How to pay less for therapy

45% of Americans avoid seeking treatment for mental health issues because of costs. Most therapists, including Kip therapists, don’t accept insurance, so I wanted to share a couple of strategies that can make therapy more affordable.

I also want to challenge you to think about therapy differently than you may have before. It’s easy to look at therapy as a simple transaction: $165 for one hour of care. Unlike a nice haircut which lasts for a few months, therapy is actually a long-term investment that brings you returns for the rest of your life. When you spend $165 for a therapy session, you get one hour of care, personal growth, and skills to manage your mental and emotional well-being forever.

Strategy #1: Get reimbursed from your insurance company

PPO insurance plans usually cover some portion of out-of-network benefits when you see providers who don’t take insurance, and so do some others. Make sure to check your plan.

How much do you save? People get anywhere from 30% to 100% of their session reimbursed in full. It all depends on your plan and the deductible.

How do you get the money? Look up your plan details, specifically in the row for out-of-network Mental Health Outpatient Services. If you don’t have out-of-network benefits, consider switching to a plan that does during the Open Enrollment period.

This example shows you what to look for and what all this insurance lingo means. Here’s my Aetna plan (for which I enrolled through Gusto’s new health benefits service). In my non-network provider column, I can see that Aetna will pay 50% coinsurance for mental health visits. Awesome!

There are two more conditions that I need to check before I’ll know whether I can get money back for my out-of-network therapy costs. First, do I have a deductible? That 50% coinsurance only kicks in after I’ve met my out-of-network deductible, so let’s look that up.

That’s not too bad; my out-of-network deductible is only $1,000. This means that once I spend $1,000 for therapy (or any other out-of-network cost), insurance will start reimbursing my care at the 50% co-insurance rate. If I started seeing a therapist on Kip for $165/session, I’d be responsible for paying the first ~6 sessions on my own. After that, my sessions would cost me the total session fee minus whatever insurance reimburses me.

There is one more step to figuring out how much my insurance company will reimburse me after I reach my deductible–and unfortunately it’s not simply 50% if I have a 50% co-insurance rate. Rule of thumb: if an insurance company can make it more complicated, it will.

Source: The New Yorker

With a 50% co-insurance benefit, your insurance will reimburse 50% of what they estimate your therapy session *should* cost based on variables including your location. There are two ways to find out your reimbursement rate – first, you have to contact your insurance company and ask them to do an eligibility check. Or the slightly less annoying route is to go to a therapy session with your chosen provider and then file a claim with your insurance. This route is truly a crapshoot, but you will find out exactly what gets covered.

Be advised: insurance companies make it hard to file claims. Some require you to send a form in via snail mail; the nicer companies let you fax forms or file the claims online. Others will reject your claim a couple of times before approving it. It’s a pain but the money is usually worth it. My life has become much less painful with a new service called Better that will file your claims and get you your money back (even better, they’re in beta right now so it’s free).

** I mention several helpful companies/services in this article. I’m telling you about them purely because I’ve found them useful and hope you do, too. No kickbacks or strings, I promise!

Strategy #2: Start a Health Savings Accounts (HSA)/Flexible Spending Accounts (FSA)

FSAs and HSAs are no brainers when you are giving yourself the gift of therapy. These are tax-advantaged saving accounts that let you use pre-tax money for health costs. It’s a double win because you get the full value of your dollar (no taxes) and you also reduce your income (lower taxes overall). You can pay for Kip therapy and most individual psychotherapy with HSA/FSA funds.

How much do you save? You save whatever you would have lost in taxes on the amount you spend, so 10–40% depending on your tax bracket. E.g. Assume your tax bracket is 25%, you make $40/hour, and you pay $165 for a Kip therapy session. If you spend your normal income on the session, it actually costs you $206. That quickly adds up to hundreds of dollars a year, even thousands if you go to therapy a couple times a month. Yowza!

You can use pre-tax HSA/FSA funds on a ton of stuff in addition to therapy: band-aids, contact lenses or glasses, copays, dental care, and any out-of-network health expenses that count toward your deductible. With a letter from your doctor, you can even use HSA/FSA funds for over the counter medicines for acne treatment, allergies, and cold medicine. Here a full list of FSA-eligible expenses. If you take away anything from this article, I hope it’s that you can get FREE money by opening up an HSA or FSA account.

This is free money.

FSAs: You can put up to $2.5k (individual limit) into an FSA per year and the money is taken out of your paycheck in portions throughout the year. Another pro: you decide how much to put into your FSA during open enrollment but that full amount gets taken out pro-rata throughout the year. If you spend the full amount but leave your job mid-year, you get that full benefit. E.g If I set up an FSA for $1k annually, then $83 will be taken out monthly. If I’ve spent that $1k by April, and leave my job in May, I get fully reimbursed for that $1k even though I’ve only contributed $333. That’s $667 of free money!

A major downside to FSAs are that you lose any money that you don’t use within the year, so calculate wisely. You can use this guide from NerdWallet to help you decide whether to get one or not.

HSAs: The pros are that you can put more money into an HSA since the individual limit is $ $3,350 per year (2016), and these funds roll-over to the next year if you don’t use them up. The cons are that HSAs have more eligibility restrictions. You must be enrolled in a high deductible health plan, cannot be claimed as someone’s dependent, and cannot be enrolled in Medicare. There’s more information here.

To set up an HSA or FSA, contact your HR department. Most companies will offer FSAs and HSAs as a regular benefit to their employees.

#Strategy #3: Use Kip!

There is one more way to save money on therapy: use Kip. We’ll give you your first session free with the code MEDIUM. Kip comes with tons of benefits:

  • Book your therapy appointments online.
  • Trust our vetted providers who are selected for their skills, empathy, and use of evidence-based, science-backed therapies.
  • Get a better care experience by using our app throughout your care that lets you share more information with your therapist and leads to more productive sessions.

Learn more at hellokip.com.