Therapy, Insurance, and Your Information: What Clients Should Know Right Now

In recent months, many people have begun asking thoughtful questions about how changes in federal policy and healthcare systems may affect privacy, insurance coverage, and access to care. These concerns relate to how personal health information is documented, where it travels, and who may access it over time.

I am writing this as a psychologist who has worked within health insurance systems for more than a decade. This article is not meant to predict the future or discourage the use of insurance. Instead, it is meant to help clients better understand how therapy documentation works so they can make informed decisions about their care. 

What Is in Your Medical Record?

Whenever you receive healthcare, including mental health treatment, a medical record is created. This is not optional. Licensed providers, including psychologists, are legally required to maintain documentation of the services they provide.

A medical record exists to:
• document that care occurred
• describe the type of treatment provided
• record the clinical reasoning behind that treatment
• support continuity of care and professional accountability

While details vary by provider and setting, a typical mental health record includes:

• identifying information
• dates and type of services provided
• diagnostic codes used for treatment or billing
• treatment goals and general progress
• billing and insurance information
• required consent and disclosure forms

A therapy record is not a transcript of therapy. Ethical documentation is typically intentionally concise and clinically focused. Therapists are trained to include only information necessary to meet legal and professional standards while avoiding unnecessary detail purposefully to protect your privacy. 

For example, if a client and I discuss a conflict with a family member, I do not document the full argument or who said what. Instead, I document the therapeutic focus: themes such as communication difficulties, emotional regulation, or boundary setting, and the clinical interventions used. Many people assume therapy notes contain far more personal detail than they actually do.

Who Has Access to Your Medical Record?

In most situations, your therapy information remains confidential. Psychologists and other mental health professionals have both ethical and legal obligations to protect privacy.

There are, however, specific situations where information may be shared:

• immediate safety concerns involving risk of harm
• when you request records be released
• professional consultation (with identifying details protected)
• submission of information to your insurance company for reimbursement

All of these situations should be explained in your informed consent paperwork before treatment begins. At any point, you can request to review the informed consent document you signed when you began treatment. It’s never too late to ask your provider your questions about steps they take to protect your private information. 

What Does an Insurance Company Receive?

When therapy is billed to insurance, certain information must be transmitted in order for the service to be reimbursed. This usually includes:
• a diagnosis code
• type of service provided
• dates of treatment
• provider identification information

Typically, insurance companies do not routinely receive detailed session notes. However, they may request records during audits to verify that care met their standard of care criteria. When an audit occurs, a full copy of the clinical record is often requested. In my experience, audits are requested at most a few times per year. 

An audit does not signal a problem or wrongdoing. It is a standard administrative process within insurance systems. Still, it is important for clients to understand that billing insurance means documentation exists beyond the therapist’s office, and can be requested at any point. 

Once a diagnosis is submitted, it generally becomes part of a medical record and, in some contexts, may later be reviewed in disability evaluations, legal proceedings, licensing applications, or certain occupational screenings.

Many clients are comfortable with this, whereas others prefer to limit it. It is important to consider your personal risks as it relates to insurance companies having access to your private health care information.

How Can Clients Advocate for Themselves?

Informed consent requires understanding not only the therapy itself but also how information is handled. Clients may wish to ask their provider:

• How do you document sessions?
• What information is shared with insurance?
• When might a diagnosis be required?
• Is self-pay an option for me?

Self-advocacy does not mean distrust. Rather, it means participation in your own healthcare decisions and ensuring that you have a comprehensive understanding of how your information will be stored and shared with others.

It is also important to communicate your long-term goals to your provider. Therapists cannot anticipate every future consideration a client may have, such as occupational plans, licensing requirements, or security clearances. When providers understand your priorities, they can better help you weigh options.

There are also advocacy efforts that can take place outside of the therapy room. These things include:

• Keeping up with the news related to health insurance changes.

• Voting and lobbying your representatives for health care policies that benefit you.

• Ensuring that states are following mental health parity policies.

Should I Use Insurance or Self-Pay?

There is no universally correct answer. Insurance can make care financially accessible and has helped many people receive treatment who otherwise could not. For years, my clients who used insurance received the same level of care and attention as those who did not.

However, insurance-based care does involve formal diagnosis, documentation requirements, and information sharing that some individuals prefer to limit. Self-pay allows greater flexibility in pacing, diagnostic timing, and record containment, but may not be financially feasible for everyone.

The decision often depends on:
• financial resources
• clinical needs
• privacy preferences & vulnerable identities
• future professional considerations

Neither option is inherently better. Rather, we’d like clients to make a choice knowingly rather than accidentally.

Final Thought

Changes in healthcare systems often create uncertainty. It is reasonable for clients to feel more cautious right now. As a provider, I also find myself asking how to best protect the people I work with while still ensuring access to care. My role is not only to provide treatment, but also to help clients navigate the systems surrounding that treatment safely, so they can make decisions aligned with their values, needs, and future plans.