Licensed vs. Unlicensed Therapy Practice
Key Differences and Considerations for Aspiring Therapists In Whether to Enter Licensed Practice
When aspiring therapists complete their master’s degree, they often assume that becoming a Licensed Clinical Social Worker (LCSW), or Licensed Marriage & Family Therapist (LMFT) is the only path into mental health practice. However, that’s not the case. In fact, unlicensed mental health practices are becoming increasingly popular as they allow more freedom, and command higher pay rates that licensed practice, in many instances. It is critical to understand the nuances of the licenses, if you are going to enter unlicensed practice, however.
This article explores the differences between licensed and unlicensed practice, key considerations, and why unlicensed practice might be a better fit for you, depending on your goals.
What is a Therapy License?
A license in the field of therapy, such as Licensed Clinical Social Worker (LCSW), Licensed Professional Counselor (LPC), or Marriage and Family Therapist (LMFT), is a state-regulated credential that allows professionals to:
Diagnose and treat severe mental health disorders (e.g., schizophrenia, major depressive disorder).
Bill insurance companies directly for services.
Use the title “licensed therapist” or similar protected titles.
To obtain licensure, therapists must:
Complete a master’s degree program in an approved field (e.g., counseling, psychology, or social work).
Accumulate supervised clinical hours (ranging from 1,500 to 3,000 hours).
Pass a state-mandated licensure exam.
While licensure provides certain legal and financial advantages, it also comes with restrictions on practicing new, cutting-edge, unregulated modalities (like somatics). Somatics, and other mind-body modalites are not regulated by licenses, and fall in ambiguous territory.
Key Differences Between Licensed and Unlicensed Practice
Legal Scope of Practice
Licensed Therapists: Legally allowed to diagnose and treat severe mental illnesses. They can also create treatment plans for clients with psychiatric diagnoses and collaborate with insurance companies.
Unlicensed Therapists: Focus on wellness, personal growth, and general mental health. They avoid working with clients who require diagnosis or treatment for severe mental health disorders (this is key). They know to refer these clients to licensed professionals credentialed to treat these clients.
Both licensed and unlicensed practitioners are a critical part of the mental-health ecosystem as they play different roles.
Titles and Credentials
Licensed Therapists: Use titles like “Licensed Clinical Psychologist” or “Licensed Professional Counselor.”
Unlicensed Therapists: Use titles like “Coach,” “Somatic Practitioner,” or in some instances “Counselors” or “Somatic Therapist” depending on the scope of their work and state regulations. Because somatic practices are unregulated by licensing boards, the term “Somatic Therapist” is a little ambiguous. Our Clinical Somatic Psychology Masters Degree is a comprehensive 2-year clinical masters degree program that prepares students for practice as a Somatic Therapist.
*As always It’s important to check your state regulations around the use of terminology, to make sure you are following your state’s regulations.
Freedom of Practice
Licensed Therapists: Bound by the rules and frameworks of their licensing board, including restrictions on using alternative modalities (e.g., somatic therapy, energy work) without additional certifications.
Unlicensed Therapists: Have the flexibility to incorporate a wide range of practices, including somatic work, mindfulness, coaching, and body-based techniques, without needing approval from a regulatory board.
Insurance and Payment
Licensed Therapists: Can bill insurance companies, which may help attract clients seeking reimbursable care.
Unlicensed Therapists: Operate on a private-pay model, often appealing to clients who prioritize personalized, alternative, or holistic care.
Why Unlicensed Practice Might Be the Right Choice
1. Faster Path to Starting Your Practice
The licensure process can take years and cost tens of thousands of dollars. By opting for unlicensed practice after completing your master’s degree, you can begin seeing clients and building your practice immediately.
2. Freedom to Offer Diverse Modalities
Licensed therapists are often restricted to evidence-based practices approved by their licensing board. If you’re drawn to somatic therapy, breathwork, coaching, or other alternative approaches, unlicensed practice gives you the freedom to use these tools.
3. Focus on Wellness and Personal Growth
Most people seeking therapy aren’t dealing with severe mental illnesses—they want support in managing stress, improving relationships, or navigating life transitions. These areas fall squarely within the scope of unlicensed practice.
4. No Need for Insurance Hassles
While insurance billing can attract clients, it often comes with administrative burdens and lower reimbursement rates. In unlicensed practice, you can set your own fees, work directly with clients, and avoid the red tape of insurance companies.
Key Considerations for Unlicensed Practice
Know Your State Laws
Every state has specific rules about who can call themselves a therapist and the scope of unlicensed practice. Research your state’s regulations to ensure compliance.
2. Stay Within Your Scope
As an unlicensed practitioner, you cannot diagnose or treat severe mental health conditions. If a client presents with these issues, you should refer them to a licensed professional.
3. Build Credibility
While you can’t use the title “licensed therapist,” you can still establish yourself as a credible professional by highlighting your master’s degree, training, certifications, and client testimonials.
4. Market to Your Ideal Clients
Position yourself as a specialist in areas like somatic therapy, mindfulness, or coaching. Many clients are actively seeking alternative approaches to mental health care.
Conclusion: Is Unlicensed Practice Right for You?
Unlicensed practice offers a faster, more flexible path to starting your career as a therapist, especially if you’re passionate about somatic or alternative modalities. While you’ll need to stay within your legal scope of practice, the ability to offer personalized care without the constraints of licensure can be incredibly rewarding.
If you’re ready to take control of your career and make an impact in your own way, unlicensed practice could be the perfect fit for you. Research your state’s regulations, invest in your education, and start building the practice of your dreams today.
If you are interested in becoming a Somatic Therapist, our Clinical Somatic Psychology Masters Degree is a comprehensive 2-year degree program that prepares students for practice as a Somatic Therapist.