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Why You Need A Financial Policy

One question that Practice Solutions receives is whether it is legal to write-off deductibles and co-pays. Many therapists make this a practice to make therapy affordable and to get people through their door. However, this idea presents the counselor with a troublesome issue: chronically writing-off deductibles and co-pays is not exactly legal.

To clarify, a counselor can write-off deductibles and co-pays per their contracts with payers once they approve the client for such a discount after proving financial hardship. But the counselor has to prove financial hardship according to their financial policy.

When drafting a financial policy, there are 3 key items that counselors need to keep in mind.

1. Financial Policies Can Be Multi-functional

A financial policy should help in more than one area of your practice. Chiefly, this policy should help establish the patient's financial obligation to you and your practice. This helps them to manage their expectations and makes sure there is no surprise when it comes to paying bills.

However, a financial policy should outline your standards for discounts, determining financial hardship, payment plans, interest on outstanding money, and when money is due. Your financial policy can be useful for all of these purposes. If you don't want to draft a policy ask around and see if you can borrow a colleagues.

2. Financial Policies Should Prove Financial Hardship For Discounts

When a counselor wants to write-off a co-pay or deductible they have to prove financial hardship. To be clear, proving financial hardship the right way is a multi-step process that requires time and patience.

The major items that need to be included are income, expenses, and supporting documentation. This process needs to be thorough in order to be done correctly and to avoid any penalties in the event of an audit.

3. Financial Policy and Documentation Need to Be Simple

Often times, when organizations create documentation it can be and look intimidating. Formatting your documentation so it looks clear, simple, and organized is a key step in getting the information that you need. Patient's tend to shy away from documentation that is unclear.

It also aids the patient if you sit down and go through the documentation with them. This will also clarify any questions that they may have.


A financial policy is helpful to manage your patient's expectations, your expectations, and provide the correct documentation for providing discounts and waivers of deductibles and co-pays. If you are a therapist who needs a financial policy, contact some of your colleagues for an example or give us a call and we can furnish you with a sample.

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