Sorry ladies, I somehow missed this thread!
Dyslexia is one those things that is VERY difficult to diagnose accurately. It also has many other issues that can be rolled up within the problem that can make it look like a child has dyslexia when it really may be a different eye-related issue instead.
5 year olds will often do just what you ladies are describing when they're reading. They are working so hard to hold the sounds that each letter makes in their head, and then blend them together, that they will often say the last sound they read and work back to the beginning after decoding a new word. My own child is doing it right now at age 6.
I always make my kiddos run their finger under the words from left to right as they say them. When they get to the end of sounding out a word, I'll have them quickly run their finger under the word from left to right again as they blend it. This is a simple exercise that helps with tracking and with strengthening their eye muscles. It is also a reminder to go from left to right.
Mazes are another excellent way to strengthen eye muscles. Have the kiddos use their eyes to make the path from beginning to end first. Then, have them do it with a pencil or marker. You could easily do this daily and quite inexpensively with good results. Phonics Pathways has a Pyramid book that is also good for strengthening eye muscles and for tracking practice as kiddos read words in a pyramid formation. It can be used separately from the Phonics Pathways reading curriculum, and only takes 5-10 min. a day.
It is always a good idea to have your kiddos eyes tested to make sure their vision is not interfering in their reading or their ability to track words on the page. However, many young children need time to develop and strengthen their eye muscles to be able to track a line of print properly across a page. It has much to do with age and maturity. I would always err on the side of giving a 5 year old several years to come along phonics-wise, tracking-wise, and writing-wise before worrying about extensive testing or therapy (unless it is a clear-cut vision issue or a different issue related to a disability that the child has).
I would not consider dyslexia to be a clear-cut learning issue to diagnose. There is not a formal test that clearly shows whether a child is dyslexic or not. There are many batteries of tests that can be given, but from years of experience in the public school system, I will tell you it is more a diagnosis that grows out of years of symptoms that combine to form the diagnosis of dyslexia (more than likely diagnosed accurately in older teens or adults). This is because adults who have discovered they are dyslexic can tell very quickly that they fit the listing of "symptoms", but a young child has a hard time conveying what they're seeing and often will give conflicting symptoms that sound dyslexia-like but aren't necessarily so. Even when dyslexia is the diagnosis, there is not a certain prescriptive way to fix it. While some spelling programs and reading programs are better suited toward a dyslexic child, overall kiddos often learn to cope on their own and learn strategies that help them overcome it as they go through life.
So, long story short, if your insurance pays for vision therapy, it would be a good thing to do (as it certainly wouldn't hurt your child in any way). But, since they are unclear on the diagnosis (double-vision vs. dyslexia), if your insurance does not pay for the therapy, I would see how many sessions they are recommending your daughter would need and what the expected outcome would be. I would also ask if there is anything you could work on at home to help with this. I would be more inclined to wait and see how she progresses without therapy, since your daughter is so young. I would also check with your opthamologist to see if any kind of glasses, prisms, etc. could be helpful in your daughter's case. If you haven't already been to an opthamologist, this is a step up from an optometrist, and would be well worth your time in getting an opinion.
Blessings,
Carrie