Insurance or Out Of Pocket? Pros and Cons

Should I take insurance or cash pay at my private practice?

This is a question a lot of therapists ask as they’re starting out in private practice, and it makes sense.
Weighing the pros and cons of both can feel confusing, and at the end of the day, we want to be able to build a sustainable practice while also helping a wide variety of people.
So, what’s the answer?

Here are the main pros and cons of each so you can make a better decision:



Cons of going the insurance route:


1. Below market rates

If you’re thinking about taking insurance, knowing beforehand what the actual payout of your sessions will be is crucial. The payout may be lower than what you might expect. At most this could look like $110 per session, but many times it can look more like $60 or $75 per session.

Think through what this would mean financially for you depending on the number of clients you’re hoping to see per week. Knowing what your income will realistically look like when all is said and done will help you create a practice aligned with your values and goals.


2. It’s hard to get off panels

Insurance panels usually want you to be on them and stay on them. Going through the process of dropping one or more panels can be a lengthy process many therapists don’t realize from the get-go when joining.

It’s important if you choose to go the insurance route to understand what the steps and process are like un-paneling and asking those questions upfront.

This will save you a headache later if you’re trying to make a quick transition from insurance to out-of-pocket. Hint: It most likely will not be an overnight switch!


3. Confidentiality

Due to the information needed to take your client’s insurance, it can make therapists feel uneasy at times giving so much personal information away.

Mental health is still something that, unfortunately, is still stigmatized, and having a certain diagnosis on your medical records may not help you in other areas of your life like going to school or getting a job.

Having to diagnose in order to submit claims can get tricky and at times feels over-pathologizing and unnecessary.


4. Delay in claims (accounts receivable)

This is probably the biggest issue therapists run into when taking insurance.

Receiving the payment from your claims can sometimes take weeks. Being a therapist in private practice can already be challenging when it comes to relying on a consistent income and/or schedule. When you add a delay in getting paid out for your services this can make things stressful.

Another thing to think about is if you’re running a group practice and there is a delay in your claims being paid out, you still have to pay your employees. That means it’ll be coming straight out of your business due to the delay which can be another added stressor as well.


Now, here are the pros of insurance:


1. Built-in clients

Ok, one of the big reasons so many of us are drawn to taking insurance is because we know if we take it, it’s more likely people want to book sessions with us.

Taking insurance is very attractive to potential clients which can make your job seem easier (although we strongly disagree that it replaces a good marketing plan!).

The fact is, taking insurance will most likely create a higher chance of getting more clients, but again, it’s not an excuse for throwing out your marketing plan. Your marketing is still a huge factor in building a sustainable practice, especially if you’re thinking of going out of network eventually.

All that to say, taking insurance can give you peace of mind when it comes to getting clients booked, but remember to think through what you’re wanting for you and your practice long term before jumping head first into it.


2. Payment is mostly guaranteed

Most of us have been there. We see a client and somehow their card bounces, is canceled, or they never entered their info in the first place.

Knowing that no matter what, even if it’s later than expected, you’ll get paid is a big reason many therapists choose to go the insurance route.


3. Serve a broader population

Here’s another big reason therapists take insurance. They want to be able to serve populations that many times cannot afford an out-of-pocket rate.

If you’re wanting your specialization or niche to be with clients that would benefit from you being in-network, taking insurance can be a great option.

Now, we do have to say we’re a bit biased here when it comes to choosing cash pay, but that doesn’t mean it’s necessarily the right option for you.

Cons of cash pay:


1. Overcoming objection hurdles

Here’s the deal, you can have a great connection with a potential client over the phone, they’re thinking you’re a great fit for their needs, and then… you drop the price per session.

Sometimes they’re silent, or maybe they suddenly change their tone and say they’ll “circle back” with you.

So, is the answer to just go the insurance route??


Here’s why.

Although stating your out-of-network fees can turn potential clients away, there are ways to deal with these objections. Setting up the consultation in a way that can actually convert clients you may have assumed wouldn’t consider paying your fee really is possible.

To learn more about how to have a killer consult call, watch our video here where we go in-depth into how to make these calls and how to convert clients even if they seem hesitant.


2. Skews your practice toward serving only the privileged

Just as taking insurance can help you reach clients with a lower SES, being out of network can lead to creating a caseload of primarily privileged clients.

This can get tricky as many of us went into this field in order to help those who need it most.

Something we suggest doing (and this will be different depending on your values and overall mission for you and your practice) is taking on a set amount of full fee clients to run a sustainable business while offering a set number of spots for reduced fee clients as well.


3. Other therapists might judge you

As much as we wish this wasn’t the case, therapists can be judgmental for the fees you charge or the fact that you don’t take insurance.

Here’s the deal, we all want to help people, and it can be easy to start pointing fingers and criticize other therapists for the way they go about doing it.

Judgment many times is just a projection of insecurity or jealousy, so don’t take it too seriously. If this does happen to you, try your best to ignore it and keep moving forward knowing everyone’s values and situations will look different and that’s ok.


Pros of cash pay:


1. Clients can often get partially reimbursed

Although there are reasons why clients may not get reimbursed by their insurance, and it’s important to be upfront with them about this possibility, there is also a good chance they can be reimbursed through superbills.

Make sure you understand this process and can explain it well to potential clients.


2. Full control of your fees = massive income potential

Say goodbye to the glass ceiling of being a therapist! When you can set your own fees, you go from having very real limits for income potential to being able to see fewer clients while charging a higher fee.

Really think about your capacity as a mental health provider and ask yourself if reducing the number of clients you see would increase your own mental health and self-care, actually giving you more capacity to best help clients and be present for your life outside of work.


3. Ability to protect client information

If you’re out of network, you don’t have to send detailed client information to insurance companies. Your clients are protected and can rest assured their private information is kept safe and confidential.

Which one is best for you??
it depends on your goals, vision, mission, and values, and who you want to serve. Regardless of what you choose, choose wisely and in a way that protects the interests of a long, profitable, and sustaining practice.
FYI, I own and operate a private pay therapy practice called Calm Again Counseling. We offer trauma therapy in San Francisco and EMDR therapy in San Francisco.

Pro Tip:

It’s always easier to start cash pay and then add insurance later vs the other way around!
Want to learn more about how you can create a practice you love without all the overwhelm? Click below to get started today!

Watch our latest video where John talks about the pros and cons of these two options in more detail!



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