- Financially Better for Clients. This maybe counterintuitive, but paying out of pocket for many healthcare services has been shown to actually be the same or less expensive. The average number of sessions I see clients in a year is 21. Here’s the math: 21 Sessions x $159/session = $3339. That’s a big chunk of money. But…whatever is not reimbursable to you by insurance is often tax deductible. Most healthcare expenses can also be paid directly with an HSA or FSA. Additionally, more and more families are choosing high deductible, lower fee plans. Pay $5000 deductible and then insurance kicks in. That’s after you’ve paid your $833/month.
- Less Complication. It takes longer to verify insurance, verify their plan covers my services and ensure they can be seen It is a fact that every document or form that needs to be sent to insurance is an opportunity for them to avoid financial responsibility. I’ve had dozens of situations where my office manager would send in a form and the insurance company would first claim they never got it. We’d resend it. Then they claimed it was not completed correctly. Resend after corrections. Then they would claim it was incomplete. This game can last up to a year (I’m still getting payments from insurance claims filed over a year ago).
- Clinical Decisions are Not Driven By Insurance. I’ve had way too many instances where an insurance company told me or the family that the client ‘no longer met criteria for services.’ What? How the heck would they know that? It’s based on the number of sessions they allot, the diagnosis I gave and how much money has been spent. At no time does insurance actually review my notes, talk to the client or family or inquire about the clinical status. No thanks – I don’t want insurance professionals making decisions for my clients. And just in case you were thinking it, I’m not a right-wing, libertarian nut job. This is actually my progressive, liberal side coming out advocating for my clients against huge companies whose sole business model is to take in as much money as possible and avoid contractual obligations.
- Flexibity. No insurance company has ever liked hearing that I’m on-call for clients and use texting, video chat, etc. to continue treatment and support between sessions. They also are not fans of me working with parents in a consulting manner. They don’t want to hear that I provide insider knowledge of treatment programs. None of this fits within their narrow definition of what a counselor should do. I do what is necessary to create stability and promote a healthier life.
- Protection. Until there are safeguards that protect clients from being blacklisted for a preexisting condition (ACA is currently under attack from the Trump administration for this) I’d prefer not be forced by insurance companies to diagnose a client. For me to get payment, I have to provide client’s name, diagnosis code, CPT code (what service I provided), my license information, and my NPI (national identifier for healthcare professionals). If I fail to provide any of that, the claim with be denied. In my opinion, there is no reason why a company needs evidence that a client has a diagnosible condition. I totally understand requiring all the other information but diagnosis is unnecessary. At times, a diagnosis is important for the client or family to hear and understand.
Most people see a psychotherapist/counselor for the mental benefits of having someone to talk to about anxiety, depression, relationship issues or substance abuse. Insurance companies have increasingly become difficult to work with and will often dictate types of treatment, how many sessions are allowable. They also dictate when someone is well enough to not need treatment. More and more students I work with at Indiana University are paying out of pocket for mental health services because of the hassles of dealing with insurance. Same is true for parents with whom I consult for therapeutic placement. Private pay, while seemingly more expensive on the front-end, turns out to often be comperable to using insurance.
What many people do not realize is that seeing a therapist or paying for residential treatment out of pocket can often be covered through out of network benefits and also might also provide tax deductions. To start the conversation, I put together a quick overview of what, if anything, can be deducted from your taxes.
Read on to learn when and what could be deductible. This may get more complicated if you consider using a health savings plan or flexible spending account to pay for services. Let’s get started…
1. Find those Qualifying Expenses
Only medical expenses that are for the “diagnosis, cure, mitigation, treatment, or prevention of disease, or payments for treatments affecting any structure or function of the body” are considered qualifying expenses. Your son or daughter’s therapist appointments are deductible as a medical expense, according to IRS Publication 502, but only to the extent it is for medical care. You can also include the cost of therapist appointments for your spouse or your dependents, if applicable.
