insure logo

Why you can trust

quality icon

Quality Verified

At, we are committed to providing the timely, accurate and expert information consumers need to make smart insurance decisions. All our content is written and reviewed by industry professionals and insurance experts. Our team carefully vets our rate data to ensure we only provide reliable and up-to-date insurance pricing. We follow the highest editorial standards. Our content is based solely on objective research and data gathering. We maintain strict editorial independence to ensure unbiased coverage of the insurance industry.

Mental illness usually begins early in life: Half of all lifetime mental illness cases begin by age 14 and three-quarters begin by age 24, according to the National Institute of Mental Health (NIMH). Anxiety disorders often begin in late childhood, mood disorders appear in late adolescence and substance abuse begins in the early 20s, says NIMH. Left untreated, one mental illness can become more severe or even lead to the development of a co-occurring mental illness.

mental health insurance for childrenAccording to a recent article by U.S. News & World Report, between 8 and 13 million children and teenagers have a mental health problem at any given time. Unfortunately, two-thirds of them are not getting treatment for their mental health issues.

Furthermore, suicide is the third leading cause of death for ages 10 to 24 years, and more than 90 percent of those who die by suicide have a diagnosable mental disorder, according to the NIMH.

Key Takeaways

  • Health insurance plans vary on offerings for mental health.
  • If your child qualifies for the Children’s Health Insurance Program (CHIP), you can receive some mental health treatments.
  • Assessing whether or not your health plan provides adequate mental health for your child can be complex, review the plan details to determine if it fits your family’s needs.

Mental health insurance for children

Getting your health insurance plan to cover mental illness treatment can be an ordeal. Dr. Barry Herman, a child and adolescent psychiatrist and former HMO medical director and currently Area Medical Officer at Sanofi-Aventis U.S., says HMOs reduce their mental health care costs by rationing treatment, pushing patients out of their networks into community mental health services and lowering their reimbursements to providers.

In addition, health insurance plans regularly “carve out” mental health treatment by contracting with a separate company to provide behavioral health services to plan members. Magellan Health Services and ValueOptions, for example, are large contractors for mental health treatment and other services.

Herman says this can compromise care because health plans pay these contractors on a “capitated percentage” of the premiums; that means the contractors are paid a fixed amount per plan member whether the member never uses the service or uses the service heavily. Herman says this arrangement encourages rationing and cost-shifting.

“It’s very hard for parents to get the appropriate treatment for their children under managed care,” says Herman. “It’s a shell game all about cost-shifting rather than about good patient care. Many diagnoses specific to children and adolescents, such as attention deficit and hyperactivity disorder and eating disorders, are excluded from coverage. These kids fall through the cracks.”

Additionally, Herman says it is an abomination that parents and their children must endure long waits for appointments, endless pre-authorization requests for mental health care and claim denials.

Andrew Sperling, director of legislative advocacy for the National Alliance on Mental Illness (NAMI), says carve-out programs have the potential to provide better care than the health plans would on their own. “These carve-out plans have greater expertise in mental health treatment services than most managed care plans. They will continue to exist, and in fact, we could see the market strengthen. Because of uncertainty many plans have about complying with the 2008 parity law [see below], we expect that many states will turn to HMOs because of their expertise in mental health treatment.”

Coverage through CHIP

If your child qualifies for the Children’s Health Insurance Program (CHIP), you can receive some mental treatment coverage or your child. The first step to determining whether your child qualifies is to check into income eligibility requirements in your particular state.  

Become an advocate for your child

It’s important to educate yourself about the mental health assistance available for your children from HMOs. If your claim is denied or payment reduced, “appeal everything,” says Herman, and as many times as it takes to secure the appropriate medically necessary care. If your insurer rebuffs your attempts and you believe your plan’s terms provide coverage for what you want, initiate an appeal directly with the insurer. In addition, the best places to take your complaints are:

  • Your state insurance department.
  • Your state legislators.

In 2009, a new law for the Children’s Health Insurance Program went into effect, expanding health coverage to 4 million additional children and requiring that they receive the same access to treatment for bipolar disorder, anxiety, depression and other mental health disorders as they do for physical health issues.

Problems despite coverage

There are still a few problems, Sperling notes. “In some communities there is a severe shortage of child psychologists. It’s an issue of capacity that parity cannot solve on its own—we need more experts in child psychology. What we see is, unfortunately, many pediatricians are trying to treat these disorders because the family doesn’t have access to a specialist in the community.”

How to determine if your health plan provides adequate mental health care for your child

  • Can you get diagnosis and treatment by a highly trained mental health professional?
  • Can you work with any licensed clinician or are you limited by a list of “preferred providers”? Lists limit your choice of clinician, especially if your income is limited. (Many patients today cannot find a clinician with whom they are comfortable because of these limits. Some can’t find anyone at all, as some of these provider lists are “phantom lists” containing names of clinicians who no longer take new patients or who should no longer be on the list.)
  • If you must use a list of “preferred providers,” is there a sufficient range of clinicians that includes specialists and subspecialists (e.g., in adolescent and family therapy, in eating disorders and in addictions)?
  • If there is a list, do you have immediate access to out-of-network clinicians when needed?
  • Is “medical necessity” decided by you and your clinician or by a “case manager” who doesn’t know you and never meets you but who uses the company’s “clinical guidelines” to determine how much of what kind of treatment you need?
  • Can you choose the type of mental health therapy you feel fits your needs or are you limited to “brief,” “symptom-focused,” or “problem-focused” therapies or to generic medications?
  • Does your plan provide for individual, couples, group and family therapy, generic and brand-name medications as prescribed by your clinician, biofeedback, and other prescribed treatments? Are there “fail-first” requirements or high co-payments for those with serious mental illnesses?
  • Can you stay in treatment as long as is needed, as decided by you and your clinician?
  • Are hospitalization and day-treatment centers available when you and your clinician believe they are necessary?
  • Does your plan provide for separate units or programs for children, adolescents, the elderly and those with addictions or disabilities?
  • Is your treatment private? Does your plan require only a diagnosis, dates of treatment and type of treatment to process your claim, or does your plan require personal information from your clinician about your symptoms and problems in order to authorize sessions? (Many people decline therapy or feel they have to pay out of pocket to ensure privacy, making it effectively unaffordable to many who need privacy for their mental health.)
  • Can you remain in treatment with the professionals you like at the facilities you like when your insurance changes or when your job changes?
  • Is the behavioral or mental health portion of your insurance administered by a different company than the rest of the health care benefits (i.e., a “carve-out” program)?
  • Are there different benefit limits to mental health care than there are for medical health care?
  • Are all psychiatric diagnoses in the DSM and ICD-9 (published lists of diagnoses accepted by the mental health professions) covered?
  • Do you have to get referrals or pre-authorizations or call 800 numbers or go through other gatekeepers or screening mechanisms before seeing the right mental health professional? (Access should be direct, with no obstacles to treatment.)
  • Does your plan allocate 8 to 10 percent of all health care expenditures to mental health care? (If not, it is underfunding mental health care.)

Source: The National Coalition of Mental Health Professionals and Consumers, Inc.

author image
Michelle Megna


Michelle, the former editorial director, insurance, at QuinStreet, is a writer, editor and expert on car insurance and personal finance. Prior to joining QuinStreet, she reported and edited articles on technology, lifestyle, education and government for magazines, websites and major newspapers, including the New York Daily News.