Your Medicare Mental Health Benefits Might Look Generous, But the Hidden Costs Tell a Different Story

Key Takeaways

• Although Medicare now covers a wide range of mental health services, your out-of-pocket costs can still be substantial, especially if you need ongoing or specialized care.

• In 2025, added benefits like coverage for marriage and family therapists offer more options, but provider shortages and cost-sharing requirements can leave you with unexpected bills.

Expanded Benefits, But Not Without Conditions

Medicare has taken significant steps in recent years to improve mental health coverage. As of 2025, both Original Medicare and Medicare Advantage plans must offer mental health services, including outpatient therapy, inpatient psychiatric care, and prescription drug coverage for mental health medications.

What’s covered sounds promising on paper:

• Outpatient mental health services under Part B

• Inpatient psychiatric care through Part A

• Mental health medications through Part D

• Telehealth options for therapy and psychiatric evaluations

• New provider types, including licensed marriage and family therapists (LMFTs) and mental health counselors (MHCs)

But each of these benefits comes with costs that aren’t always obvious until you start using them.

Medicare Part B Costs for Therapy and Counseling

Under Part B, Medicare covers 80% of the approved amount for outpatient services like therapy, psychiatric evaluations, and medication management. That leaves you responsible for the remaining 20%, after meeting your annual Part B deductible, which in 2025 is $257.

These 20% coinsurance costs add up, especially if you attend therapy weekly. For instance:

• Weekly therapy for 6 months = about 26 sessions

• Even if each visit costs $100 (Medicare-approved), your coinsurance would be $20 per session

• That’s over $500 out-of-pocket, not including your deductible or any other services

You may also face additional costs if your therapist charges more than the Medicare-approved amount or doesn’t accept Medicare assignment. This can happen with psychiatrists and specialists who have limited availability.

Hospitalization for Mental Health Carries Separate Costs

If you need inpatient psychiatric care, Part A handles that. But it has its own cost structure and limits:

• Deductible: $1,676 per benefit period in 2025

• Coinsurance: Starting on day 61, you pay $419/day; after day 90, it jumps to $838/day using lifetime reserve days

• Lifetime limit: Medicare only pays for 190 days of inpatient psychiatric care in your lifetime

This limit applies specifically to psychiatric hospitals, not general hospitals. Once you hit 190 days, Medicare will no longer cover inpatient psychiatric care in a specialized facility, even if you’re eligible in every other way.

Part D Prescription Drug Costs for Mental Health

Mental health medications fall under Medicare Part D. In 2025, the out-of-pocket cost structure for Part D has changed significantly:

• Deductible: Up to $590 for the year, depending on your plan

• Out-of-pocket cap: Set at $2,000 annually, thanks to new reforms

While this $2,000 cap is a major improvement over previous years, you could still be paying hundreds per month if your prescriptions are costly. Some antidepressants, mood stabilizers, and antipsychotics can be expensive depending on whether they’re on your plan’s formulary and what tier they’re assigned to.

You may also encounter prior authorizations and step therapy requirements that delay access to your prescribed medication, depending on the Part D plan you are enrolled in.

Marriage and Family Therapists Are Covered, But Not Always Available

Starting in 2024 and continuing into 2025, Medicare now covers services from licensed marriage and family therapists (LMFTs) and mental health counselors (MHCs) under Part B. This expanded network is aimed at addressing provider shortages and increasing mental health access.

However, just because the benefit exists doesn’t mean you’ll easily find a provider. As of 2025, there’s still a widespread shortage of Medicare-participating mental health professionals in many areas, especially rural communities. Even urban regions face high demand, long waitlists, and limited availability of specialists.

If you have a Medicare Advantage plan, your network may be even more restrictive. Not all covered providers participate in every plan’s network, meaning you could still pay out-of-pocket or travel far to access care.

Telehealth Coverage Helps, But It Isn’t a Silver Bullet

Medicare permanently covers telehealth visits for mental health, including audio-only sessions for those without video access. This includes therapy, psychiatric consultations, and medication follow-ups.

But there are important caveats:

• You must have an in-person visit with your provider at least once every 12 months for continued eligibility (starting October 2025)

• Some telehealth services require stable internet or phone access, which many older adults may lack

• Not all providers offer telehealth or may not be comfortable using it for new patients

So while telehealth opens the door to more flexible care, it doesn’t remove the barriers of cost, access, and continuity.

Medicare Advantage May Help or Hurt, Depending on the Plan

If you’re enrolled in a Medicare Advantage (Part C) plan, your benefits must at least match those of Original Medicare. In 2025, most plans include extra features like:

• Broader mental health networks

• Case management or care coordination

• Wellness programs and behavioral health hotlines

However, these plans also come with network restrictions, referrals, and prior authorizations, which may limit your access to care. You might need to switch providers if they’re not in-network, or wait for pre-approval to start therapy.

Out-of-pocket costs also vary widely between plans. Even if you have a cap on annual spending, the path to reaching that cap could still involve hundreds or thousands in coinsurance, copayments, and drug costs.

Preventive Screenings Are Free, But Follow-Up Isn’t

Medicare covers annual depression and substance use disorder screenings as preventive services with no cost to you. However, if your screening shows signs of a mental health condition, any follow-up care falls under standard cost-sharing rules:

• Therapy visits: 20% coinsurance after deductible

• Psychiatric consultations: Same as above

• Medication: Subject to Part D costs and coverage tiers

So while the screening itself is free, the treatment pathway that follows is not. This can deter some individuals from pursuing care, especially if they are on fixed incomes.

Gaps in Coverage Leave Some Needs Unmet

Even with expanded benefits in 2025, Medicare’s mental health coverage still leaves gaps:

• No coverage for most long-term custodial care or residential treatment centers

• Limited coverage for intensive outpatient or partial hospitalization beyond short-term stabilization

• Difficulty accessing culturally competent care for diverse populations

• Lack of integration between medical and behavioral health services in many settings

These gaps can have serious consequences, particularly for seniors dealing with chronic mental health conditions, co-occurring physical illnesses, or socioeconomic challenges.

Coordination with Other Coverage May Help

If you have other coverage alongside Medicare (such as retiree benefits, Medicaid, or a Medigap plan), you may be able to reduce some of the hidden costs:

• Medigap can help cover Part B coinsurance

• Medicaid may provide additional mental health services for low-income beneficiaries

• Employer-sponsored retiree plans could offer broader mental health benefits, though availability is decreasing

Be sure to review your specific plan documents or speak with a licensed agent listed on this website to understand how your other coverage coordinates with Medicare.

The Bottom Line on Medicare Mental Health Costs in 2025

Your Medicare mental health benefits in 2025 are broader than ever before, but they still require careful planning. The expanded coverage for therapists, prescription drugs, and telehealth is meaningful—but coinsurance, deductibles, provider access, and utilization limits can make care expensive or difficult to obtain.

For many beneficiaries, what looks generous on the surface turns out to be a patchwork of limitations. To protect yourself from unexpected expenses and gaps in care:

• Understand what each part of Medicare covers and what it costs

• Check provider availability in your area or network

• Review your drug plan’s formulary for mental health medications

• Consider supplemental coverage to reduce your out-of-pocket burden

If you’re unsure how your plan handles mental health services or want help comparing options, speak with a licensed agent listed on this website. They can help you make sense of the costs, coverage, and requirements.