Getting NDIS Psychology Funded
- Julian Vilsten
- Jun 4
- 5 min read
Updated: 7 days ago
Written by Julian Vilsten, Clinical Neuropsychologist and Specialist Behaviour Support Practitioner. Last updated: June 2026.
NDIS-funded psychology sits under Improved Daily Living and pays for capacity building, not clinical treatment. Treating a mental health condition is Medicare’s responsibility. This guide explains the line the NDIS draws, why psychology requests get declined as a health system issue, and how to frame and evidence a request so it holds up at planning.
Key points
The line: The NDIS funds capacity building, not treatment. Psychology that builds functional skills is fundable; treating a condition is Medicare’s job.
Where it sits: NDIS psychology is funded under Improved Daily Living, a Capacity Building budget. It can’t come from Core.
Why requests fail: A request written in treatment language reads as a health-system job, so the NDIS declines it.
The fix: Frame the request around function, what the person can’t do now and how psychology helps them do it, and tie it to plan goals.
Not a duplicate of PBS: Psychology (Improved Daily Living) and Positive Behaviour Support (Improved Relationships) fund different work and often run together.
Does the NDIS fund psychology?
Yes, but only a certain kind. NDIS-funded psychology sits under Improved Daily Living (IDL), a Capacity Building budget, and pays for capacity building: work that builds the functional skills a person needs because of their disability. It does not pay for clinical treatment of a mental health condition. That sits with Medicare and the state health system.
The test is purpose, not diagnosis. The same psychologist, seeing the same person, can be an NDIS support or a Medicare one depending on what the work is for. Building skills to manage daily life with a permanent disability is capacity building. Treating or stabilising the symptoms of a condition is treatment, and the NDIS won’t fund it.
Why do psychology requests get declined as a health system issue?
When a planner writes that a support is “the responsibility of the health system”, they are usually not disputing the need. They are placing the request in the wrong system. A request framed as treatment reads as a Medicare job, and the NDIS declines it on those grounds.
The NDIS sits alongside Medicare. Clinical supports, treating a condition or diagnosing an illness, fall under Health. Functional supports, building the capacity to live with a permanent disability, fall under the NDIS. Ask the NDIS to treat anxiety, and you are speaking the language of Health. Ask it to fund skill building so a person can leave the house and use public transport, and you are speaking the language of disability. The need is the same. The category is not.
How should a psychology request be worded?
Often the work doesn’t change. The framing does. Move the language from treatment to capacity building, and tie each request to function.
Same need, different frame:
“Treating depression” becomes “building motivation to complete daily self-care tasks.”
“Therapy sessions” becomes “capacity building intervention.”
“Managing symptoms” becomes “overcoming barriers to social participation.”
“Curing the condition” becomes “developing lifelong emotional regulation strategies.”
“Reducing pain” becomes “learning strategies to manage fatigue and maintain activity.”
Is psychology a duplication of Positive Behaviour Support?
A common reason for decline is the claim that psychology duplicates supports when a participant already has Positive Behaviour Support (PBS). It doesn’t. They fund different work and often run together.
Here is the distinction you can use in a response:
Positive Behaviour Support (Improved Relationships) focuses on safety and systems. The practitioner writes a plan to manage risk, train the support team, and reduce restrictive practices, keeping the network around the person aligned to prevent behaviours of concern.
Psychology (Improved Daily Living) builds the person’s internal capacity. Psychologists apply specialised knowledge of cognition and emotional development to help someone process emotions, understand social situations, and build resilience.
The bottom line: these are partners, not duplicates. For complex presentations they work in tandem. PBS sets up a consistent, safe environment and support team; psychology builds the internal skills, emotion regulation, resilience, and social understanding, that the person carries into the rest of their life.
Will the right words guarantee funding?
No, and it’s worth being honest about that. You can frame a request well, evidence it properly, and still get a decline. The NDIS is large and inconsistent. Reports aren’t always read in full, and decisions can turn on who assesses the file.
What you can control is the quality of the evidence. Clear, functional language removes the easy reasons for a no and makes the request harder to misread. It won’t guarantee an outcome, but it gives the request its best chance.
What should you check before a plan review?
Before a planning meeting or review, test the request against four questions:
Is the purpose functional, not clinical? The NDIS funds the functional impact of a permanent disability, not treatment of an acute episode. Argue the purpose, not the session count.
Is it about doing? Focus on what the person can’t do now, and how psychology helps them do it, rather than on how they feel.
Is it tied to a plan goal? Link the support to a specific goal in the plan, such as work, study, relationships, or living independently.
Is it value for money? Explain the cost of not funding it. Without these skills, will the person regress, or rely more heavily on paid support later?
At Outcomes Lab, we document functional impact alongside clinical need, so a planner has the evidence to assess the request.
Not sure which budget a psychology request should come from? Our mobile team across Melbourne can help you work out the right support and how to evidence it.
Frequently Asked Questions
Does the NDIS fund psychology, or is that Medicare’s job?
Both can, but they fund different things. Medicare covers treatment for a mental health condition, usually up to 10 sessions a year on a Mental Health Treatment Plan. The NDIS covers psychology that builds functional capacity tied to your disability, and it sits under Improved Daily Living. So Medicare treats the condition, the NDIS builds the skills to live with the disability. Many people draw on both for different goals.
Why was my participant’s psychology funding declined as “health system responsibility”?
Usually the planner isn’t denying the need. They’re placing it in the wrong system. A request written as treating or curing a condition reads as a Medicare job. Reframed around functional goals, the same support reads as capacity building, which is what the NDIS funds.
What’s the difference between NDIS psychology and a Medicare Mental Health Treatment Plan?
Medicare helps you manage the symptoms of a condition. The NDIS helps you build the skills to live alongside a permanent disability. One treats, the other builds capacity. They can run side by side.
Can a participant have both psychology and Positive Behaviour Support?
Yes. They do different jobs and aren’t a duplication. PBS focuses on safety, the environment, and the support team around the person. Psychology builds the person’s internal skills, like emotion regulation and resilience. For complex presentations they often work in tandem.
Which NDIS budget pays for psychology?
In almost all cases it comes from Capacity Building, under Improved Daily Living. There is a Core line item that can cover it, but that's the exception rather than the rule, so most psychology funding sits in Capacity Building. If a plan has no Capacity Building funding for it, that needs raising at the next plan review.
Can psychology funding be added at a plan review?
Yes. Documentation that links the psychology need to the participant’s disability and their plan goals, written in functional terms, gives the request its strongest footing.
Outcomes Lab provides neuroaffirming Positive Behaviour Support, Psychology, and Neuropsychology services. If you’re looking for support we’d love to hear from you.
About the author
Julian Vilsten is a Clinical Neuropsychologist, Specialist Behaviour Support Practitioner, and the Director of Outcomes Lab. He has over 15 years of experience in mental health and disability services. Outcomes Lab provides NDIS psychology, neuropsychological assessment, and positive behaviour support services in Melbourne, VIC and Port Lincoln, SA. To make a referral or check capacity, contact us here.
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