Insurance Reimbursement Vs. Self-pay for Therapists

The decision to panel with insurance companies or use self-pay is one of the most significant decisions you will make as a private practice therapist. Fortunately, it’s not a permanent decision. You can start out accepting insurance and switch to self-pay later, or start as self-pay and panel with insurance companies once you’re more established.

Deciding how you’ll get paid determines how much administrative work you’ll need, how much you can charge, and what types of clients you’ll attract. Self-pay and insurance reimbursement both have benefits and challenges, so the route you choose is a personal decision. In this blog, we’ll give you the pros and cons of each so you can make the best decision for you and your prospective clients.

Factors to Consider

Starting a mental health private practice means you need to switch your mind from therapist mode to business mode. If you’ve never started a business before, it can be challenging to figure out what areas to consider when deciding how you’ll get paid. Here is a list of questions to get started when considering insurance panels Vs. Self.

  • Does insurance cover your chosen specialty? Some specialties, such as sex therapy and divorce mediation, aren’t covered by insurance. These specialties will often need to be self-pay. You may offer some services that instance covers and others it does not. The decisions about what types of therapy to offer will be detailed in your business plan and help guide your choices.
  • What insurance companies cover your area? What insurance plans do most people have? What reimbursement rates for each insurance company? Some insurance companies pay more than others, making them popular with therapists. There’s often a cap on the number of mental health professionals that an insurance company will credential, so you’ll need to call around for this information.
  • What are the credentialing requirements for insurance companies in your area? Consider everything from Blue Cross to Medicaid.
  • Do insurance companies limit the number of sessions a person can have?
  • Could you offer a sliding scale for private pay clients based on income? Will you provide self-pay clients a discount or charge a higher hourly rate?
  • What are the demographics of the people you serve? People with fewer resources may rely on health insurance covering therapy sessions. They’re paying premiums and want the most out of their insurance benefits.
  • What rate will you need to charge each hour to reach your income goals?
  • Will your clients want their mental health diagnosis information on their medical records, or is complete privacy important?
  • How will you market your services? Think beyond referrals from insurance companies and other therapists.

Is It Normal for Therapists to Not Take Insurance?

Many therapists opt to use only self-pay, especially when starting in private practice. Insurance paneling can be time-consuming and cut into the amount of time you can spend in session with clients or scaling your business. A private-pay practice is often more profitable, depending on your niche. There are disadvantages to using only self-pay rates, which we will discuss later in this blog.

What is the Process For Taking Insurance

Many private practice therapists opt for self-pay because of the amount of administrative time required for insurance paneling. Paneling with insurance companies is a complicated process that will be slightly different for each insurance company. Most will need you to register with the CAQH database, so that’s a great place to start.

Then, you’ll need to contact insurance companies to see if they are adding providers. If they are, you can fill out an application. If your application is approved, you’ll sign a contract detailing reimbursement rates, claims filing procedures, etc. You can then start taking patients with that insurance and submitting claims via the insurance company’s policies. It can take up to 45 days for insurance companies to process claims.

Taking Insurance


  • Built-in referral system from insurance companies
  • Most people will want to use health insurance to pay for mental health care.
  • Best if you serve economically disadvantaged populations or rural communities.
  • More diversity in your client base.
  • Insurance credentialing can increase your credibility.
  • Doctors and mental health professionals will refer patients to therapists in their networks.


  • Insurance paneling requires hours of administrative time.
  • Filing claims takes time outside of direct client time, so it’s essentially unpaid.
  • Insurance companies can reject claims requiring additional time and energy.
  • Insurance companies decide your reimbursement rates, so it’s difficult to give yourself a raise.
  • You may need to hire other staff to take care of medical billing.

Private Pay


  • You set your fee based on how many clients you can see each week and how much you want to make each year.
  • You’re paid for services immediately.
  • You don’t have the hassle of filing claims or refining rejected claims.
  • Your services will appeal to clients with higher incomes.


  • You can’t rely on referrals from insurance companies.
  • You may lose clients when you switch to private practice because they need to use insurance.
  • Less diversity in your client base.

Superbills: a Third Option

Another option for private practice clinicians wishing to avoid the hassle of insurance paneling is to use a superbill. Your client pays out of pocket at a rate you establish. Then, you send a detailed superbill to the client at the end of the month or another predetermined interval. It’s the client’s job to send the Superbill to their insurance company for reimbursement. While some clients may be unable to afford the out-of-pocket expense and wait for reimbursement, a superbill is an option that falls somewhere between private pay and insurance.

Get Guidance and Make the Right Decisions for Your Practice

All the decision-making required for setting up your private practice can feel overwhelming, especially if you’ve never started a business before. You need guidance from someone with experience, but you also need accountability to ensure you’re completing tasks at a decent rate.

Soribel Martinez, LCSW, is a psychotherapist who started her private practice, SMPsychotherapy and Counseling Services, in 2018 and scaled it to include over thirteen practitioners and two states. Her coaching programs will start you on the right track toward building your million-dollar practice. Reach out today to schedule your FREE Business Consultation Call to learn more about Soribel’s business coaching services. She’ll learn more about your current business, your goals for scaling your practice and provide her recommendations for your next steps. You can also download a Private Practice Checklist to help you organize your tasks.

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