Using Insurance to Cover Mental Health Treatment

January 6, 2026

Authored by: Meagan Burkhart,

Edited by: Jemma Strain, B.S. Psychology

Seeking care for a mental health condition can be overwhelming, especially if you are worried about the cost of treatment. It’s often hard enough to find the right level of care for your child, between searching for local outpatient options and determining if inpatient or residential treatment is necessary. But factoring in how you will afford your child’s healthcare can be an extra layer of burden. Understanding mental health insurance coverage can help.

Fortunately, many health insurance plans include mental health insurance coverage. In fact, the mental health parity law requires marketplace insurance plans to treat mental and behavioral health services as essential benefits.¹

The team at Mission Prep can help you better understand the ins and outs of mental health insurance coverage. This page also works as a guide for using insurance for mental health treatment, as it covers:

What the mental health parity law is
Common behavioral health insurance benefits
Levels of care for mental health treatment
The mental health insurance verification process
Additional options for mental health treatment financial help

What Is the Mental Health Parity Law?

Three major laws have impacted mental health insurance coverage to date. First, the 1996 Mental Health Parity Act (MHPA) ensured that large group health plans can’t impose a limit on spending for insurance for mental health in comparison to medical treatment. In other words, the limit cannot be less favorable than the benefits for medical and surgical healthcare.

The MHPA was a great starting point for improving accessibility to mental health care. However, the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) included additional protective measures. Yet, the MHPAEA did not specifically require that all health plans cover mental health benefits. That level of protection came later with the Patient Protection and Affordable Care Act. The latter act has significantly shaped today’s mental health insurance coverage standards by including mental health and substance use disorder services as one of ten essential health benefit (EHB) categories.²

By including mental health and substance use disorder services in the EHB categories, all plans have to cover services like psychotherapy and counseling, as well as inpatient treatment.

The mental health parity law also applies to employer-sponsored health coverage, coverage purchased through health insurance exchanges under the ACA, the Children’s Health Insurance Program (CHIP), and most Medicaid programs.³ The specific benefits vary based on your insurance provider. But, in general, the laws in effect prevent health insurance companies from setting more restrictive limits on mental health services than medical services. This includes spending limits, copayments, days and visits covered, and authorization or care management processes.¹

Common Behavioral Health Insurance Benefits

If you are trying to determine the specific mental health treatments covered by insurance, you can start by looking for the following common benefits:

Inpatient hospitalization
Partial hospitalization
Residential care
Outpatient mental health services
Non-emergency transportation
Case management
Peer support services
Psychiatric rehabilitation
Crisis intervention
Prescription drugs
Long-term care
Early Periodic Screening, Diagnosis, and Treatment (EPSDT) services for children

Benefits can vary significantly depending on whether you are covered by a private plan, Medicaid, Medicare, CHIP, TRICARE, or VA Health Care.^4,5 It is important to call your insurance provider and speak to a representative to fully understand the details of your insurance for mental health treatment. Mission Prep can help with this process.

Levels of Care for Mental Health Treatment

If your child is dealing with a mental illness like depression or anxiety, the severity of the condition can impact what level of treatment is needed. Getting a mental health evaluation by an experienced provider can help you determine which level of care is best for your situation. This section will review a few different levels of care for treatment which are often covered mental health services.

Outpatient Treatment and Therapy Covered by Insurance

There are a variety of options for outpatient mental health treatment options that may be covered by your health insurance. Finding out what is recommended by a mental health practitioner is important when speaking to your insurance representative to find out about coverage. However, outpatient mental health services typically include diagnosing and treating patients with a range of mental illnesses. Some of the services that might be included in your particular insurance plan are a psychiatric evaluation, medication management, partial hospitalization programs, intensive outpatient services, and psychotherapy sessions. All of these services must be provided by qualified health professionals, including psychiatrists, clinical psychologists, social workers, nurse practitioners, and mental health counselors, to name a few.⁶

Inpatient Mental Health Insurance Coverage

For more severe mental illness treatment, inpatient services may be necessary. Inpatient mental health insurance coverage involves treatment when the patient is admitted to a hospital. The coverage includes services provided by doctors and health care professionals in the hospital setting. Depending on your coverage, you might have to meet a deductible before your health insurance contributes to the cost of inpatient mental health care. In addition, copays and coinsurance apply to these services as outlined in your health benefits. Inpatient mental health treatment can be delivered at a general hospital or a specialized psychiatric facility, depending on your needs.⁷

