Insurance Guide For Families and Individuals Seeking Mental Health Services

Medical services in general and mental health services specifically can be costly for families. If you or a family member needs mental health treatment, an important consideration is how to pay for services. Most families prefer to use health insurance. However, trying to understand insurance benefits can be confusing and frustrating.

This Guide will help you understand various aspects of mental health insurance coverage. While it is difficult to thoroughly cover all aspects of such a complex issue, this Guide provides basic information about frequently asked questions and common concerns related to working with health insurance companies. It offers ideas about how to get started, questions to ask an insurance company, and a glossary of terms.

Getting Started

How can I get insurance?

Group Insurance through Your Employer
While people obtain health insurance in a variety of ways, the most common is through an employer. Private health insurance can be group insurance and small group insurance, which differ based on the size of the employer. Group insurance is provided by medium to large-sized employers. Small group insurance is provided by smaller employers, but is also available to individuals, families, and groups who share a common trade or professional organization.

It is possible to have several different options for health insurance coverage provided by an employer, such as HMOs (Health Maintenance Organization), PPOs (Preferred Provider Organization), POS (Point of Service plan), or Fee for Service/ Indemnity plans. Please see our glossary below for definitions of these various types of plans. When trying to determine which plan to select, it is important to ask questions regarding the type of coverage provided. Below you will also find basic questions to ask an insurance company about specific coverage options.

Non-Employer Insurance
In Massachusetts, if you need to purchase private insurance for yourself and/or your family but do not have access to insurance through an employer, you can explore the options available through the Commonwealth Health Insurance Connector— an independent state agency that helps Massachusetts residents find health insurance coverage and avoid tax penalties. This agency gives its official approval to plans which meet their standards for quality and value. For more information on this option, please visit www.mahealthconnector.org.

Public Programs
If you are not eligible for employer-provided insurance or cannot afford other non-employer options, you may be eligible for public programs, such as Medicare or MassHealth. Eligibility requirements often relate to age, income, and whether or not you or your child has a disability. Eligibility requirements and applications for these programs can be found online at Apply for Health Coverage.

It is sometimes possible to receive public programs as a supplement to private insurance. This involves having a secondary insurance available to pay for medical or mental health services. This can be helpful, especially if your primary insurance does not pay for all the services needed.

There are many different MassHealth Plans to explore. You can find more detailed information here.

Applying for Public Programs
You can receive guidance applying for public programs at many community-based organizations, community health centers or hospitals. Another helpful resource is Health Care for All http://www.hcfama.org which operates a helpline for families seeking information about health insurance: the helpline is 1-800-272-4232.

Note: if you are on a Mass Health plan, you will occasionally receive requests asking for an update on your status. It is important that you provide this information promptly or your insurance coverage may change.

A Word about the Term “Disability”
Public programs may be available to you if you or your child has a disability. You may have concerns about a child or family member being labeled “disabled” since there can unfortunately be stigma and/or misunderstanding related to this term. If you have questions or concerns about this term, it is important to discuss the issues in depth with your mental health provider. S/he will be able to help you understand if your child fits the legal definition of “disabled” and if your child may be eligible for special services.

As information about disabilities becomes more widespread, increased numbers of people with temporary or permanent disabilities are gaining recognition, thus decreasing the stigma associated with needing support services.

Paying ‘Out of Pocket’ for Mental Health Care
Some families choose to pay for mental health services privately out of personal funds. The main advantage of private payment is having complete freedom in choosing a care provider. However, for most people, it is imperative to find some type of insurance to cover, or at least help to cover, a the cost of mental health services.

The Next Steps: “I Have Insurance, So Now What?”

Once you have chosen private or public insurance, or a combination of the two, the next step is finding out as much as possible about your benefits. The more you understand your plan, the better you can navigate the process of finding providers and manage any problems or issues that arise as you seek services. You are entitled by law to a written summary of benefits provided by your plan, often referred to as a Summary Plan Description. This information should be available on your carrier's website. Do not hesitate to call and speak with someone to learn more about your benefits. Below is a list of helpful questions to ask your insurance company’s representative.