Below is a partial list directly from the IRS site (I took the liberty of underlining some of the more relevant items):
- Air conditioner necessary for relief from allergies or other respiratory problems (less any increase in the value of your home resulting from installation of air conditioning)
- Alcoholism treatment, including inpatient treatment, meals and lodging at a therapeutic center for alcohol addiction
- Artificial limbs
- Artificial teeth
- Birth control pills prescribed by a doctor
- Braille books and magazines used by a visually-impaired person
- A clarinet and lessons to treat the improper alignment of a child’s upper and lower teeth
- Contact lenses, including equipment and materials for using contacts
- Cosmetic surgery, if it’s necessary to improve a deformity related to a congenital abnormality, accident or disease
- Diet, special. When prescribed by a doctor, you can deduct the extra cost of purchasing special food to alleviate a specific medical condition
- Doctor or physician expenses
- Drug addiction treatment, including in-patient treatment, meals and lodging at a therapeutic center for drug addiction
- Elastic hosiery to treat blood circulation problems
- Exercise program if a doctor has recommended it as treatment for a specific condition
- Extra rent or utilities for a larger apartment required in order to provide space for a nurse/attendant
- Eye surgery, such as Lasik or a similar procedure, when it is not for cosmetic purposes only
- Guide dog or other animal used by a visually-impaired, hearing-impaired or otherwise physically disabled person
- Hospital care
- Household help for nursing care services only
- Insurance premiums for medical care coverage
- Laboratory fees
- Lead-based paint removal, including the cost of removing lead-based paints from surfaces when a child has lead poisoning or was previously diagnosed with lead poisoning. (Does not include the cost of repainting.)
- Legal fees paid to authorize treatment for mental illness
- Lifetime care advance payments
- Lodging expenses while away from home to receive medical care in a hospital or medical facility
- Long-term care insurance and long-term care expenses (there are limitations to what you can deduct)
- Mattresses and boards bought specifically to alleviate an arthritic condition
- Medical aids, including wheelchairs, hearing aids and batteries, eyeglasses, contact lenses, crutches, braces and guide dogs (and their care)
- Medical conference admission costs and travel expenses for a chronically ill person or a parent of a chronically ill child to learn about new medical treatments. (But not the cost of meals and lodging while attending the conference)
- Medicines and drugs
- Nursing care
- Nursing home expenses, including the entire cost of medical care, plus meals and lodging if the main reason for being in the home is to obtain medical care
- Oxygen and oxygen equipment
- Reclining chair bought on a doctor’s advice by a person with a cardiac condition
- Special education; tuition for sending a mentally impaired or physically disabled person to a special school that has resources to relieve the disability
- Smoking cessation programs (does not have to be recommended by a physician)
- Swimming (the cost of therapeutic swimming prescribed by a physician)
- Telephone (the cost and repair of special telephone equipment for a hearing-impaired person)
- Television (the cost of equipment used to display the audio part of a TV program for hearing-impaired persons)
- Transplant of an organ (but not hair transplants)
- Transportation costs for obtaining medical care
- Travel expenses for parents visiting their child in a special school for children with drug problems, where the visits are part of the medical treatment
- Weight loss program, if it is recommended by a doctor to treat a specific medical condition or to cure any specific ailment or disease
- Whirlpool baths prescribed by a doctor
- Wig for the mental health of a patient who has lost his or her hair due to a disease
- X-ray services
Please also want to ask your tax professional how to also list expenses related to placing and working with therapeutic boarding school, education consultant, therapeutic transportation services, case manager, residential treatment center and inpatient hospitalization for any of your children that you listed as dependents and needed such care.
2. What Counts as Therapy (HINT: Not everything)?
The therapist’s treatment must be related to treating a physical or mental issue. For example, the IRS ruled that marital counseling to improve the marital relationship was not deductible as a medical expense since it was not related to a mental or physical defect (…which is why you should work with your therapist during the intake session to determine if you really need “marriage counseling” or individual counseling where you occasionally bring in your spouse to help with your distress). However, in other rulings, the IRS has held that the cost of psychiatric treatment for sexual inadequacy and incompatibility was closely related enough to a medical or physical defect that those costs could be deducted. This gray area comes up often which is why you should consult your tax professional AND therapist. Other types of therapy or intervention often over looked include:
- Individual and Group Counseling provided at Therapeutic Boarding School, Hospital or Residential Treatment Center
- Intake Sessions
- Psychiatrist visits/consults
- Psychological testing
- Therapeutic transportation service
- Case manager or education consultant
- Parenting assessment
- Drug testing
4. Medical Deduction Limitations
Just because a therapist’s appointment qualifies as a medical expense doesn’t mean you will actually be able get credit for it on your tax return. In 2012, you could only deduct medical expenses that exceed 7.5 % of your adjusted gross income. For future years, the floor goes up to 10 %. For example, if your AGI is $51,000, using the 10 percent floor, you’re only able to deduct your medical costs that exceed $5,100. Unless you’ve got a very expensive therapist, you’re probably going to need some other medical expenses to be able to take any deduction.
5. Itemizing Required
If you take the standard deduction, you are out of luck. You must itemize your taxes in order to claim your therapist sessions (and any associated costs). If you can only deduct a few hundred dollars or so after accounting for the AGI floor, you might not benefit if you give up your standard deduction to itemize. However, if you were already planning to itemize because of other itemized deductions, such as the mortgage interest deduction or charitable contributions, any medical expenses can also be deducted without further cost.
