2. Built-in marketing: Accepting insurance can reduce your marketing and advertising costs. Insurance companies often have provider directories that clients use to find therapists. Being listed as an in-network provider means potential clients can find you easily through their insurance company, saving you time and money on marketing.

3. Financial security for the risk-averse: For therapists who prefer financial stability, accepting insurance can provide a steady stream of clients and income. Knowing that you have a consistent flow of clients referred by insurance companies can alleviate the anxiety of constantly needing to attract new clients. This sense of security can be particularly appealing if you're risk-averse and prefer predictable income.

4. Essential for certain populations: If you work with populations that rely heavily on their insurance benefits, such as families who need family therapy, accepting insurance may be a necessity. Many families cannot afford to pay for therapy out-of-pocket, making insurance the only feasible option. By accepting insurance, you ensure that these families can receive the therapy they need without financial strain.

5. Supervisory billing: Insurance can also be beneficial if you operate under supervisory billing arrangements. This allows therapists who are under supervision to bill insurance, expanding your practice's reach and providing opportunities for newer therapists to gain experience and build their client base. It’s a win-win situation that supports both the growth of your practice and the professional development of your team.

Accepting insurance has its benefits. Now let’s consider some of the cons of accepting insurance as a therapist.

Cons of accepting insurance

While there are benefits to accepting insurance, it's important to weigh them against the potential downsides.

Here are several reasons why accepting insurance might not be the best choice for every therapist or therapy practice.

1. Low reimbursement rates: One of the biggest drawbacks is the low reimbursement rates offered by insurance companies. Despite making significant profits, insurance companies often pay therapists far less than their standard fees. This can impact your overall income and financial stability, making it difficult to run a profitable practice.

2. Administrative burden: Combine low reimbursement fees with increased admin burden and you really might be earning a low hourly rate. Dealing with insurance companies can be incredibly time-consuming. The paperwork alone can take hours each week, leaving you with less time to focus on your clients and your practice. From filing claims to handling denials, the administrative workload can be overwhelming and frustrating.

3. Session time limits: Insurance companies typically impose time limits on therapy sessions. This can be restrictive and may not align with the therapeutic needs of your clients. These constraints can hinder the effectiveness of therapy and limit your ability to provide the best care possible. You also can’t charge for intensives and workshops via insurance.
   

3. Equal pay regardless of experience: Under insurance, a therapist with 30 years of experience often receives the same reimbursement rate as someone just starting out. This can feel demoralizing and may not reflect the value of your extensive experience and expertise.

5. Burnout and lower quality of care: The administrative demands, low reimbursements, and time constraints can contribute to therapist burnout. This, in turn, can lead to a lower quality of care for your clients, as you might find yourself stretched too thin.
   

5. Rare raises and inflation: Raises for insurance reimbursements are infrequent and often don't keep pace with inflation. This means that over time, the real value of your earnings decreases, making it harder to maintain a sustainable practice.

7. Risk of clawbacks: There's always the risk of clawbacks, where insurance companies retroactively deny claims and demand repayment. This can create financial uncertainty and disrupt your cash flow, adding another layer of stress to managing your practice. Why subject yourself to that?

8. Confidentiality concerns: Sharing client information with insurance companies can raise confidentiality issues. Many clients prefer to keep their therapy completely private, and involving insurance companies can compromise this confidentiality.
   

8. Pathologizing clients: Some therapists are uncomfortable with the need to pathologize clients for insurance to cover their sessions. This often means diagnosing clients with a specific mental health condition, which may not always be appropriate or necessary for effective therapy. For example, your client may be stressed at work, but that’s not a diagnosis that insurance covers. This incentivizes therapists, rightly or wrongly, to diagnose a client to help them gain coverage.

10. Limited coverage for certain services: Not all therapy services are covered by insurance. For instance, couples therapy is often excluded from insurance plans, limiting your ability to offer a full range of services to your clients. This can be particularly frustrating if you specialize in areas that insurance doesn’t typically cover.

11. Increased marketing efforts without insurance: While not accepting insurance means you'll need to invest more in marketing, it also means you have full control over your client base and fees. This trade-off requires a careful balance of time, effort, and financial resources.

Now consider whether accepting these cons aligns with your values and goals or not.

Making a choice on accepting insurance

Deciding whether to accept insurance as a therapist is a complex decision, especially for early-career therapists who are just starting out. 

This choice impacts not only your financial stability but also your ability to serve your clients and maintain a sustainable practice.

Balancing accessibility and financial health

As a therapist, you likely entered this field because you care deeply about helping people and making a positive impact on your community.

Accepting insurance can enhance accessibility, allowing clients who might not afford out-of-pocket costs to receive the therapy they need.

This is particularly important if you serve clients in rural or underserved areas where financial barriers can prevent access to mental health services.

However, while accessibility is crucial, it's also essential to ensure that your practice is financially viable. You might just leave the field if your practice doesn’t work for you.

Low reimbursement rates, administrative burdens, and other constraints imposed by insurance companies can make it challenging to earn a sustainable living.

