Why are more therapists refusing to take insurance?

Reflections from the field, as a therapy provider, therapy receiver, and practice owner.

You do the research, and you find a therapist that you finally connect with - whether it’s their specialties, their bio, or their vibe over the phone during your initial phone consult.

Or - maybe you’ve been seeing the same therapist for years, and they’ve become someone you have a deep connection with. They know you inside and out, and you trust them implicitly.

And then - whether you’re moving forward with next steps, or hearing this update from your current therapist - you learn from the therapist that they don’t accept insurance, or they’ll no longer be accepting insurance.

For some clients, this is totally fine. They’ve anticipated the cost of therapy, or they have the financial means for out-of-pocket therapy, or they already understand the benefits of private-pay therapy.

For other clients, though, this can understandably cause disappointment, confusion, or frustration.

Isn’t this person in the business of helping people?

Don’t they know how expensive things are?

And for this latter group of clients, private-pay can feel too scary or unrealistic.

So they opt out completely, and continue searching for a therapist in-network with their insurance.

But as they continue the search, this thought keeps coming back -

Why doesn’t that therapist take insurance?

If you’ve ever found yourself in this situation, or if you’re just generally curious about the thought process behind therapists accepting insurance or not, here are some insights into the complexity.

1) Insurance pays therapists much lower fees than what they deserve, based on their training and experience.

Based on the current rates I see on Psychology Today in San Diego, and the rates that most of my colleagues charge, a licensed therapist charges around $175-250 per therapy session. The fee is on the lower end, if the therapist is a basic talk therapist, without any specializations or advanced trainings. The fee is on the higher end, if the therapist is specialized in something, such as Gottman Couples Therapy, EMDR therapy, Somatic Training, etc. These fees are also aligned with the amount of education, training, and experience required to become a therapist (undergraduate degree, graduate degree, 3,000+ hours of clinical training, and the successful passing of two state-administered exams in Law & Ethics, and clinical competency - all of which cost time & money).

Now, keeping this $175-250 fee in mind, most of the mainstream insurances you’re familiar with, reimburse us anywhere from $75 to $125, on average, with higher rates being more of the exception than the rule.

And as you can see, for many therapists, that’s not even half of what they should be making, based on credentials.

Because quality therapy by trained professionals isn’t just “paying someone to listen to you”; it’s paying someone to connect the dots, to help you heal old wounds, to provide psychological safety, and to facilitate deep, lasting transformation in your life.

Lastly, unlike private-pay fees which are paid on the spot, insurance claims can take up to 21 calendar days for the payment to land in the therapist’s bank account. That’s assuming that there are no denials, errors on the claim, or other issues that delay payment. When those errors happen, payment can take twice as long. As you can imagine, this creates a lot of frustration, emotional burnout, and financial unpredictability for therapists.

2) Delays, denials, and general misdirection are common with insurance.

Let’s dig deeper into the payment window for insurance claims:

Claim payments can get delayed because of something entered incorrectly, no matter how minor the typo. Unfortunately, it usually takes insurance teams weeks to get to the claim, a few days to notify the therapist of the error, and then more weeks for the therapist to correct and resubmit the claim. Sometimes this means that the therapist isn’t getting paid for a session, until 3+ months after it happens.

On top of human error, there’s the issue of heavy internal bureaucracy within these insurance companies, to no fault of the therapist. I once worked at a place where claims from the past August still hadn’t been processed by the following January, because of an issue with the company’s algorithm. The practice owner had many things on their plate, and hadn’t followed up with the insurance as persistently as was necessary - so therapists went unpaid for months, until we finally called the company out on social media, and a supervisor was assigned to our case.

Another mainstream insurance company had a data breach, which impacted the speed of claims processing.

Another mainstream insurance company was proven to have an algorithm that systematically denied coverage, where coverage was valid and legal.

I’ve even had the experience of insurance companies saying that a client had coverage, only to come back later and say that the client didn’t have coverage, and now the client owed hundreds, if not thousands, of dollars they hadn’t anticipated paying.

Of course, when these delays and denials happen, the therapist is responsible for resolving them with the insurance companies - and the only way to do that, typically, is over the phone. And calling these insurance companies over the phone feels like being in purgatory; you’re forced through automated parts of the call, where the robot-voice hangs up on you if you choose the wrong option; you must patiently explain, and re-explain, the issue to multiple insurance agents; and you must not tear your hair out, when different departments re-route you to other departments, and each agent contradicts what the previous agent told you. I once spent 2 hours being re-routed to different agents, for information that was just 30 seconds’ worth of conversation.

