What Our Professional Associations Say . . . .
According to the American Counseling Association’s Code of Ethics (A.10.b),
In establishing fees for professional counseling services, counselors consider
the financial status of clients and locality. In the event that the established
fee structure is inappropriate for a client, counselors assist clients
in attempting to find comparable services of acceptable cost.”
The American Psychological Association’s Code of Ethics (6.04-d) states only that
If limitations to services can be anticipated because of limitations in financing, this is discussed with the recipient of services as early as is feasible.”
And the National Association of Social Workers Code of Ethics (1.13 – a) directs members that
When setting fees, social workers should ensure that the fees are fair, reasonable, and commensurate with the services performed. Consideration should be given to clients’ ability to pay.”
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Those are hardly the detailed guidelines that help us figure out what to do when clients lose their jobs due to downsizing or their children are diagnosed with catastrophic illnesses. Over the years, I’ve tried several things with varying degrees of success . . . .
Sliding Fees
I started off in the field of mental health by working in community 
mental health when I went to work for Highlands Community Services Center and then Mental Health and Retardation of Tarrant County. In community agencies, it is common practice for there to be established sliding fee scales for services to be provided according to financial need. I adopted that practice when I first went into business for myself. If you choose to do so, you will need to set up a matrix or scale to guide your decisions about how much to charge each of your clients and how (and if) you are going to verify your clients’ incomes.
I chose to charge my full fee to those who earned $100, 000 annually and reduced my fee by 10% for each $10, 000 less that was earned. If my fee was $100 / hour and my client earned $50, 000, she would only pay $50 / hour. That was easy enough for me to track and figure out on the fly but it failed to take into account the number of individuals surviving on that income. And, it also failed to take into account my clients’ catastrophic and health emergencies.
Reduced Fees
I also went through a phase of setting my fees on a whim. I told myself (and my clients) that I was making the decision on my hourly fee based on “the needs” of my clients. In truth, I am embarrassed to say, that was not always exactly true. There was no consistency in place and there was no system in place to determine a client’s needs. It was just me saying “Oh, that’s hard luck – let me offer you a reduced fee.” You should know that not only is that not fair, it’s also not good (or smart) business practice to do so. And, if you are in a relationship with insurance or managed care companies, it’s actually illegal!
Scholarships
I now offer a limited number of reduced-fee scholarships to those clients in need. Here’s what that looks like . . . . When a client has a financial need – maybe he is going to be off from work for 6 weeks recovering from surgery – I may choose to offer a time-limited reduced hourly fee for my services. It has a starting date and an ending date that the client is made aware of. If additional time is needed at that reduced rate at the end of that “scholarship,” I have the ability to offer another time-limited reduced fee scholarship. However, I also have the opportunity at that time to not have another reduced fee scholarship. This allows me to comfortably retain control over my fees and my time.
For a different perspective on the use of sliding scale fees, take a look at the Colorado Counseling Association’s Chair of Ethics, Michelle Steven’s article here.
I have thought a lot about the sliding fee idea, and I have conflicting feelings about it. On one hand, it helps reduce the financial barrier for clients that may have relied on their insurance otherwise, or could not afford therapy otherwise, on the other hand, is it really fair for clients to be charged different fees? Why not just charge a lower fee for all clients if you’re starting out? Then they’ll all pay the same and it will reduce confusion.
Hi, Jill! What a creative idea! And, if you set your fee to $60 / hour, which is below the Usual and Customary Fee for most licensed mental health professionals, what would you say about the client who says that she can only afford $30 / hour?
And, if you set your fee at $60 / hour, would you still be able to cover all of the operating and salary expenses that you are responsible for?
I’m intrigued by the scholarship idea and wondered how they go about applying for a scholarship or what your process is with this.
Hi, Kristin! Thanks for asking. Regardless of how you choose to offer a reduced fee – whether by sliding scale,scholarship, or otherwise – what’s important is to have a standardized way of gathering information and establishing financial need from client to client. You can gather the information on a form or in an interview. And, then apply your formula for establishing financial need. That formula, by the way, can be any formula that you devise. As long as all of your clients can apply for this fee reduction, it is considered to be fair and equitable.
Another option that I have found useful is offering the client a 30 minute session if they are unable to pay the full fee. That calls for more work on my part and on theirs as they will be doing more homework and written assignments outside of the office in order to deal appropriately with the issues. If paying at time of service is an issue, I discuss the option of a payment plan with the client. We develop it together, in much the same way as a treatment plan to determine how much and how often they will pay. We develop a written agreement and both sign it. Doing the above prevents me from charging different amounts to different clients. I have found that there are more factors at work in the client’s financial picture than yearly income and I also don’t want to put myself in last place when it comes to getting paid a fair amount. This is a complex issue, however, and we have all experienced difficulty here, I am sure.
