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Why Using Insurance For Therapy May Be A Bad Idea

Using insurance for therapy comes with strings attached

Many people don't realize there are real, long-term costs when using insurance to pay for therapy. Unfortunately, this information isn't commonly provided to us. 

This isn't a scare tactic. It's part of informed consent.

If you are going to use insurance to pay for therapy, you should know the risks. Then make an informed decision that's right for you.

You will have a pre-existing condition on your insurance record

In order to bill your medical insurance, a therapist must diagnose you with a mental illness. Your insurance record will forever contain that diagnosis. 

Insurance companies have their own database, called the Medical Information Bureau (MIB). It's similar to how lenders use credit agencies and credit scores. When insurance companies discover a mental illness diagnosis in your record, it can severely impact your ability to obtain health, disability, or life insurance. It can place you in higher risk categories with higher costs and deductibles. It can even make someone unable to obtain insurance altogether.

Your information will not be confidential

Insurance companies may request treatment notes, diagnostic information, and other sensitive personal information. Once that information leaves your therapist's office it's difficult to control who has access to it.

When a mental health diagnosis goes on your insurance record, it can be accessed by insurance companies or government agencies during background checks or applications for insurance policies. 

This information may be accessed if you need a security clearance for work, want to join the military, apply for jobs that require background checks, and other sensitive situations. 

If you are involved in a lawsuit or divorce, this information may be accessed and utilized in harmful ways against you.

Benefits to paying "out of pocket"

  • When you're in control of payment, your record never leaves the office, unless you explicitly authorize it or in rare circumstances the law requires it. 

  • In general, people who pay out of pocket tend to be more invested in the process. They are more likely to attend their appointments, practice skills, and reach their treatment goals in fewer visits. 

There are always exceptions

If your financial situation is such that using insurance is the only way you'll get the help you need, then please do it. 

Getting treatment is always the priority.

Insurance Risks: FAQ
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