In-Network vs. Out-of-Network: How Health Insurance Networks Work

Whether a provider is in network or out of network is one of the biggest factors in what you pay for medical care. Here's how in-network and out-of-network coverage works in U.S. health insurance, what it means for your costs, and how to avoid unexpected bills.

In-network vs. out-of-network: the quick explanation

An in-network provider is a doctor, hospital, clinic, pharmacy, or other health care facility that has a contract with your health insurance plan. That contract sets negotiated rates for covered services. In-network providers accept those discounted rates, and your share of the cost (your copay, coinsurance, and deductible) is based on the lower, pre-agreed amount. That's why in-network care usually has lower out-of-pocket costs.

An out-of-network provider has no contract with your health plan. Without a negotiated rate, out-of-network providers can charge their full price. Depending on your coverage, the plan may pay only part of the bill, or nothing at all. Out-of-network care usually costs more than in-network care, sometimes much more.

Here's an example. A specialist charges $200 for an office visit, and your plan's in-network allowed amount is $110. After your deductible is met, you owe 20% coinsurance on $110, which is $22, and the insurer pays $88. Now suppose the same specialist is out of network. Your plan might still recognize $110 but cover only 50%, so you owe $55, plus the $90 the provider charges above the allowed amount. Your total is $145 instead of $22.

A few terms come up throughout this article: allowed amount, coinsurance, deductible, copay, balance billing, and out-of-pocket maximum. Network status changes how each of them works.

What is a health plan network and an in-network provider?

A health plan's network is the group of doctors, hospitals, labs, pharmacies, and other health care providers that have agreed to the plan's payment terms for covered services. Your health insurer builds the network by credentialing medical providers, checking licenses and board certifications, and negotiating reimbursement rates. Some insurers keep networks narrow to negotiate better prices, which can mean lower premiums for members. Providers can also turn down an insurer's rates, which is one reason a given doctor may not take every plan.

Being a network provider means accepting the plan's negotiated payment as full payment for covered health care services, apart from your cost sharing. In-network billing is handled between the provider and the insurance company, so you usually pay only your copay or coinsurance at the visit. The same doctor can be in network for one health insurance plan, such as a local HMO, and out of network for another company's PPO.

Network design also affects premiums and out-of-pocket costs. Narrower networks often come with lower premiums, while broader networks offer more provider choice. HealthCare.gov describes the main plan types, HMO, PPO, EPO, and POS, each of which handles its provider network differently.

What does "out of network" mean?

Out-of-network providers don't have a contract with your insurance plan. There's no pre-agreed price for services, and the provider doesn't have to follow the plan's billing rules beyond federal and state law.

The practical difference between in network and out of network is significant. In network, you pay cost sharing based on the allowed amount. Out of network, the plan (if it covers anything) may pay only part of a benchmark rate, and you can be billed for the rest. This is called balance billing: the provider bills you for the difference between their charge and your plan's allowed amount. HealthCare.gov notes that a preferred, in-network provider may not balance bill you for covered services. Out-of-network providers can, except where the No Surprises Act or state law prohibits it.

HMO and EPO plans generally don't cover non-emergency out-of-network care at all, so you could be responsible for 100% of the bill. PPO and POS plans do include out-of-network benefits, but they typically come with a higher deductible, a higher share of coinsurance for you, and a separate out-of-pocket maximum.

How in-network vs. out-of-network costs work

The cost difference between in-network and out-of-network care comes down to how your plan calculates your share. In-network costs are based on a negotiated allowed amount. Your share may be a copay (a fixed dollar amount per visit) or coinsurance (a percentage of the allowed amount) after you meet your in-network deductible. In-network payments count toward your in-network deductible and out-of-pocket maximum.

Out-of-network care, when covered, often has a separate, higher deductible and a lower plan coinsurance rate, for example the plan pays 50% instead of 80%. Out-of-network spending may not count toward your in-network out-of-pocket maximum at all, and some plans set no out-of-network limit.

