Clients & Clinicians

What is An Allowed Amount?

Brandon Grill
November 24, 2023
Allowed Amounts for Mental Health Services: What to Know

What is an Insurance “Allowed Amount” for Therapy?

You need to see a therapist and you hope your insurance helps pay for it. You look at your insurance papers and see "allowed amount." What does that mean? It sounds confusing and makes you worry about money. This "allowed amount" can be tricky, but it's important because it tells you how much your insurance pays for therapy.

Let's go through this together so you can get help in feeling better without worrying about the cost.

What is the "Allowed Amount"?

The "allowed amount" is a term used by insurance companies to describe the maximum they will pay for a certain health service. Think of it like a price tag that your insurance agrees to pay for therapy sessions. It's also known as the "eligible expense," "payment allowance," or "negotiated rate."

Why does it exist? It keeps costs clearer for everyone—both the people getting therapy and the ones providing it. For you, it means knowing how much of the bill your insurance will cover before you even start your session. And for therapists, it tells them how much they can expect to be paid by the insurance company.

Knowing the allowed amount is super important when it comes to mental health. Services can be costly, and insurance can be complicated. By understanding the allowed amount, you can avoid surprise bills, budget for your care, and make sure you get the most from your insurance benefits.

So, how do insurance companies figure out this allowed amount for mental health services? It's a mix of agreements and regulations. Insurance companies negotiate with therapists and clinics to set these rates, which are often lower than the regular cost of therapy. They look at the usual fees for services in your area, what the therapists ask for, and what they believe is a fair price for the service. This way, they come up with an amount that balances fair payment to therapists with affordable costs for you.

The Role of the Allowed Amount in Mental Health Coverage

The allowed amount is like a cap on what your insurance will pay for your therapy. If your therapist charges more than this cap, you might have to pay the difference. That's called "out-of-pocket" costs because it comes from your own pocket. When you know the allowed amount, you can figure out how much you need to pay on your own for your mental health care.

It also matters if your therapist is "in-network" or "out-of-network." In-network means they have a deal with your insurance to charge certain prices. Out-of-network therapists don’t have that deal, so they might charge more, and that means you could pay more out-of-pocket.

What is Balance Billing?

Balance billing happens when a therapist sends you a bill for the difference between what your insurance covers and what they charge. Imagine your therapy costs $100, but your insurance's allowed amount is only $70. If your therapist asks you to pay the $30 left, that's balance billing.

This often happens with out-of-network therapists because they charge more than the insurance's cap. They're allowed to ask you for the rest of the money that insurance won't pay.

But don't worry, there are rules to help protect you. Some laws say that certain therapists can't balance bill you if you have a certain type of insurance. That means you might not have to pay more than the allowed amount. It's important to know these rules so you can keep your costs down.

Additionally, so-called mental health parity laws are expected to get better enforcement. For you, that means more affordable mental health care.

What You Need to Know About Explanation of Benefits (EOB)

Just like we talked about allowed amounts and balance billing, there's something else that's important in understanding your mental health coverage: the Explanation of Benefits, or EOB for short.

After a therapy session, your insurance sends you this EOB paper. It's not a bill, but it's full of numbers and terms that tell you what's going on with your insurance money.

An EOB shows how much your therapy costs, what the allowed amount is, and any balance billing if it's there. It tells you exactly how much the insurance paid the therapist and how much you might need to pay.

To read your EOB, look for the total cost of your therapy, the amount your insurance is covering, and what's left for you to pay, if anything. This can help you understand if you're being balance billed. If you see numbers you don't understand, you can always call your insurance and ask them to explain.

Keeping your EOBs can help you keep track of your therapy costs over time. You can see if you're getting close to meeting your deductible — that's the amount you pay before your insurance starts paying for things. By understanding your EOBs, you'll be better at managing your mental health expenses and making the most of your insurance.

Now that you know about EOBs and how they show the nitty-gritty of insurance costs, next we'll hear from someone who's gone through this whole process.

A Real-Life Example: How Adelaide Navigated Her Mental Health Insurance

When Adelaide started therapy, she knew her budget was tight. The term "allowed amount" on her insurance plan paperwork seemed straightforward until she realized it was the heart of her billing concerns. Her insurance's allowed amount was $80, yet her therapist charged $120 per session. Adelaide quickly learned this meant she would be responsible for the $40 difference.

Determined to manage her finances, Adelaide scrutinized her Explanation of Benefits (EOB), which confirmed the $40 was due to balance billing. This insight pushed her to find an in-network therapist, aligning the charges with her insurance's allowed amount and reducing her out-of-pocket costs.

Adelaide's experience underscores the importance of understanding the allowed amount to make smart choices about mental health care. By focusing on this key figure, she was able to navigate the financial side of therapy with confidence and make her mental health journey a little easier.

Tips for Patients: Managing Your Mental Health Care Costs

Before you book your first therapy session, call your insurance company. Ask them about the "allowed amount" for the services you need. Write down this number. It's how much they'll pay your therapist. Remember, this helps you plan your budget.

If your therapist isn't in your insurance network, they might charge more than the allowed amount. This could mean you'll get a bill for the extra cost. To handle this, ask therapists if they accept your insurance's allowed amount as full payment. If not, consider looking for one who does.

Knowing your insurance policy is key. Read it or talk to your insurance company to understand what's covered and what's not. Pay special attention to your allowed amounts. This way, you won’t be caught off guard by unexpected charges.


We've talked a lot about allowed amounts, balance billing, and why these are important when using mental health insurance.

Understanding the allowed amount in your mental health insurance is crucial. It can save you money and stress.

Take charge of your mental health care by getting to know the ins and outs of your insurance policy. Ask questions, stay informed, and always plan ahead.

Finally, bookmark this page and come back regularly. We’re building a network of therapists who work with Thrizer to get you reimbursed faster and effortlessly. Got out-of-network benefits? Great, let Thrizer get you your money.

About the Author
Brandon Grill

Brandon Grill is a mental health copywriter and marketer based in Las Vegas, NV. He loves helping mental health professionals build fulfilling businesses. You can find Brandon going on a walk with his adorable nephews.