Mental Health Coverage Denied by Insurance: Your Rights and How to Appeal

If your insurance denied coverage for mental health treatment—therapy, psychiatry, or psychiatric hospitalization—you're facing a heartbreaking situation. Mental illness is real. Mental health treatment works. And you should have the same coverage for mental health as for physical health.

In fact, you do. The law requires it. If your insurer is treating mental health differently, they may be breaking the law.

Understanding Mental Health Parity Laws

Mental health parity laws protect you from discrimination. They require insurers to cover mental health similarly to physical health.

In the United States: MHPAEA

The Mental Health Parity and Addiction Equity Act (MHPAEA) requires group health plans and health insurers to provide mental health benefits equally to physical health benefits. Specifically:

• Limits on mental health visits cannot be stricter than physical health limits
• Copayments and deductibles must be comparable
• Prior authorization rules must be equivalent
• Insurance cannot refuse to cover medically necessary mental health treatment

If your insurer denies mental health coverage under more restrictive rules than they'd apply to physical health, they're likely violating MHPAEA.

In the United Kingdom: FCA Equality Duty

The Financial Conduct Authority (FCA) requires insurers to treat mental health equivalent to physical health. They cannot apply unfair exclusions or restrictions specifically to mental health conditions.

In Australia: Private Health Insurance Requirements

Private health insurers in Australia must cover mental health services according to government-mandated minimum benefits. If an insurer denies coverage that's supposed to be covered, that's a regulatory violation.

Globally: Similar Protections

Most developed countries have similar requirements, though enforcement varies. Check your country's health insurance regulator to understand your specific protections.

Why Insurance Denies Mental Health Claims

Understanding the reason helps you construct a powerful appeal.

Claiming Treatment is "Not Medically Necessary"

Insurance may deny saying therapy or psychiatry isn't medically necessary. This is often wrong. If a mental health professional has diagnosed a condition and recommended treatment, it's medically necessary.

Your response: Get your mental health provider to write a letter explaining the diagnosis, why treatment is necessary, and what the expected outcomes are. This specific medical documentation is powerful.

Exceeding Visit Limits

Some policies limit therapy visits (e.g., 20 visits per year). If you exceed the limit, insurance denies additional claims. But many policies don't have explicit visit limits for medically necessary treatment. Check your policy carefully.

If you do have a limit, argue that:

• Your condition is more severe than anticipated and requires additional sessions
• You've made significant progress but need continued treatment
• The limit is unreasonable for your diagnosis

Get your therapist to document the medical necessity of continued care.

Denying Specific Diagnoses

Some older policies exclude coverage for specific mental health diagnoses (e.g., personality disorders, substance use disorders). These exclusions often violate parity laws. If your claim was denied because of your diagnosis, argue that the exclusion violates parity requirements.

Denying Hospitalizations

If insurance denies coverage for psychiatric hospitalization, this is particularly serious. Argue that:

• You were a danger to yourself or others, requiring hospitalization
• You were unable to function outside a hospital setting
• The hospital discharge summary documents medical necessity
• Your treating psychiatrist recommended inpatient care

Get the hospital and your psychiatrist to provide detailed letters documenting why hospitalization was medically necessary.

Denying Psychiatric Medications

Some insurers deny coverage for psychiatric medications, arguing they're "experimental" or not on their formulary. But FDA-approved psychiatric medications are standard of care. If your psychiatrist prescribed an FDA-approved medication and insurance denied it:

• Request prior authorization (many denials are automatic, but prior auth can reverse them)
• Get your psychiatrist to explain why this specific medication is necessary (maybe you've failed trials on other medications, or have specific contraindications)
• Ask about appeals or exceptions to formulary restrictions

Building a Mental Health Appeal

Your appeal should address the insurer's specific stated reason while emphasizing that mental health must be treated equally to physical health.

Open With Your Diagnosis and Medical Necessity

Start clearly: "I am appealing [Insurance]'s denial of coverage for [therapy/psychiatry/hospitalization] for my [specific diagnosis]. This treatment is medically necessary."