So as you can see, all of these factors beyond the therapist’s control, influence the therapist’s compensation.

And that’s a recipe for emotional, physical, and financial burnout.

3) Consistent rest, resources, and sustainability are much harder to maintain, when your caseload is primarily insurance clients.

If insurance clients’ fees are 2-3 times lower than what therapists should be making per client, this means that a therapist must often take 2-3 times the amount of clients, to cover their expenses.

Let’s use an example.

In order for me to cover my business costs of ~$3000 per month (includes business costs, higher for fully in-office therapists), match the cost of living where I am, and earn an income worthy of my experience level, I would need to see at least 20 clients per week, to make $60,000 before taxes. Keep in mind that California has the highest income tax out of all of the states, and taxes are even more burdensome for businessowners (aka private/group practice owners).

So what does this mean for a therapist who does accept insurance?

• My annual income is lower, for double the work, than it would be with private pay.

• My compensation is unpredictable, given how long insurance takes to reimburse me.

• I would need to fill up each weekday with 4-5 clients minimum, which often means less rescheduling flexibility, less rest, and more risk for burnout.

Now, let’s say I’m a therapist who does not accept insurance.

If I only accepted private-pay clients, and I was on the lower end of $175 per session, I would only need to see 12 clients to make the same compensation per year, +a little extra.

On top of that:

• My compensation is predictable, so I’m less financially hypervigilant or anxious.

• I don’t worry about ending abruptly with a client, due to insurance disruptions.

• I don’t live in fear or anxiety of what’s going to go wrong with insurance companies.

• I’m not spending excessive time on claims, billing, and troubleshooting (which is, let’s be honest, unpaid labor that therapists do as a courtesy to their clients).

• I have more hours in the day to rest, to help or take care of others in my life, and to strategize on treatment plans, offering clients the best therapy I can.

• I have more time and energy for learning/trainings, which allows me to increase mastery in my desired areas (meaning better therapy for clients).

• I have the flexibility to reschedule clients without burning myself out.

Of course, if you’re reading this from a client perspective, none of this may truly land for you, in terms of why therapy is so expensive. These are all benefits that many therapists need, in order to make the work sustainable; but it may not feel as helpful or justified, when it comes to what you’re being asked to pay.

So, let’s think about it from your perspective - the client.

When you see a private pay therapist, you’re seeing someone who:

• You can build with, over time, because they’re not limited to one insurance carrier, forcing you to only work with them as long as you have a certain insurance/job.

• Isn’t worried about when they’re getting paid, which allows them to feel more ease and presence during the week.

• Is showing up with deep focus, given that they’re not spread thin throughout the week.

• Has invested time in learning new things, consulting with colleagues, and attending different workshops/events - because they’re not in survival mode, on a lower income than what they should be making.

And by the way, not all private-pay therapy needs to be out-of-pocket, all the time. If you’re a business owner, therapy with a medically-viable diagnosis can be counted as a medical cost, and medical costs that exceed 7.5% of your annual salary, are tax-deductible. If your therapist uses a service called “Mentaya”, you can submit Superbills to your insurance company, if they have out-of-network benefits, and they will typically pay you back for 20%-60% of your session fees. Additionally, HSA accounts (Health Savings Accounts) allow you to use pre-tax dollars for therapy. Ask a therapist, or call your insurance company, to learn more!

Ultimately, it’s your choice.

There have been many seasons of my life - including, ironically, my grad school chapter of becoming a therapist - when private pay therapy wasn’t accessible to me. I’m so grateful to the clinics and therapists who were able to see me through insurance, especially since I know the compromises involved. However, given my current skill level in therapy, and the experiences I’ve had in therapy, I’m willing to invest in private pay therapy for a new, and deeper, relationship with an expert.

At the end of the day, however, only you know what makes therapy feel valuable and sustainable.

Different chapters offer us different resources, and therapy may even feel like more worthy of an investment when we need something more advanced, we receive a trusted referral, or we find a specialty that really speaks to us.

Whatever decision you choose to make, I hope you can feel pride in your persistence at getting the care you need. It’s always a brave decision to engage in mental healthcare - regardless of what the fees are.