Perri, thank you so much for offering this approach! It’s a creative and compassionate solution for both you and your client! You know I saw research at least 10 years ago that noted that there is nothing special or particularly therapeutic about the traditional one hour so many therapists schedule. The research noted that 30 minute sessions were shown to be just as therapeutic as single hour or longer appointments.
I appreciate your sharing a different way of working to accomodate your client’s needs as well as your own.
Thanks for the great info on this issue. I’ve been wrestling with how to set fees in a way that is fair and legal for quite some time and the blog post is much appreciated.
A question I have is: could I modify my fees in accordance with a client meeting certain easy-to-establish criteria, such as being disabled, a senior citizen, or unemployed?
Would that still be legal with insurance companies, provided that I set the same reduced fee across the board (for those categories) regardless of the insurance carrier?
Would love to hear your input.
Hi, Maureen! Welcome to Private Practice from the Inside Out! I think you have the right idea but your implementation would be a bit different. After all some clients who are disabled may be independently wealthy, some clients who are elderly have no financial responsibilities, and I have a client who is unemployed and lives entirely on a trust. My point is that you don’t want your “easy-to-establish criteria” to be restricted to certain characteristics.
Instead, you would want your criteria to be based on need i.e. household income, number of dependents, possible debt, etc. And, then those criteria would be applied to all of your clients. That would be considered ethical and in compliance with most insurance protocols. (Of course, you would need to read your contracts with each of those managed care providers to make certain that you were not violating any of their policies.)
Hi Tamara,
I have been using a sliding scale and after researching it and especially after reading your opinion I have decided to stop. I will now incorporate different charges for my clients based on 30 mins, 45 mins, and an 1 hour. In addition, I really liked your idea of the scholarship fund. Must you make clients aware that you have this or can you bring it up if a client raises a problem with your set rate? When using income as part of this, do you ask clients to take in their income and proof of debt? Thank you.
Hi, Tara! So glad I could help! I do not make clients aware of my reduced-fee scholarship unless I believe it may be useful. And, asking for proof of household income and proof of debt is always a good business practice.
Hi, Tara! So glad I could help! I do not make clients aware of my reduced-fee scholarship unless I believe it may be useful. And, asking for proof of household income and proof of debt is always a good business practice.
Hi Tamara!
Long time no see… I am finally opening my practice soon and reading this article is like getting a smack in the head (in a good way). I’ve heard and read so many of our colleagues struggling with the confidence to just charge what is fair for our services.
Our altruistic spirit can get in the way of our healthy business practices. I was already considering the sliding scale and I am so glad I came about this article and everyone’s comments to it. These are great ideas!
And, I think that what sums this up is that we just need to be more assertive with our businesses.
It’s like you once wrote to me: every time I give my services away or don’t charge it’s value, it’s money I am stealing from my household and my children. That was immensely powerful.
Thank you again!
Hi Tamara, thanks for the helpful info! You mentioned using clients’ tax returns in another post as a method of eligibility assessment for your mental health scholarship. Can you share more about how you use this data to make that call? Do you draw the line at the poverty level? Higher? Do you use the annual income figure to calculate a reasonable percentage to base rates on (and if so, what’s that percentage?)? Happy to dig around in other resources if you can point me in the right direction. Thanks again for all the great content!!
Hi, Chase! Welcome to Private Practice from the Inside Out!
To be clear, I do not currently use clients’ tax returns to assess eligibility; however, many agencies and individual therapists do.
It has been my experience that those who do use this as part of their assessment.
Along with that, they may also factor in the number of dependents and other extenuating circumstances – ability to earn income, medical expenses (the number one cause of bankruptcy in the USA), bankruptcy, etc.
If you are considering incorporating this into your own practice, you might want to check in to see how some of the agencies and private practitioners in your own community are measuring need and assessing fees.
Whatever you do, know that FIRST you need to make sure you can cover your own expenses and financial needs before giving it away to your clients; you cannot give what you do not have.
I was wondering your input on using crowdfunding to offer these scholarships. It seems like setting up a 501(c)3 wouldn’t be a good way to go about this since I think that would fall under using a nonprofit to subsidize a private entity. Thoughts about crowdfunding?
Hi, Jena! Thanks for dropping in!
You’re asking a really interesting question!
I’ve never actually used crowdfunding for anything so I don’t think I’m going to be the best person to ask.
Sorry! Maybe someone else reading your question might be able to offer some ideas?
By the way – I’ve admired the name of your practice for years.
Love the name, all that implies, and the logo, too!