As a therapist, your well-being is just as important as that of your clients, and enduring financial strain or burnout is not a sustainable path.

Evaluating your practice goals

When considering whether to accept insurance, reflect on your practice goals and values:

• Client accessibility: Do you primarily serve a population that relies heavily on insurance benefits? If so, accepting insurance may be necessary to ensure they can access your services.
• Financial goals: Are you aiming to achieve a six-figure income or grow a high-end private practice? If financial security and growth are priorities, the limitations of insurance reimbursement may hinder your progress.
• Work-life balance: Consider the impact of administrative tasks and potential burnout. If maintaining a balanced work-life dynamic is vital, the added stress of dealing with insurance paperwork might not be worth it. You can also use an AI note-taking platform like Upheal to reduce the paperwork burden.
• Therapeutic approach: If your therapeutic approach requires flexibility, such as longer sessions or specialized treatments not typically covered by insurance, you might prefer a private pay model to retain control over your practice.

Exploring alternatives

If you decide that accepting insurance is not the best fit for your practice, there are alternative ways to ensure your services remain accessible while maintaining financial stability:

1. Out-of-network benefits: Help clients use their out-of-network benefits for partial reimbursement, ensuring they can still access your services while you receive your full fee.
2. Sliding scale fees: Offer a sliding scale fee structure based on clients' ability to pay, making therapy more affordable without involving insurance companies.
3. Out-of-pocket payments: Encourage clients who can afford it to pay out-of-pocket, which allows for greater privacy and flexibility in your practice.
4. Pro bono services: Allocate a portion of your time to provide free services to those in need, balancing financial sustainability with community support.

Choosing both insurance and a fulfilling practice

Ultimately, the decision to accept insurance as a therapist should align with your values, goals, and the needs of your clients.

It’s a deeply personal choice that requires careful consideration of the pros and cons. But whatever you choose, know that you deserve to make that choice without guilt or shame.

By thoroughly evaluating your practice’s priorities and exploring alternative models, you can create a practice that supports both your clients and your professional well-being.

Remember, your commitment to accessibility and quality care is vital, but so is ensuring that your practice is rewarding and sustainable. As you navigate this decision, consider what will enable you to thrive as a therapist and continue making a meaningful impact in your community.

If you're considering transitioning to a private pay model but are worried about losing clients, platforms like Thrizer can help. Thrizer is an out-of-network insurance reimbursement platform that transforms out-of-network therapy into an in-network experience for clients. It helps clients instantly verify their out-of-network benefits, offload all the insurance stress onto Thrizer, and even allows them to just pay their co-insurance for sessions instead of paying in full and waiting several weeks for reimbursement - all while clinicians receive their full fee upfront. Try Thrizer for free using this link or code upheal to receive waived fees for your first $2500 in charges!

FAQs about accepting insurance as a therapist

Q: Is it normal for a therapist to not accept insurance?

A: Yes, it's quite common for therapists to choose not to accept insurance. Many therapists prefer to avoid the administrative burden, low reimbursement rates, and other constraints that come with insurance. Instead, they often use alternative methods to make therapy accessible, such as sliding scale fees and out-of-network benefits.

Q: What are out-of-network (OON) benefits, and how do they work?

A: Out-of-network (OON) benefits are part of many insurance plans that offer partial reimbursement for services provided by therapists who are not in the insurance network. Clients pay the therapist directly and then submit a claim to their insurance company to get reimbursed for a portion of the cost. Therapists can assist clients by providing the necessary documentation for these claims.

Q: How can I help my clients use their out-of-network benefits?

A: You can help clients use their out-of-network benefits by providing them with detailed invoices that include all necessary information for insurance reimbursement. Using platforms like Thrizer can streamline this process, making it easier for both you and your clients.

Q: What are the benefits of not accepting insurance?

A: Not accepting insurance can offer several benefits, including reduced administrative workload, the ability to set your own fees, more flexibility in session length and therapy approach, and maintaining greater confidentiality for your clients. It can also help avoid the low reimbursement rates and constraints that come with insurance.

Q: How can I make therapy affordable without accepting insurance?

A: There are several ways to make therapy affordable without accepting insurance:

• Offer sliding scale fees based on a client's ability to pay.
• Provide pro bono services for those in need.
• Assist clients in using their out-of-network benefits for partial reimbursement.
• Allow clients to pay out-of-pocket, which often provides them with more privacy and flexibility.

Q: What is Thrizer, and how can it help my practice?

A: Thrizer is an out-of-network insurance reimbursement platform designed to simplify the process for therapists and clients. It helps clients use their out-of-network benefits to get reimbursed, ensuring therapists receive their full fee without dealing with insurance companies directly. Thrizer can help you transition to a private pay model while increasing the likelihood of retaining some clients and minimizing the administrative burden.

Q: Is it possible to transition from accepting insurance to a private pay model without losing clients?

A: Yes, it is possible to transition to a private pay model without losing all of your clients. Clear communication about the change, providing support for clients to use their out-of-network benefits, and offering alternative payment options can help retain clients during the transition. Using tools like Thrizer can also facilitate this process and make it smoother for both you and your clients.