Don’t rely on this blog post for tax decisions. Consult your tax professional.
For years I have listened to parents’ tales of wasted time and money as they shifted from one therapist to another, one residential treatment program to another without experiencing the progress they anticipated. What parents don’t know costs them big time. Tens of thousands of dollars in expensive, non-evidence based treatments along with countless hours searching generic databases that don’t really help someone understand the differences in care and how to tell good interventions from bad.
Yes, this happens to be one of the services Fonthill Counseling provides but even if you do not use us, take these suggestions to heart. We offer a free consultation and will help you determine if higher level of care like residential treatment is even a good fit for your struggling teen or young adult child.
1. Professional Advisement
Chances are, if you’ve ever bought a house or had surgery, you consulted with a professional within the respective industry. So what do parents think when they start their online searching for treatment options? Do they honestly think they know how to determine the quality, effectiveness and safety of a program from reading through a website or spending 10 min on the phone with an ‘admissions counselor?’ There is WAY more to choosing any sort of therapeutic intervention than the list your insurance provides or what you find on Psychology Today.
A high quality professional advisor (aka Educational Consultant or Therapeutic Placement Consultant) will know if insurance will cover expenses AND (…and this is the important part) how to actually GET insurance to pay. They know when a kid is appropriate to remain at home and start/continue with outpatient therapy and when they are no longer appropriate for home and need a higher level of care. They will also know the positives and negatives of programs that are clinically, financially and logistically the best fit for your loved one. One program we worked with for years had lots of staff turnover which resulted in 2 suicides in close succession. We no longer refer to them. Guess what? That program does not advertise about the suicides.
Even if you are just doing preliminary search to see what might be available for your acting out son or daughter, whether you’re thinking about therapeutic boarding school, residential treatment for substance abuse or an eating disorder, or you’re looking for a treatment program for depression or anxiety, find a professional.
WARNING! Stay away from any ‘professional’ that is offering advice for residential treatment, therapeutic boarding school or a therapeutic wilderness program but does not have any clinical credentials. Look for professionals that have at least a master’s degree in counseling, psychology, social work or marriage and family therapy. Also, and this is REALLY important, make sure they are licensed in some clinical field (Licensed Professional Counselor, Licensed Clinical Social Worker, Licensed Marriage and Family Therapist, etc.). Many, many professionals are providing advice without really having a formal, clinical background.
Every parent asking us for help starts out by saying their highest priority is ‘quality’ or ‘effectiveness.’ But once we start drilling down into details, reality mandates compromise. One of the biggest realities is cost. Cost matters… and it should. It’s not healthy, and certainly not necessary, for parents to think it’s appropriate to spend any amount to fix a problem. Residential treatment can cost between $400 per day up to $80,000 per month. Insane. What many parents don’t realize is the ‘retail price’ quoted by a treatment program admission counselor (…price is almost never posted on their website) is often not set in stone.
Let me explain. If a parent calls Fonthill Counseling and needs to find an eating disorder program in the mid-West for their college-aged daughter, it’s likely we’ll contact Timberline Knolls (pretty good program located in Illinois). If the parent calls Timberline directly, they’ll get a daily or monthly rate quoted to them with a minimum length of stay. Now, if Fonthill Counseling calls, we can negotiate a lower rate along with other accommodations (ie. single vs double room, admission date, etc.). Most programs also have ‘scholarships’ or supportive funding they can tap when their numbers are low. They’d rather have full client roster but less income per person rather than few clients and even less income since their overhead costs do not change much based on census.
But now we have to back up a bit and talk about insurance. Bottomline – insurance does NOT want to pay for residential treatment. Ever. It’s vital that if you think your son or daughter needs a higher level of care, you have your professional get a) a psychological evaluation conducted and b) preauthorization. Here is a link to more details on getting insurance to pay for treatment. If you do not submit that to insurance or if the residential treatment program fails to submit it (and they are in-network) your chances of having insurance cover treatment is very, very, very low. If your insurance covers medical inpatient and residential treatment, they are required by law to pay for mental health residential treatment. Insurance companies will argue with you on this but its the law.
Unless the client is very motivated to participate in treatment, we recommend having your professional find a transport service to transition from home to treatment. These are not thugs in black shirts that throw a bag over your kid’s head and drag them to a running van. These are often well-trained professionals using counseling skills that create enough rapport and trust to get your kid to voluntarily get into the car. Like any service, there are sketchy people trying to make a quick dime and true professionals with exceptional interpersonal skills (we’ve used Right Direction Crisis Intervention many times with great success). Insurance will never cover this but definitely worth the cost.
