Offering sliding scale fees helps to make therapy more affordable to clients. 

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But charging sliding scale fees isn’t as simple as pulling numbers from the air—there are best practices you should follow to ensure: 

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• Sliding scale fees are financially sustainable for your practice
• Everything is correctly documented
• You avoid breaching insurance contracts

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Here’s what you need to know to offer sliding scale fees equitably and effectively while keeping your practice in the black.

Key takeaways

• Make sure you can afford to provide sliding scale fees before offering them
• Create a documented fee plan based on recognized standards
• Require clients to complete applications for sliding scale fees
• Avoid regularly waiving payments for Medicare and Medicaid clients
• Be realistic about your own expectations and attitudes, and the extra admin that comes with offering sliding scale fees
• Consider other options for making therapy more affordable before deciding on sliding scale fees

DO run the numbers to make sure sliding scale fees are sustainable for your practice

Before doing anything else, calculate how much in fee reductions you can afford to offer clients.

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Any reduction in hourly rates is a reduction in revenue for your practice, so:

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1. Determine your average monthly revenue
2. Calculate a lower but sustainable revenue that you would be comfortable earning
3. Subtract the lower amount from your average monthly revenue

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The result is the amount you can afford to sacrifice by offering sliding scale fees.

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Other factors come into play when determining the fees you can offer clients. But running this simple calculation ensures you can cover operating costs even when charging reduced rates.

DO set your sliding scale fees based on recognized standards

Your sliding scale fees are not based solely on what your practice can afford. In order to ensure equitable treatment for clients, they should be based on the Federal Poverty Guidelines.

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The Guidelines set the Federal Poverty Level (FPL) for each state. You can use the FPL to:

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• Determine eligibility. For instance, you may offer a sliding scale fee to any clients whose income is 100% to 200% of the FPL.
• Calculate sliding scale fees. One common method is to set fees at 0.001 times the eligible client’s income. (Eg. A client with $24,000 income would pay $24 per session.)

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You can find out a client’s income level by asking them to provide pay stubs or a copy of their most recent tax return when applying for the sliding scale.

DO check your insurance contracts before offering sliding scale fees

If you’re on an insurance panel, you can’t charge clients any more or less than the amount you agreed to charge when you signed a contract with the insurer. 

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Before offering sliding scale fees to insured clients, check your contracts with insurance companies. Some insurers may offer leniency, but you’ll need to contact them directly to negotiate new terms.

DO create a written sliding scale plan

Write a detailed description of your sliding scale plan that you can use both for your own reference and to inform clients. Include:

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• Purpose: Your reason for offering sliding scale fees 
• Eligibility criteria: Who has the option of paying sliding scale fees.
• Calculation methods: How fees are calculated on a sliding scale.

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Revisit this plan at least once each year. You may need to change it if:

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• Your fees increase
• The plan is no longer financially sustainable for your practice
• You take supplementary or alternative steps to make therapy more affordable for clients

DO document all sliding scale applicants

When providing sliding scale fees, be sure to create a paper trail. Any client opting for a sliding scale option should:

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• Fill out a written application
• Provide proof of their stated income level
• Be recorded internally in your records

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For your part, be prepared to provide a document:

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• Informing the client who is eligible for sliding scale fees
• Explaining how you calculate sliding scale fees
• Specifying that your fees may change in the future
• Indicating that the client will receive the same quality of care as they would if they paid your typical fees

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Have the client sign and date this document to indicate that they have read and understand it.

DO decide how and when you will notify clients of the sliding scale option

If you offer sliding scale fees, you’re not required to publicize the fact. However, some low-income individuals look specifically for therapists who offer fees on a sliding scale. Those clients may pass you by if you don’t indicate sliding scale on your website and your directory listings.

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Other clients will reach out to you directly to find out whether you offer reduced fees.

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Still others may feel anxious about bringing up sliding scale fees, particularly if they’ve already been in treatment with you for a long time. 