Top Ten Questions to Ask Your Insurance Company About Your Mental Health Benefits

  • Are mental health benefits covered under my plan?
    Most - but not all - health insurance companies will pay the costs of mental health care services such as therapy and/or medication. In some cases, health insurance will cover more intensive services like in-patient hospitalizations or residential treatment.
  • Does your company manage my family’s mental health benefits or is another company “subcontracted” or “carved out” to manage my mental health benefits?
    Some health insurance companies manage both their consumer’s medical and mental health benefits. However, others “subcontract” or “carve out” mental health benefits to another company. Insurance cards may have a separate telephone number to call for information regarding mental health benefits; check yours to see if there is a specific phone number for Behavioral Health or Mental Health and Substance Abuse Treatment. If so, you may cal this number to ask about benefits.
  • Do I need a referral from my primary care physician to see a mental health professional?
    When you want to receive a particular service in a non-emergency situation, many health insurance companies, especially HMOs (Health Maintenance Organizations), require you to get a referral for that service from a primary care physician. Otherwise, your plan might not cover the cost. In some cases, the plan may allow a certain number of mental health visits with a provider without a referral, and then require a referral for additional visits beyond that number. Typically, the primary care physician’s referral must be formal and in writing. Usually, s/he signs a form and faxes or emails it to the insurance company. If your primary care physician only gives you verbal approval of a service, this is not official and your insurance plan will be free to disregard it. It is prudent to keep a copy of such forms for your own records.
  •  Do I need pre-approval from my insurance company before I can see a mental health professional?
    Some health insurance companies, especially HMOs, require a pre-approval or preauthorization. Unlike a “referral” which comes from a doctor and means your doctor is referring you to a treatment because it is medically necessary, a preapproval or preauthorization means that your insurance company agrees to pay for the services. You would typically call the insurance company for initial authorization of a number of visits. Once you use the sessions that were approved in the initial authorization, you or your provider would need to call the insurance company again to authorize additional sessions, and would likely have to submit a form explaining why additional services are needed.
  • Are there co-payments for services?
    Co-payments are fees that consumers themselves pay when they receive health care services. It is important to understand what your co-pays are for mental health services are and to find out if there are different co-pays for “in-network” versus “out-of-network" providers.
  • Can I only see providers on the list provided by my insurance (in-network) or can I choose to see any qualified professional (out-of-network)?
    Insurance plans often create contracts with certain health care professionals who are considered to be “in-network providers.” In-network providers accept payment for services from the insurance company, often at a discounted rate. If you an have an HMO, typically your insurance company will only pay for services provided by a health care professional who is a part of the its own network. If you choose to see a provider who is not in the network, then your insurance carrier may not pay for services.
    Insurance plans can vary considerably when it comes to this issue. For example, if you have a PPO (Preferred Provider Organization), your insurance might have a preferred network of providers, but you may still be able to see providers out-of-network. However, it is possible that your insurance company may pay for these services at a lesser rate, which means you may have higher “out-of-pocket” expenses for services.
  •  If services are covered for providers who are out-of-network, are those services covered differently than services provided by in-network providers?
    As stated previously, if you learn that you do have “out-of-network” benefits included in your plan, it is important to understand at what rate such benefits are covered as compared to in-network benefits. For example, your insurance company might cover psychotherapy visits for you see an in-network provider and you may only be expected to cover the co-pay. However, if you choose to see an out-of-network provider, your insurance company might only pay for 60% of the total service, and thus you would be responsible for a 40% coinsurance. You might also have to reach a certain deductible before your insurance company would pay that 60$. Thus, seeing an out-of-network provider could prove significantly more expensive than seeing an in-network provider.
  • Do I have a deductible for services?
    Some insurance companies require that you pay a specified amount of money towards health care expenses, including mental health expenses, before they will begin covering services. The amount of this deductible can vary from plan to plan and may be also be higher to see out-of-network providers versus in-network providers, if there is a deductible at all.  If this is the case, you will need to pay ‘out-of-pocket’ for your health and mental health care services until you exceed the amount of the deductible. When seeing an in-network provider, you will only be require to pay the in-network rate to the provider, whereas an out-of-network provider may charge a higher fee.
  •  Are there visit limits, dollar limits, or other coverage limits for my mental health benefits?
    Some plans have limits on the number of psychotherapy visits or medication management visits per benefit year. For example, your plan might limit you to 24 sessions with a psychotherapist each year, and up to 7 days of inpatient treatment a year. If you exceed these services, you will have to pay out of pocket.
  •  What if I have out of state insurance?
    Your plan may have compatibility with plans in Massachusetts, but you must call the insurance company from the state you are insured to verify compatiability.