Why not have parents escort their own kid? Unless you have great rapport and the issues leading them to treatment have nothing to do with trust issues, running away, drugs or medically complicated issues, parents do not have the clinical skills in supporting kids during a powerless experience like transitioning from home to residential treatment.
4. Quality Control
At Fonthill, we call this ‘oversight.’ Hiring a team like Fonthill ensures through regular email, phone and treatment team meetings their is unbiased, third party oversight over the treatment plan, therapy and communication at the residential treatment program. Most of the time, we are talking with the therapist and interpreting their clinical impressions back to the parents. Since parents are not clinicians, the terms and progress may not make sense but to us, we can sift through and quickly understand how things are going. Residential programs also treat clients with greater attention to detail than those without the same oversight.
How do you know when your child is ready to leave? When can you trust the treatment program is being honest about progress? What should be set up at home, in the community or back at college to ensure your money was not wasted when they transition back to real life? In our humble opinion, the first day of intake should be the first day of discharge planning. We ensure the residential treatment program has a measurable treatment plan with clearly identifiable goals.
As we get close to discharge, as the professionals circle up and agree that he or she is ready to return home or back to campus, Fonthill Counseling will often link with a therapist, psychiatrist and case manager and make sure all appointments and documentation is set up way before. This is sometimes called aftercare, community-based living, or step-down. The final discharge meeting should just be a big hug-fest since all the prep work has already been done.
We like to have the first therapy session take place within 24 hrs of discharge. First medication management appointment should be within the first 72 hrs. Case management continues to provide that oversight and continuity, making sure the treatment plan from residential treatment is modified and extended into real life. Typically, we are providing parenting support, on-call support if something goes wrong, and linking with school personnel to help the kid get back on track.
Finding residential treatment is much larger a task than what folks realize but with a little support from a professional, you can avoid wasting resources that would be better spent on your family.
The Affordable Healthcare Act has been the biggest change in our healthcare system this century (ok, and last century). This doesn’t mean that costs for residential treatment programs and therapeutic programs for acting out teens has gotten cheaper or easier to pay for. To help make sense of how a family can reasonably afford mental health or substance abuse treatment and care, we are comparing two of the most understood and underused tools – the Flexible Spending Account and the Health Savings Account. They sound so similar but definitely have major differences.
FSA (Flexible Spending Account) and HSA (Health Savings Account) are tax-advantaged accounts for healthcare expenses but they differ in terms of who is eligible, who owns the funds, whether funds are portable or roll over, contribution limits, and eligible expenses. HSAs have higher contribution limits and funds not spent in a given year roll over to the next year, but an HSA is only available to members enrolled in a high-deductible health plan (HDHP). FSAs eligibility is set by employers and usually all employees – whether they participate in a health plan or not – are eligible for an FSA, but unspent and unclaimed funds are forfeited. You continue to own money in the HSA even if you change health plans or terminate employment; however, you lose funds in an FSA when you terminate employment (with some exceptions).
Check out the chart below for a quick run through of their similarities and differences but make sure to consult your financial professional before making any major financial decisions.
When your struggling teen or young adult is acting out and traditional therapy and medication just has not been enough, it may be time for a therapeutic wilderness program. Before you start googling programs, read through our handy guide that includes not only the cost of therapeutic programs but also all the hidden costs that programs may not divulge (or even know about) and strategies on how to afford these expensive interventions.
Financial costs of support for troubled child is not free and is usually not cheap (actually, it’s pretty costly). Many savvy parents that place their troubled teen in therapeutic wilderness programs receive financial aid and/or assistance to cover the expenses of the placement. The following are items that pose a significant financial expense for parents considering the placement of troubled teens in therapeutic wilderness programs:
- Therapeutic Wilderness Program: These programs range anywhere from $200 to $500+ per day and the programs usually last 30 – 90 days. Many wilderness programs will charge an additional upfront fee for gear and supplies and some have an application fee of a few thousand dollars. If they provide individual and group counseling, your insurer may reimburse you a portion of your out-of-pocket expenses following discharge. Programs generally do not voluntarily provide the information needed so consult a case manager that knows how to navigate the process. BEWARE: With the rise of client need and fees sky-rocketing, lots of programs have sprouted up like mold after a rainy week. Do your homework and make sure the program is insured, make sure staff are happy and have been there for years and, finally, make sure they are available to any other professionals working with you. Continuity is essential when a family is experiencing turmoil.
