Does Health Insurance Cover Therapy

Mental health is as important as physical health, but there was a time not even 20 years ago when health insurance companies could cover mental health care to a lesser extent than physical health services. For example, your insurance policy could require a copay of $40 when you visit a mental health professional but only $20 when you visit your primary care physician. In 2008, federal law changed that practice.

The mental health parity law

The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA) prohibits health insurance companies from saddling policyholders with a cap on mental health or substance use disorder (MH/SUD) benefits less favorable than medical/surgical benefits. The law initially applied to group health plans only. The Affordable Care Act amended the law in 2010 to include insurers who sell individual health insurance policies inclusive of mental health benefits.

Health insurance limitations

The federal parity law does not require insurers to offer mental health benefits. The MHPAEA only states that the benefits must be comparable if a plan includes medical/surgical and MH/SUD coverage. Review your insurance materials to verify coverage. 

Insurance companies restrict coverage to medically necessary services, so you need a diagnosis to submit a claim. Sometimes, people are reluctant to go that route under an employer-sponsored insurance plan. In that case, they may choose to pay out of pocket.

According to the Employee Retirement and Income Security Act (ERISA), a small company has no more than 50 employees. Small employers are not required to provide insurance coverage. 

According to the Centers for Medicare & Medicaid Services (CMS), the mental health parity law does not apply to:

• Small, self-insured non-federal governmental plans and small, self-insured private employers
• Group health plans and insurers with an approved exemption based on the cost of compliance (beneficiary notification required)
• Large, self-funded non-federal organizations that have opted out
• Medicare, though mental health benefits are available under Part A, Part B and the prescription drug plan

The Marketplace

All the health insurance plans offered through the Marketplace cover MH/SUD services. It is one of the 10 “essential health benefits,” a term that also applies to preventive visits, emergencies, prescription drugs and laboratory services.

MH/SUD benefits include: 

• Behavioral services, which includes psychotherapy and counseling
• Behavioral and mental health inpatient support
• Treatment for substance use disorder

The insurance plans you buy have parity protections. These plans do not impose annual or lifetime dollar limits on MH/SUD services or any of the essential health benefits.