Does Insurance Cover Life Coaching?

No, health insurance does not generally cover life coaching. Insurance pays for medical care, meaning the diagnosis and treatment of an illness, and life coaching does not diagnose or treat anything. The same rule usually keeps coaching out of a health savings account or flexible spending account. The routes that do pay for coaching are mostly employers, through training budgets and workplace programs.

There is one important exception to keep in mind. If what you need is help with a mental health condition, that is therapy rather than coaching, and therapy is something insurance often does cover. Knowing which of the two you need is the first decision, and it may save you money as well as time.

Why health insurance does not pay for life coaching

Health plans pay for medical care, and the federal definition of medical care is narrow. IRS Publication 502 describes medical expenses as the costs of the "diagnosis, cure, mitigation, treatment, or prevention of disease," and says they do not include expenses that are "merely beneficial to general health."

Life coaching sits on the wrong side of that line by design. A coach helps a client set goals and act on them, such as changing careers, building confidence or organizing a life after a big change. That is valuable work, but it is not the treatment of a condition, so there is nothing for a health plan to reimburse.

Licensing points the same way. Insurers pay licensed providers, such as physicians, psychologists and licensed counselors, whose work is defined and regulated by their state. No US state licenses life coaches, a point our guide to life coach licensing covers in detail. Without a license there is no billing route into a health plan.

What about health coaching

Health and wellness coaching is a separate field from life coaching. It focuses on habits tied to physical health, such as diet, exercise and managing a chronic condition, and some health coaches work inside medical practices or alongside a client's doctor.

Coverage for that kind of coaching depends on the plan and on whether it is part of treating a diagnosed condition. If your goal is health related, ask your plan directly before assuming either way. For personal and career goals, the general answer above holds.

Can you pay for life coaching with an HSA or FSA

Health savings accounts (HSAs) and flexible spending accounts (FSAs) let you pay for medical expenses with money that is not taxed. They follow the same definition as the medical expense deduction. IRS Publication 969 says qualified medical expenses for these accounts are generally those that would qualify for that deduction.

The IRS has answered closely related questions in its FAQ on wellness and general health expenses. The answers show where the line falls, and the table below sets out a few of them beside life coaching.

The marital counseling answer is the telling one. Even a conversation-based service with a trained professional falls outside the rule when it is not treating a diagnosed illness. Life coaching for personal or career goals is further from medical care than that, which is why it is generally not an eligible expense.

Your plan administrator has the final say on any claim, and tax rules change. If you have a specific situation, such as coaching that a physician has recommended as part of treating a diagnosed condition, ask the administrator before you pay rather than after.

Questions to put to your plan administrator

A short email to the administrator settles the question for your own plan, and it leaves you with an answer in writing. These questions cover what most people need to know:

• Is coaching from a provider who is not licensed ever an eligible expense under this plan?
• Would a letter from my physician change the answer, and what would it need to say?
• If a claim is refused after I have paid, can the account be repaid, and how?
• Does my employer offer a separate wellbeing or development benefit that covers coaching?

The last question is often the most useful, because it moves the conversation from health cover to the budgets that actually pay for coaching.

Routes that can pay for life coaching

The money for coaching usually comes from work rather than from health cover. That makes sense given why most people hire a coach. In the 2017 ICF Global Consumer Awareness Study, the most common reason people gave for working with a coach was to improve their individual or team performance at work, at 43%.

We see a similar pattern. Across the clients our graduates describe to us at the Life and Career Institute, about two in five are hiring a coach mainly to do better at work, which is why an employer budget is so often the route that pays. These are the ones worth asking about:

• A training or development budget. Many employers fund coaching for new managers, people stepping into a bigger role, or staff working on a specific skill.
• An employee assistance program. An EAP is a free, confidential service some employers offer. It usually covers short-term counseling and referrals, and some programs include coaching-style sessions on work or life issues.
• A professional association or alumni network. Some offer members coaching at a reduced rate or a few free sessions.
• Your own business. A self-employed client hiring a business coach may be able to treat the fee as a business cost. A tax professional can tell you whether that applies to you.

When asking an employer, frame the request around the work. Explain the goal, how coaching would help you reach it, and how long it would take. A clear goal and a fixed budget make a yes much easier for a manager to give.

When therapy is the right call, and insurance may help

Sometimes the honest answer to "should I hire a coach" is no. If low mood, anxiety, grief, trauma or an addiction is getting in the way of everyday life, a licensed therapist is the right professional, and coaching is not a substitute for treatment.

That is also where insurance comes back in. HealthCare.gov states that all Marketplace plans cover mental health and substance use services as essential health benefits, including behavioral health treatment such as psychotherapy and counseling. Employer plans have their own terms, so check your plan's mental health benefits.

To find a therapist your plan will pay for, start with your insurer's own directory of in-network providers, then call to confirm they are taking new clients. Ask about your share of each session, such as a copay or the amount owed before the deductible is met, so the cost is clear from the start.

The two kinds of help can work together. Some people see a therapist for a condition and a coach for a career goal at the same time, with each staying in their own lane. A good coach will say plainly when a session has moved into territory that needs a therapist, and will suggest one.

Planning for coaching without insurance

Since coaching is almost always paid for privately or by an employer, it is worth budgeting for the whole engagement before starting. Our guide to how much a life coach costs explains typical fees and works through what a three-month engagement can cost.

There are also ways to keep the cost down, such as group programs, fortnightly rather than weekly sessions, and coaches who offer a sliding scale. Before paying anyone, our guide to finding a life coach covers the checks that make the money well spent.

The coaching and therapy line in coach training

For anyone weighing up training as a coach, the line this guide keeps returning to is a working skill rather than a footnote. The Life Coach Certification covers it from the first unit. Introduction to Life Coaching sets out the ethics of the work, including what coaching is not.

Understanding Human Behavior and Personal Development, also in the Professional Course, explains why clients act as they do without straying into diagnosis. A coach's written agreement should say clearly that coaching is not therapy, and our free life coach contract template includes that clause.