Mental Health Treatment Denied by Insurance: How to Fight Back

Mental health insurance denials are among the most common and most consequential of all insurance disputes. They affect people at their most vulnerable, often when they most need support. And they are, in many cases, legally challengeable.

Across the UK, Australia, Singapore, Canada, and other regulated insurance markets, there are specific legal and regulatory protections for mental health coverage — including the principle that mental health conditions should be covered equivalently to physical health conditions. When insurers violate these principles, you have the right to fight back.

The Scale of the Problem

Mental health insurance denials commonly involve:

• Therapy and counselling sessions (number of sessions limited or denied entirely)
• Inpatient psychiatric hospitalisation ("not medically necessary" or duration disputes)
• Residential treatment programmes for eating disorders, addiction, or severe mental illness
• Intensive outpatient psychiatric programmes
• Certain medications (antidepressants, antipsychotics, ADHD medications not on formulary)
• Specialist psychiatric care (denied as out-of-network or not pre-authorised)
• Psychological assessments and neuropsychological testing

Mental Health Parity: The Legal Foundation

The most powerful principle in mental health insurance disputes is parity — the concept that mental health and substance use disorders must be covered under the same terms and conditions as physical health conditions. The specific rules vary by country:

United Kingdom

While the UK does not have a formal mental health parity law equivalent to the US Mental Health Parity and Addiction Equity Act, the FCA's Consumer Duty and ICOBS regulations require insurers to treat customers fairly and apply exclusions consistently. If a private medical insurance policy covers treatment for a physical condition of equivalent clinical severity to a mental health condition, denying the mental health treatment may constitute unfair treatment.

Additionally, the NHS Long Term Plan committed to achieving genuine parity of esteem for mental health in public healthcare — a commitment that reflects the broader policy environment that regulators consider.

Australia

Australia enacted the Fairer Private Health Insurance Incentives Act and related reforms that require Gold-tier private health insurance to cover psychiatric treatment without sub-limits. As of April 2020, Gold-tier policies must cover mental health and psychiatric hospital treatment equivalently to other hospital treatments.

If you hold a Gold-tier policy and your psychiatric inpatient or day hospital claim is denied or subject to a sub-limit not imposed on equivalent physical treatments, this is potentially a regulatory breach. File with AFCA and the PHIO.

Bronze and Silver tier policies may legally have more limited psychiatric coverage — but check your specific policy carefully before accepting a denial.

Singapore

Singapore's ISP framework includes psychiatric hospital benefits under enhanced plans, but typically with a 12-month waiting period. Post-2025 MAS reforms have placed greater emphasis on disclosure of mental health coverage terms. Disputes about psychiatric benefits go to FIDReC.

Many basic ISPs and some enhanced plans have sub-limits for psychiatric care. Check whether the sub-limit is clearly disclosed and whether it applies as the insurer claims.

Canada

Most Canadian provincial health plans do not cover private psychotherapy or psychological counselling. Private supplemental insurance varies widely, with many group plans covering a limited number of psychologist or social worker sessions per year.

For private plan disputes, OLHI handles complaints. Mental health parity is not as strongly codified in Canada as in the US or Australia, but insurers must honour their contracted benefits clearly.

Malaysia

BNM and the Malaysian government have increasingly emphasised mental health as part of the healthcare framework. Life and medical policies may include psychiatric coverage under hospitalisation benefits. The OFS handles disputes.

Step-by-Step: How to Appeal a Mental Health Insurance Denial

Step 1: Identify the Exact Basis for Denial

Common stated reasons for mental health claim denial:

• "Not medically necessary"
• "Annual session limit reached"
• "Provider not on approved panel"
• "Treatment not covered under your plan"
• "Condition is a pre-existing mental health condition"
• "Admission not pre-authorised"
• "Treatment is maintenance/custodial, not curative"

Each requires a different appeal strategy.

Step 2: Get Your Treating Mental Health Professional Involved

Your psychiatrist, psychologist, or therapist is your most important advocate. Ask them to provide:

• A detailed clinical letter explaining your diagnosis (using DSM-5 or ICD-11 criteria as appropriate)
• Why the specific treatment — whether therapy type, number of sessions, or inpatient care — is clinically necessary
• What would happen without the treatment (risk of deterioration, hospitalisation, self-harm risk)
• Whether the treatment is consistent with published clinical guidelines

For psychiatric inpatient admissions, your psychiatrist should document the clinical criteria for admission — including any risk assessments conducted.