Then provide context:

• When were you diagnosed?
• What symptoms are you experiencing?
• How is this condition affecting your functioning?
• What treatments have you tried?

Get Your Mental Health Provider's Support

This is critical. Your therapist or psychiatrist must write a letter specifically addressing the insurance company's stated reason for denial.

If insurance said treatment isn't medically necessary: "The patient has [specific diagnosis]. Based on [specific clinical findings], [medication/therapy] is the appropriate evidence-based treatment. Without treatment, the patient is at risk for [specific consequence, such as deterioration, self-harm, loss of employment]."

If insurance said therapy should stop: "The patient has made progress, but treatment is ongoing because [specific reason]. Terminating therapy at this time would risk [specific consequence]. Based on clinical judgment, continued therapy is medically necessary."

If insurance denied hospitalization: "The patient required hospitalization because [specific reason: danger to self/others, inability to function, acute decompensation]. Discharge was appropriate because [specific reason], but continued outpatient treatment is medically necessary."

Address the Parity Issue

In your appeal, explicitly reference parity laws:

"Mental health treatment must be covered equally to physical health treatment under [MHPAEA/FCA requirements/your country's law]. If [Insurance] would cover [comparable physical health treatment] without the restriction being applied to my mental health claim, then this denial violates parity requirements."

For example: "If insurance would cover 50 physical therapy sessions for orthopedic recovery, mental health treatment for severe depression must be covered equally. I am requesting [X] therapy sessions, which is medically necessary and comparable to coverage for physical health conditions."

Document Progress

Include:

• Your initial symptom severity
• Progress you've made with treatment
• Current functioning
• Why continued treatment is necessary

Your mental health provider can document this in clinical language.

List All Enclosed Evidence

• Intake and assessment notes from your mental health provider
• Treatment notes documenting your diagnosis and progress
• Your provider's letter specifically addressing the insurer's stated reason for denial
• Hospital discharge summary (if hospitalization was involved)
• Psychiatric evaluation or assessment
• Any letters from other providers (primary care physician, psychiatrist if therapist appealing)
• Your policy documents

Closing

"Based on [provider]'s clinical judgment that this treatment is medically necessary, and based on my legal rights under parity laws to have mental health coverage equal to physical health coverage, I request that [Insurance] reverse this denial and approve coverage for [specific treatment]."

Timeline: Act Immediately

Mental health treatment delays can be seriously harmful. Don't wait:

• File your appeal immediately upon receiving the denial
• Request expedited review if you're in crisis
• If insurance doesn't respond within 15-30 days, escalate
• If they deny your appeal, immediately escalate to your regulator

Escalating Beyond Insurance

If insurance maintains the denial, you have options:

USA: File MHPAEA Violation Complaint

Contact:

• Your state's insurance commissioner
• Your state's attorney general
• The U.S. Department of Labor (for employer-based plans)
• The U.S. Department of Health and Human Services

Explain how the insurer is treating mental health differently from physical health.

UK: Escalate to FOS

File with the Financial Ombudsman Service. Explain that the insurer's denial violates FCA parity requirements.

Australia: AFCA Complaint

Escalate to the Australian Financial Complaints Authority.

Other Countries

Check your country's health insurance regulator and file a parity violation complaint.

When to Consider Legal Help

If the claim amount is large, or if insurance is clearly violating parity laws, consider consulting an attorney. Many will take mental health parity cases on contingency or for reasonable fees, especially when a clear parity violation exists.

Getting Help With Your Mental Health Appeal

Appealing a mental health denial is emotionally difficult at a time when you're already struggling. The appeal letter needs to be organized, specific to the insurer's stated reason, and backed by your provider's clinical documentation.

ClaimBack's AI helps you organize your case, ensures you're framing the parity argument, and drafts a compelling appeal letter supported by your provider's clinical documentation. You review, edit, and submit it—maintaining full control.

Get your free mental health appeal analysis →

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Disclaimer: ClaimBack provides AI-generated appeal assistance for informational purposes only. ClaimBack is not a law firm and does not provide legal advice. Always review your appeal letter before sending and consider professional advice for complex or high-value claims.

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