Common Issues and Special Topics

Adequate Access

Most private insurance plans are required by law to make sure that you and your child have “adequate access” to mental health services. At times, families can have problems seeking adequate access. For example, if you are trying to get a mental health service for your child and cannot find a provider who offers that service, which your insurance would cover, this would be an adequate access problem. You might also find that there are providers who offer this service but not in your community, or if they exist in your community, there may be a long waitlist. These are other examples of adequate access problems. If you feel your insurance company is not meeting its legal obligation to provide adequate access to services, you can try to resolve the problem in one of the following ways:

  • Ask the insurance company to provide you with a list of available providers;
  • Ask the insurer to investigate and confirm the availability of providers in its network;
  • Look for another type of mental health provider within the network who might provide the service that meets your needs;
  • Ask the insurance company to approve and pay for services from a mental health provider who is available but not in the network. This is sometimes is referred to as a single case agreement (see below);
  • Change to a different insurance plan;
  • File a complaint with the Massachusetts Division of Insurance (DOI);
  • If all else fails, consult with a lawyer who is knowledgeable about mental health advocacy.

Mental Health Parity Law

Some private insurance plans, including most plans provided by employers, are governed by the Mental Health Parity Law. The Mental Health Parity Law states that health insurers must cover “biologically- based” mental disorders to the same extent that they cover the diagnosis and treatment of physical disorders. This law makes it illegal for insurance companies to have more stringent standards for services provided for mental health. Under this law, children are entitled to more expansive services than adults. The law also maintains a minimum outpatient and inpatient benefits for treatment of diagnoses that are not considered to be “biologically-based.” Some examples of biologically based mental disorders are: Schizophrenia, Bipolar Disorder, and Depression. If you and your child have been denied benefits, you may decide to contact a health law attorney to determine if the Mental Health Parity Law can help you.

Affordable Care Act (2010)

The Affordable Care Act, also known as “Obamacare” was passed in 2010, and was upheld by the Supreme Court in 2012.  This legislation has many implications for accessing and maintaining insurance, and will positively impact those seeking services for mental health needs. Prior to this legislation, insurance companies were able to deny coverage based on a pre-existing condition, including mental health concerns, which had led to people denying that any pre-existing mental health concerns existed when applying for benefits. Given that half of all psychiatric illnesses like major depression, anxiety disorders or substance abuse start by age 14 and that 75% are present by age 25, the majority of people needing care for mental health needs have a pre-existing condition. This law prohibits insurance companies from being able to deny coverage on the basis of any pre-existing condition, including mental health needs.  Additionally, this legislation provides that children may remain on their parents insurance, as long as they do not have access to job-based insurance, until age 26.  Also, there are provisions that prevent insurance companies from dropping coverage or imposing lifetime limits, which can impact critical services like inpatient hospitalization stays or outpatient coverage as well as providing a process for appealing denials of coverage or services to an outside board if your insurance company is unwilling to cover the services.  By creating incentives for physicians to think about their clients in a more holistic manner focused on prevention and wellness, including mental health, this law will help to ensure that coverage for mental health is on par with physical health care.

Glossary of Terms

Co-insurance—Co-insurance reduces the risk to insurance companies by requiring the policy holder to pay for a percentage of treatment. The exact amount the policy holder is responsible for will vary from plan to plan and can be typically found on the insurance card.

Co-pay—This is the flat amount the insured person is expected to pay for medical care at the time of the visit. Co-pay amounts can often be found listed on your insurance card.

Deductible—This is the amount you must pay each year for health costs before your plan begins contributing. Some health insurance plans have deductibles and some do not. The amount of the deductible will vary from one plan to another and can vary from individual to family plans.

Disability Insurance—This type of insurance policy pays benefits if you are unable to work. Common reasons are injury and serious illness.

Exclusions—These are services not covered by a plan. They must be explicitly listed in the information provided by the company.

Fee-for-service Insurance—This is health insurance requiring you and your plan to each pay a portion of your health expenses, and the company pays a specific amount for each visit. In most cases, it resembles a co-insurance plan, and you are still responsible for the deductible.

Flexible Spending Arrangements— This benefit is offered by an employer when a set amount of pre-tax wages are set aside to cover medical expenses. At the end of the year, unused dollars are lost.

Formulary—This lists the pharmaceuticals a health plan will cover.

Group Insurance—This health plan is offered to a group of individuals by an employer, association, union, or other entity, providing coverage for individuals and possibly their dependents.

Health Maintenance Organization (HMO)—In this form of managed care, you receive all your care from participating providers. HMOs cover only care rendered by those doctors and other professionals who have agreed to treat patients in accordance with the HMOs guidelines and restrictions - in exchange for a steady stream of customers. You usually must obtain a referral from your primary care physician before you can see a specialist.

Health Reimbursement Arrangement—This is one of the most flexible insurance accounts available. These federally-approved accounts may be tied to a high deductible plan or offered independently. They are entirely employer-funded. HRAs are similar to flexible spending accounts; however, FSAs are an addition to your health coverage while HRAs are your health coverage. Unlike FSAs, unused HRA funds at the end of the year roll over and accrue.