- Transportation: If you are working with a case manager/educational consultant, they may encourage use of a therapeutic transportation service if your child has a history or is suspected of acting out when they find out about going to the program. These transport services help transition and transport a struggling teen/young adult safely to a wilderness program, when he/she may be unwilling to cooperate with parent(s) requests to go. The transport fees usually range from $2000 to $4000. Airfare is usually an addition to this charge. Price of transport fee and airfare can vary on time and location of pick up. A good transportation service has highly trained transporters with a clinical background. They normally work in teams of two from door-step to program. BEWARE: Some transport ‘companies’ are not companies but individuals who saw an opportunity to make big money. Make sure the transport company is insured, has references and loads of experience. This, ideally, should be set up by your case manager.
- Case Management + Educational Consultant / Placement Fees: Often parents will receive the wilderness program’s information from a case manager or educational consultant. These professionals generally work directly for the parents and receive no financial compensation from the wilderness therapeutic programs they recommend. Their fees range from $150/hr up to $10,000 per project. Some are paid to simply ‘place’ children while some are more therapeutic-oriented and conduct (or recommend) an assessment prior to giving placement recommendations. Some parents will receive placement recommendation from a placement service that does not charge. Usually these services will be receiving financial kick backs and/or compensation from the therapeutic wilderness programs they refer to. Many of the wilderness programs that accept placements from such services may charge the parents an upfront admissions fee ranging from $1500 to $5000. Some or all of this fee, may go to the placement service that was said to be offering free advice to the parent(s). Good case managers can often negotiate a program or treatment center down in their fees so they may end up paying for themselves in the discounts they find you. BEWARE: Some professionals may charge simply to ‘place’ your child. This does not include an evaluation by a licensed professional and does not really take into account whether residential treatment is actually recommended for their unique needs.
- Additional Travel and Additional Placement Costs: Most parents eventually travel to the wilderness program for family meetings or come out to pick up their teen at graduation. In some cases, teens are recommended to go on to more therapeutic treatment in a boarding school type atmosphere to help internalize changes before returning home from the wilderness program. Costs for these programs are usually at a lower rate, ranging from $100 to $350 per day. These rates largely depend on the amount of intensive therapy and school program offered. See Fonthill Counseling’s blog about Therapeutic Boarding Schools for more info.
- Total Cost: $2500 – $10,000/month. This sounds expensive but if you figure that an attorney costs $350/hr if your child gets into more trouble, you may actually be saving money in the long run.
When considering the above information, it is easy to understand why many parents may want to request 1) support from a case manager and 2) financial aid for therapeutic wilderness programs. Here are some of the financial aid options that some parents may consider for therapeutic wilderness programs:
- Educational Loans: Parents may often consider or be encouraged to seek an educational loan for financial aid for wilderness programs. These loans are specifically designed to cover all of the costs involved in any type of educational placement of a child. Often the interest rates for these types of loans can be very affordable. An educational loan can cover all of the above mentioned charges if set up accordingly.
- Behavioral Health Loans: There are financial institutions that specialize in providing loans to families that need support defraying some of the out-of-pocket expenses of treatment. They often lend $500 – $100,000. Repayment often is expected 30 days after the loan has closed (no more borrowing is needed). Some companies can expedite the approval process if there is serious health risk and funds are needed asap. The interest rates are lousy but, for a last ditch option, it may have to do – expect 7% – 18%. Here are some examples: Clark Behavioral Health Financing and American Healthcare Lending (actually just acquired Clark BHF).
- School Districts /Courts/DSS: Some state laws require school districts and/or courts to be responsible for cover all and/or reimburse for all or some of the financial expenses of placing a teen in a therapeutic wilderness program. Please contact your local school district office for more information. Some parents seek the advice and help of an educational attorney. These are attorneys that fight for the school district and/or state to pay for or reimburse expenses of wilderness programs and other placements. All of the above charges may not be covered; please seek their council for more detailed information.
- Grants / Reduced Rates: Though our case managers and educational consultants do it all the time, parents can directly contact programs and ask for financial grants and/or a reduced rates. Usually financial grants and reduced rates are based on the income of a family.
- Family / Close Friends: It’s not always the first or best option but don’t forget to think about asking for help of a close family member or trusted friend. In these situations, a family member or friend that is providing the financial aid may be the one recommending and encouraging the wilderness placement. We always recommend that the loan be formalized in some sort of written contract to make it clear how much will be borrowed, when and if it will be paid back and any other terms of the loan.
Please always consider consulting a case manager or educated professional before making final placement decisions with a therapeutic wilderness program. A great program that fits your child’s needs can be a life saver while the wrong placement could set treatment and your family back years at significant financial cost.