Residential Mental Health Insurance

Depending on medical necessity, some insurance carriers provide coverage for residential mental health treatment. If your child is experiencing severe symptoms due to their mental illness, but a hospital environment is not warranted, a residential mental health facility may be recommended. Residential mental health facilities typically include continuous observation, as well as structured activities to support mental wellness. This level of care may be helpful if you are unable to manage your child’s symptoms at home or if safety is becoming an issue. If you go down this route for treatment, your child could remain in the intensive program for several months before returning home.⁸ Some of the services provided by residential mental health insurance include individual and group therapy sessions, treatment planning, family therapy, and academic support for school-age children.⁸ It is important to note that residential mental health insurance isn’t guaranteed, and your specific plan might involve inpatient treatment or outpatient treatment as an alternative. Understanding the cost of residential mental health treatment is an important first step in getting your child the help they need.

Mental Health Rehab Insurance

For teens dealing with addiction, a drug and alcohol rehab facility may be the appropriate level of mental health care. Fortunately, under the ACA, addiction is not considered a pre-existing condition for health insurance purposes, making it more likely that you will have mental health rehab insurance as an option.⁹ When seeking treatment for an addiction, you will likely have to follow a process that can include several levels of care. For example, the process might entail an addiction evaluation, brief interventions, medication, clinic visits, alcohol and drug testing, family counseling, as well as rehab or detox facilities as needed.⁹

The Mental Health Insurance Verification Process

As we mentioned earlier, your mental health treatment coverage will depend on your specific insurance carrier. To find out whether a service is covered by your insurance, you will need to go through the mental health insurance verification process. Following this process will help ensure that you don’t get mental health claims denied or end up with surprise bills after receiving treatment.¹⁰

When you reach out to a mental healthcare facility, the practice has to verify your insurance coverage to determine your responsibility for payments. The amount you are responsible for can depend on your deductible, copays, and coinsurance, which are specific to your plan.¹⁰

Most of the time, your mental health insurance can be verified electronically. After you provide the practice with the required information on your insurance card, they will be able to get information about the status of your insurance, understand your benefits, and update any personal details. Ideally, your provider will verify your insurance before your initial visit so that you are prepared for any bills.¹⁰

Mental Health Treatment Financial Help

Unfortunately, the level of care recommended for your child may not fall under covered mental health services. In this case, you can choose to pay for the recommended services without insurance or seek an alternative service that is covered under your plan. If you choose to pursue the recommended level of care without the financial assistance of your health insurance, you might consider looking for other ways to cover the cost of mental health treatment.

There are several resources available for mental health treatment and financial help that can be beneficial for you and your family during this time. Mental Health America provides suggestions for those without health insurance regarding how to obtain coverage. This includes applying for Medicaid, Medicare, employer coverage, Consolidated Omnibus Business Reconciliation Act (COBRA), and even schools if you are attending a state university.¹¹

If you are shopping for a private insurance plan, there are several different types of plans to consider, such as:¹¹

Managed care plans: These are usually the most affordable options, but they are also typically the strictest when it comes to which providers are covered.
Health maintenance organizations: These are similar to managed care, but you have additional choices for providers as long as you remain “in network.”
Point of service plans: These offer more flexibility in that you don’t need a primary care physician’s referral to see mental health specialists who are in network with your plan.
Preferred provider organizations: These are the broadest plans that allow for both in-network care and out-of-network care.

Finding the right health insurance plan that can meet your needs can be difficult. It takes time to research, and out-of-pocket costs can be high depending on your plan. The hope is to find a plan that has a balance of affordability and flexibility for care.

MissionPrep: Providing Assistance With How to Use Insurance for Mental Health

If you are ready to get your child the help they need to protect their mental wellbeing, Mission Prep is here to help. Not only do we offer a variety of mental health treatment options, but our team can also assist you in verifying your mental health insurance coverage. Further, we can work with your plan to get you effective and affordable care.

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