Paying for your child’s therapy when insurance falls short

Have insurance but struggling to find a pediatric therapist for speech, occupational, physical therapy, or ABA?

Have either of these scenarios happened to you?

You were told your child needed speech therapy. The pediatrician wrote a prescription and handed it to you. The problem is… when you called the number on the back of your insurance card, you found out that speech therapy was capped at 20 sessions a year, but your child should be seen twice a week to make real progress. Twenty sessions at two times a week will be used up in less than 3 months. You know that your child is going to need more than 3 months of speech therapy.

You have insurance. It’s a good plan, you think. It covers unlimited occupational therapy sessions with orders from your pediatrician. You call clinics in your area and ask if they are in-network with yours. They are! Wonderful! You ask: when can I get my child started? Then you hear the waitlist is close to a year, maybe longer. You reluctantly join the waitlist, knowing your child needs to start OT now, not in a year. You call other clinics. Same story, and you join that waitlist. You’re on multiple waitlists now without a clear starting date.

It’s not uncommon to run into these scenarios even when you have insurance and your payor covers that therapy type. But there are ways to pay for therapy without needing to wait a long time.

• Cash pay. Cash is king, and self-pay is sometimes necessary. I have had to do this a few times over the years to avoid gaps in therapy where I didn’t want my daughter to stop making progress. This isn’t possible for everyone, every time.
• HSA. When you sign up for your insurance, sign up for this if you can. This account can keep growing, and you can use it to cover gaps if your insurance doesn’t cover enough or you can’t find anyone in-network.
• FSA. Employer-based, but it doesn’t roll over to the next year — this is for when you know you’re going to spend all of it in one calendar year.

Guess what? Almost every clinic that takes insurance also accepts self-pay. There are also many smaller clinics and solo practitioners that are exclusively cash pay, meaning they don’t take insurance at all — but many provide itemized receipts (superbills) that help you get reimbursed from your insurance as an “out-of-network provider.”

I know the first thing you’ll check when your child needs therapy is who is in-network. It’s logical — but everyone else is doing the exact same thing, and that creates the waitlist bottleneck. If you are prioritizing speed over cost, take a look at self-pay practices. Even looking at the numbers: in-network includes co-pays on top of the insurance premiums you pay. The difference between insured in-network and self-pay is not as big as you might think.

The rest of this guide walks through the mechanics: what qualifies, how you pay with HSA or FSA money, and what to keep. It describes how these accounts generally work — it is not tax advice for your family, and every plan has its own rules, so confirm anything here with your plan administrator.

What are HSA and FSA accounts?

They hold money you set aside for medical costs before taxes are taken out.

An HSA is a health savings account. It goes with a high-deductible health plan. The money is yours to keep, and whatever you don’t spend rolls over to the next year.

An FSA is a flexible spending account. You get it through an employer, and you choose how much to set aside during open enrollment. FSA money usually has to be used within the plan year. Some plans allow a grace period or let you carry a small amount forward.

One common mix-up: a dependent care FSA is a different account. It pays for child care, not medical care. Therapy bills come out of a health FSA or an HSA.

Can you use HSA or FSA money for your child’s therapy?

Usually, yes.

The IRS treats care for a medical condition as a qualified medical expense. Pediatric therapy generally fits, because it treats a diagnosed or evaluated need. The categories that qualify are listed in IRS Publication 502.

The word that matters is treatment. Care that treats a condition generally counts. Something general, like tutoring or a sports program, generally does not.

Your plan administrator approves or denies the claim, so they have the final word for your account.

Which therapies usually count?

• Speech therapy, for a child with a diagnosed or evaluated need.
• Occupational therapy, for a child with a diagnosed or evaluated need.
• Physical therapy, for a child with a diagnosed or evaluated need.
• ABA therapy, when it is treatment for a medical condition such as autism.
• Evaluations, since finding out what is going on is part of treating it.

Travel to and from appointments can count as well. Publication 502 covers transportation for medical care, and your plan administrator can tell you what they need in order to approve it.

How do you pay with HSA or FSA money?

There are two ways, and most families use both at different times.

Pay with the account card

Most HSA and FSA accounts come with a debit card. You hand it to the front desk like any other card.

Save the itemized receipt anyway. Plan administrators sometimes ask you to show what a charge paid for, even months later.

Pay first, then ask to be paid back

You can also pay out of pocket and file for reimbursement. You send a claim to your plan administrator with the itemized receipt, and they pay you back, usually by direct deposit.

This is the path when the clinic doesn’t take the card, when the card is declined at the counter, or when you paid before you knew the cost was eligible.

What is a letter of medical necessity?

It is a short letter from a provider saying the therapy treats a medical condition.

Some plan administrators ask for one before they approve therapy costs. It depends on the account and the expense.

The letter normally names the condition, the therapy, and why your child needs it. Usually a doctor writes it. Some plans also accept one from the therapist providing the care.

Ask your plan administrator whether they need a letter and what it has to say. Then ask the clinic’s front office — they handle these requests often. Keep a copy with your receipts.