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Some signs you may want to offer existing clients reduced fees:

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• Based on what they say during therapy sessions, you understand that they struggle to pay for basic needs 
• They tell you they’re considering leaving therapy for financial reasons
• They ask to schedule fewer therapy sessions per month because of concerns about money
• They lose their insurance coverage or enter a period of economic hardship

DO check ethical guidelines for your licensing board and other organizations

Some licensing boards and professional organizations may include rules against charging clients different amounts according to their personal circumstances. In that case, offering sliding scale fees could constitute an ethics violation.

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Make sure to review the ethical guidelines of any organization you’re a part of, and if you’re unsure how to interpret them, contact a representative directly.

DON’T waive all coinsurance and deductible fees for Medicare or Medicaid clients

If you waive deductibles or copayments for Medicare or Medicaid patients, it may be considered fraud. And if you offer routine reductions to deductibles and copayments, the government may view it as an attempt on your part to induce Medicare or Medicaid patients to use your services. In many states, that’s illegal.

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You may give Medicare and Medicaid patients financial relief by occasionally waiving or reducing deductibles or copayments. The Office of the Inspector General for the US Department of Health and Human Services allows “non-routine, unadvertised waivers of copayments and deductibles based on individualized determinations of financial need.”

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But avoid making reduced fees for Medicare and Medicaid patients standard practice. It could land you in legal hot water.

DON’T ignore your own feelings when it comes to accepting a reduced rate

Before offering sliding scale fees, think carefully about the mental and emotional impact it could have on you as a therapist.

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Even if your motivations are altruistic, it’s possible to develop a sense of resentment when you’re being paid less than what you typically charge. Lack of fair compensation is one of the factors that contribute to professional burnout among therapists. That’s even the case when therapists charge lower fees voluntarily.

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Ask yourself:

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• Will charging sliding scale fees introduce new financial stressors in your personal life?
• Will earning less per session incline you towards offering lower quality of care (“phoning it in”)?
• Is your sense of self-worth likely to suffer if you are not being paid the full amount for your time as a professional?
• Are you comfortable with the fact that, for ethical reasons, you may need to continue treating a lower-paying client even if you would prefer to drop them?

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These can be difficult questions to address, particularly when helping clients is your number one priority. But answering them honestly now saves you trouble down the road. And don’t forget to check in with yourself periodically to make sure you’re still comfortable with the concessions you’re offering clients.

DON’T overlook the extra administrative burden

Offering sliding scale fees will likely mean extra paperwork for:

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• Determining how much you can afford to cut fees for clients
• Calculating individual clients’ eligibility and fees
• Creating extra intake forms for sliding scale clients
• Processing and documenting applications
• Tracking the impact of sliding scale fees on your finances

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Depending on the amount of paperwork already on your plate—and your attitude towards back office tasks in general—the extra work involved may not pose a problem. All the same, be prepared to set aside extra time for the increased administrative burden.

DON’T apply sliding scale fees inconsistently 

The option to pay sliding scale fees should be available to all clients who meet your eligibility requirements. 

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You shouldn’t make sliding scale fees available arbitrarily, for instance:

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• By neglecting to notify a client of sliding scale options because you would prefer to no longer work with them
• By offering sliding scale fees to clients who fall outside the eligibility criteria as an enticement to keep them from leaving your practice

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Treat your sliding scale plan as a procedure you follow rather than a tool you use. It applies across the board based on financial need, not on other factors.

DON’T assume sliding scale fees are your only option

After running the numbers and considering the extra admin involved, you may decide that sliding scale fees are not a good fit for your practice. Or you may implement sliding scale fees and then decide to scale them back. 

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In either case, you have other options for making therapy more affordable for clients, like:

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• Occasional pro bono sessions
• Shorter sessions with lower fees
• Group therapy

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For more options, check out How to Make Cash Pay Therapy More Accessible for Your Clients.

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If a client can’t afford therapy—either with sliding scale fees or without—then you may need to refer them to another practice. For a complete guide, see When and How to Refer Therapy Clients Out. 

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