Regular income fluctuations make anyone anxious, and self-employed workers are particularly vulnerable. The COVID-19 pandemic has demonstrated just how easily self-employed workers can have the rug yanked out from under them.
As a freelancer, know your options for covering the cost of mental health services and deducting mental health expenses from your taxable income. The Affordable Care Act defines mental health as an “essential health benefit,” so if you have a plan from the marketplace, your plan includes mental health services. Plans cover mental inpatient services, as well as behavioral treatment services like psychotherapy and counseling. But many patients still end up paying for therapy on their own. In 2017, a study found that private insurance providers reimburse far less for mental health costs than for other medical services. But it isn’t supposed to be that way. The Mental Health Parity and Addiction Health Act requires insurers to cover the cost of mental health and behavioral treatments as much as they do for physical ailments. That means insurers aren’t allowed to charge a higher copay for mental health providers than for other specialists. (If you are shopping for an in-network mental health provider, familiarize yourself with common parity violations, as well as advice on what to do if your insurance provider isn’t compliant with the law.)
According to a survey from Kaiser Health Foundation, 13% of Americans who needed mental health services didn’t get them because of the expense. This adds up, given the 2019 study that reported patients with mental health conditions paid significantly more for out-of-network treatments than patients with chronic physical conditions. If you do decide to go to a therapist or counselor who isn’t covered by your insurance, the costs can add up pretty quickly. In pricey cities like New York City, therapists often charge as much as $200 per hour. So what can you do if you end up with significant mental health costs?
Self-employed individuals who itemize their deductions can deduct mental health expenses that exceed 7.5% of their adjusted gross income. For example, if your adjusted gross income for the year totaled $40,000, you could only deduct mental health costs once you spent $3,000 out of pocket.
Look at your options for in-network providers, and talk to your accountant to find out if itemized deductions could make your mental health services more affordable. Platforms like TalkSpace and Better Help offer therapy for as little as $35 per session, while mobile apps like Bloom offer digital Cognitive Behavioral Therapy (CBT), all of which are particularly helpful while social distancing and shelter-in-place protocols are in place. Although therapists on these platforms can’t prescribe medications, studies suggest that they can deliver effective therapy. Budgetary and travel constraints might make it hard to find the exact therapy you want, but even under trying circumstances, you can get the therapy you need.
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