Step 3: Challenge "Not Medically Necessary" Using Clinical Guidelines

Mental health clinical guidelines are published by:

• NICE (UK): nice.org.uk — covers depression, anxiety, PTSD, eating disorders, OCD, psychosis, and more
• RANZCP (Australia/NZ): ranzcp.org — clinical practice guidelines for psychiatric conditions
• APA (American Psychiatric Association): psychiatry.org — widely referenced internationally
• MOH Singapore: moh.gov.sg — Clinical Practice Guidelines for various conditions

If your treatment is consistent with NICE or RANZCP guidelines, say so explicitly. The insurer's reviewer must explain why they disagree with these authoritative guidance documents.

Step 4: Challenge Session Limits as Discriminatory (Where Applicable)

If your insurer imposes a lower session limit for mental health therapy than for equivalent physical health treatment (e.g., physiotherapy), and if parity rules apply in your jurisdiction, this is your key argument.

In Australia, if you have a Gold-tier policy and your psychiatric care has a sub-limit that your orthopaedic or cardiac care does not, document this disparity and present it as evidence of non-compliance with parity requirements.

Step 5: Address Pre-Existing Condition Arguments

Mental health conditions are frequently cited as pre-existing. Common claims: "the patient has a prior history of depression/anxiety." This is often an overreach.

Check:

• When was the current episode diagnosed?
• Has there been a significant change in diagnosis or severity?
• Is the current condition a new condition despite a similar diagnostic label?

For example, a new episode of major depression following a significant life event may not be the same pre-existing condition as a resolved episode of mild depression several years ago.

Step 6: File a Formal Internal Appeal

Your appeal letter should:

• Specify the type of mental health treatment denied
• Reference the clinical guidelines supporting the treatment
• Challenge any discriminatory application of lower limits compared to physical health coverage
• Include your therapist's or psychiatrist's clinical letter
• Request that the appeal be reviewed by a mental health clinical specialist (not a general physician)

Step 7: Escalate to the External Dispute Resolution Body

If the internal appeal fails:

• UK: FOS — financial-ombudsman.org.uk
• Australia: AFCA — afca.org.au (and PHIO for health-specific matters)
• Singapore: FIDReC — fidrec.com.sg
• Malaysia: OFS — ofs.org.my
• Hong Kong: ICCB — ia.org.hk
• Canada: OLHI — olhi.ca

All of these bodies can review mental health claim denials and have the power to overturn them.

Common Mistakes to Avoid

Not getting the clinical rationale in writing from your provider: A mental health professional who is willing to write a strong clinical support letter can transform a weak appeal into a strong one.

Accepting session limits without checking the physical health equivalent: In jurisdictions with parity rules, this comparison is your most powerful argument.

Not pre-authorising inpatient admissions: Most insurers require pre-authorisation for psychiatric inpatient stays. Emergency admissions are different, but planned admissions need pre-auth.

Assuming psychological therapy and psychiatric treatment are treated the same: They often aren't. Psychiatrist-delivered treatment may be covered when psychologist-delivered treatment is excluded, or vice versa. Know your policy's specific definitions.

Not mentioning clinical risk in the appeal: If the denial puts you at risk of deterioration or harm, this must be stated explicitly in the appeal. Ombudsman bodies and regulators respond to urgency.

Confidentiality Concerns

Some people with mental health conditions are uncomfortable disclosing their diagnosis and treatment details, even in an insurance appeal process. You should know:

• Your mental health information is treated confidentially by insurers and ombudsman bodies
• You can request that sensitive information be handled with specific privacy protections
• You do not have to disclose more than is relevant to the specific dispute
• In many jurisdictions, you can ask that your GP handle communications with the insurer on your behalf

If confidentiality concerns are affecting your ability to appeal, speak with your treating professional about how to handle the medical evidence in a way that protects your privacy while supporting your claim.

Getting Help

ClaimBack (claimback.app) generates professional mental health insurance appeal letters tailored to your country, your specific type of treatment, and the stated denial reason. The tool helps you frame the right parity arguments, incorporate clinical guideline references, and structure your letter for maximum impact. It is free and designed to be accessible even during a difficult time.

Summary

1. Identify the specific denial reason — each requires a different response
2. Engage your psychiatrist, psychologist, or therapist for a strong clinical letter
3. Reference NICE, RANZCP, or other relevant clinical guidelines
4. Challenge discriminatory session limits compared to physical health coverage
5. Address pre-existing condition arguments with careful attention to episode and diagnosis history
6. File a formal internal appeal with clinical evidence
7. Escalate to FOS, AFCA, FIDReC, or the relevant national body if denied
8. In Australia, check Gold-tier psychiatric coverage parity requirements specifically