What if the clinic doesn’t take your insurance?

You can still pay with HSA or FSA money. Being out of network doesn’t change whether the care is a qualified medical expense.

You may also be able to get part of the cost back from insurance. Ask the clinic for a superbill.

A superbill is an itemized receipt built for insurance. It lists the dates of service, the services with their billing codes, the provider’s information, and what you paid. You send it to your insurance company as an out-of-network claim. If your plan has out-of-network benefits, it may pay you back for part of the visit.

Many clinics provide superbills — ask. Practices that see a lot of private-pay families are used to the question.

One caution when you use both paths: don’t get paid back twice for the same dollar. If insurance reimburses you for a visit your HSA or FSA already covered, ask your plan administrator how to handle it.

What about Medicaid and state coverage rules?

Coverage laws vary by state, and they’re worth knowing before you assume something isn’t covered.

Nearly every state — all 50 plus D.C., by most counts — has adopted some form of autism insurance mandate. Fully insured, state-regulated health plans must cover autism treatment, and that usually includes ABA therapy — though age limits and dollar caps differ from state to state. The big exception: self-funded employer plans follow federal rules instead, so the state mandate may not apply to yours. Asking your HR team one question — “is our plan fully insured or self-funded?” — tells you which rules you are under.

In Texas, Medicaid covers medically necessary ABA evaluation and treatment for children and youth 20 and younger with an autism diagnosis — a benefit since February 2022. Prior authorization through your health plan is usually required, and speech, occupational, and physical therapy are covered for eligible children as medically necessary care under Medicaid’s children’s benefit (EPSDT — in Texas, Texas Health Steps).

What if your child’s disability isn’t autism? The mandates above are autism-specific — so for a child with Down syndrome who needs speech therapy for the long haul, private coverage depends entirely on your plan, and Medicaid is the main long-term backstop. There are two different doors in, and which one exists depends on your state:

• The income door. Regular Medicaid is based on family income — and many families make too much to qualify, even with real therapy bills.
• The diagnosis door. Roughly 18 states plus D.C. offer the TEFRA or “Katie Beckett” state-plan option: a child with a significant enough disability qualifies for Medicaid based on their own needs, no matter what the parents earn — an entitlement, with no waitlist. Many other states provide a similar parental-income disregard through waiver programs instead, which can have enrollment caps.

Texas is not a Katie Beckett state. Here, the diagnosis-based door is the Medicaid waiver programs — which generally set aside parental income once your child is enrolled, but have a fixed number of slots and famously long interest lists: for the big disability waivers, often ten or more years. Your place is held by the date you signed up, and families can — and usually should — get on every list that might fit. That is exactly why Texas families sign up early, even before they are sure they will need them. And once a child is on Medicaid through any door, medically necessary speech, occupational, and physical therapy are covered for children and youth under 21. Your state Medicaid office is the source of truth for what applies to your family.

A few more things worth knowing. Public programs cover two age bands: for babies and toddlers under three, Texas ECI (Early Childhood Intervention) evaluates for free and provides therapy on a sliding-scale fee based on family income — free for families on Medicaid or CHIP. From age three on, therapy your child receives at school through an IEP or 504 plan is a no-cost path. Neither touches your HSA or FSA money, and many children do these alongside private therapy. Finally, CHIP is not the same as Medicaid: in Texas, the ABA benefit described above is a Medicaid benefit, so if your child has CHIP, ask your plan what it covers.

For what it’s worth, this is my own family’s path through these doors. Our income is too high for regular Medicaid. We signed up for the waiver interest lists — and we haven’t been called yet. And we never used ECI: the wait was long enough that we went straight to a home-health provider through our private insurance instead. None of that makes the public programs not worth pursuing — sign up for the lists anyway — but it is exactly why the rest of this guide exists. Most families need a way to pay for therapy while they wait.

What records should you keep?

Keep an itemized receipt for every payment. Itemized means it shows what the service was, not just a total. For each visit, you want:

• The date of service
• Your child’s name
• The clinic or provider’s name
• A description of the service
• The amount you paid

Keep the letter of medical necessity, if you were asked for one, and any explanation of benefits your insurance sends. Your plan administrator can tell you how long to hold on to it all.

A folder on your phone is enough. Photograph the receipt in the parking lot before you drive away — the ones that go missing are the ones you meant to file later.

Where to check the rules for your own plan

Two places, in this order.

IRS Publication 502 explains which medical expenses qualify. It is free on the IRS website and updated each year.

Your plan administrator explains your account: what it covers, which documents they need, and what the deadlines are. Plans also set annual contribution limits, and administrators differ on what proof they require — one more reason their answer is the one that counts.

This guide describes how these accounts generally work. It is not tax advice for your family. Confirm your own situation with your plan administrator, and with a tax professional if you have questions about your return.

Finding pediatric therapy in Central Texas

Care Connect Kids is free for families. Always. Clinics pay for the platform, and speech, occupational, physical, and ABA therapy all live in one place.

Not sure whether we reach your family yet? Check your zip code. If you are in Central Texas, the Austin metro page shows where we cover today.