Health Savings Account—This type of account is available to those enrolled in a high-deductible insurance plan so they can put wages away toward medical expenses on a tax-free basis. Any balance remaining at the end of the year "rolls over" to the next year, unlike a flexible spending account.

High-deductible Health Plan—This term is almost always used within the context of a health savings account and refers to a tax-advantaged way to put money towards medical expenses. If your health costs are mostly for preventative care, it may be worth considering a high-deductible health plan. For reference, the U.S. Department of the Treasury has specified that in the 2008 tax year, a high deductible health plan must have an annual deductible of at least $1,100 for individuals and $2,200 for families. This annual deductible figure is indexed each year for inflation.

High-risk Pool—This state-operated program offers coverage for individuals who may have been denied health insurance from another source due to a medical history that includes heart disease, emphysema or another serious illness.

In-Network Provider – This refers to a provider who has contracted to work with a particular health insurance company. Typically, HMOs only cover services by providers who are in-network.

Indemnity Insurance—This plan pays up to a fixed amount when you make a claim. The premiums on health insurance indemnity plans may be lower than on other plans, but the fixed payments may cover only a fraction of your medical bills. Indemnity plans should not be considered replacements for more comprehensive health insurance since they leave you vulnerable to unforeseen medical needs.

Individual Health Insurance—This coverage is purchased independently by individuals for themselves and/or their dependents, usually directly from an insurance company.

Long-term Care Insurance—This coverage pays for nursing home or in-home care. Premiums are based on the age of the applicant and usually remain stable for the duration of the policy. Premium payments end when the insured meets the criteria for long-term care for reasons such as medical necessity, cognitive impairment, and inability to complete activities of daily living.

Managed Care—This refers to an organized way of obtaining and paying for health care with the aim of controlling costs. Managed care plans feature a network of physicians, hospitals, and other providers who participate in the plan. The primary care physician is typically the “gatekeeper” who makes referrals to specialists within the plan network. In some plans, it is possible to see an out-of-network provider, but at a higher cost.

Medicaid—This program is funded by the federal and state governments in order to provide health care for certain people who cannot otherwise afford it. Although all 50 states participate in the program, each has its own set of eligibility requirements, such as income level.

Medical Savings Accounts—These accounts can be set up by self-employed individuals and those who work for small companies so that tax-deferred funds are set aside to cover medical expenses. Withdrawals are tax-free if used to pay for approved medical expenses

Medicare—This federal insurance program provides health care coverage to individuals aged 65 and older and to certain disabled people. Individuals still have deductibles and co-payments, but much of their medical costs are covered by the program. It is less comprehensive than some other health care programs, but remains an important source of health care for older individuals. There are three parts: Part A covers hospital bills, Part B covers doctors’ bills, and Part C provides the option to choose from a package of health care plans.

Network – This group of physicians, hospitals, and other providers participates in a particular insurance plan in exchange for reduced fees. Insured individuals usually pay less for using a provider from within their network.

Open Enrollment - During a set time of year, people can enroll in health insurance or change from one plan to another without a “qualifying event” such as: marriage, divorce, birth of a child/adoption, changing employment or death of a spouse. This can also mean a period when employees who have not yet signed up for a certain type of offered insurance may do so.

Out-of-Network Provider - This is a provider who has not contracted to work with a particular health insurance company. Some health insurance companies, especially PPOs, may still pay for services provided by out-of-network providers, but may not pay as much.

Point-of-service Plan (POS)—This is an option built into some health care plans which use provider networks. In this case, the POS plan allows the policy holder to use a doctor, hospital or service outside of the network. However, there will be higher co-payments for such services.

Preferred Provider Organization (PPO)—In this form of managed care, there is a network of preferred providers with predictable co-payments, as with a HMO. Unlike a HMO, typically you can elect to see someone outside of the network, although you risk higher and/or less covered expenses.

Premium- This is the amount paid to purchase insurance. If you have employer-sponsored health insurance, your share of the premium is usually is deducted from your pay. It can be as a lump sum or in installments over the insurance period.

Primary Care Physician—This physician is responsible for/coordinating a patient's care in a managed care system, such as a PPO or an HMO. S/he is the primary point of contact with the insured person, and act as a gatekeeper for specialists and other services.

Reasonable and Customary Charge—Your insurance plan determines this to be the normal range of payment for a particular service in your general geographic area. If you submit charges to your health plan which are higher than what it deems reasonable and customary, it may refuse to pay.

Single Case Agreement— An agreement between an insurance company and an out-of-network provider in which the therapist will be contracted to provide services to a member at an in-network or negotiated rate.