Consider a $1,500 outpatient procedure. With an in-network doctor, the allowed amount might be $1,000. If you've already met a $500 in-network deductible, you owe 20% of $1,000, which is $200, and the insurer pays $800. Now suppose the procedure is done at an out-of-network facility. Your plan may recognize only $900, apply a separate $2,000 out-of-network deductible you haven't met, and cover just 50% after that. You could owe the full $1,500. Out-of-network providers may also ask for payment up front and leave you to file the claim with your insurer yourself. For a hospital stay or serious illness, the gap between in-network and out-of-network costs can run to thousands of dollars.

HMO, PPO, and other plan types: how they handle out-of-network care

An HMO plan (health maintenance organization) usually asks you to choose a primary care provider, get referrals for specialist care, and stay in the HMO network for all non-emergency care. Out-of-network coverage under an HMO is typically limited to emergencies.

A PPO plan (preferred provider organization) is more flexible. You pay less with in-network providers, but you also have out-of-network benefits, typically with a higher deductible and coinsurance and more exposure to balance billing. Our guide to HMO vs. PPO compares the two in detail.

EPO plans (exclusive provider organizations) are a hybrid: like an HMO, they generally don't cover out-of-network care except emergencies, but they often don't require you to pick a primary care provider or get referrals. POS plans (point of service) pay less for out-of-network care than for in-network care and usually require a referral from your primary care doctor to see a specialist.

Employer plans and individual marketplace plans can structure their networks differently, so check your plan's Summary of Benefits and Coverage (SBC) before you see an out-of-network doctor or visit an out-of-network facility.

Emergency care, urgent care, and the No Surprises Act

In an emergency, go to the nearest hospital; network status shouldn't be your first concern. According to HealthCare.gov, insurers can't require prior approval for emergency room services from an out-of-network provider or hospital, and they can't charge you higher copayments or coinsurance for emergency care at an out-of-network hospital.

The federal No Surprises Act took effect on January 1, 2022. For most private health plans, it protects you from balance billing for emergency services, for air ambulance services, and for care from out-of-network providers, such as anesthesiologists or radiologists, at in-network hospitals and ambulatory surgical centers. Ground ambulance services generally aren't covered by these protections unless your state has its own rules, according to CMS. Once you're stable, ask about network status for any follow-up care or admission, because different billing rules can apply.

Urgent care centers work differently from emergency rooms. An urgent care clinic can be in network or out of network, and your plan may apply its normal network rules and a different copay than it does for the emergency room. Coverage for care outside the United States also varies widely by plan.

How to check if a doctor or facility is in network

Start with your insurance card. It usually lists a website and phone number for member services and may show the name of your network. Most insurers have an online provider directory, often called "Find a Doctor." Filter it by your exact plan, since one insurer can offer several networks.

Then double-check by calling the doctor's office and your insurance company. Confirm in-network status for your specific plan and for the date and type of service. Providers not listed in your plan's directory are usually out of network.

One important caution: an in-network hospital doesn't guarantee that every doctor, lab, or anesthesiologist involved in your care is in network. Ask about facility fees and other providers who may bill separately. Write down whom you spoke to and when, and save emails or messages in case of a billing dispute.

When you might still choose an out-of-network provider

In-network care is almost always cheaper, but there are good reasons people go out of network. You may need a specialist who isn't available in your plan's network, or want to keep seeing a long-time doctor who left your network. People in rural areas may have few in-network options nearby.

Some health plans grant a network exception, sometimes called a gap exception, when no appropriate in-network provider is available within a reasonable distance. Ask your insurer about the process. You can also appeal a denied out-of-network claim through your plan's internal appeals process and, for many plans, an external review.

For scheduled, non-emergency care, you can ask an out-of-network provider for a cash price, a payment plan, or a written estimate, and compare it with in-network options. Get the details in writing so there are no surprises.

Paying network costs with an HSA or FSA

Network status affects your total bill, but the IRS rules for a Health Savings Account (HSA) or Flexible Spending Account (FSA) don't depend on whether a provider is in your plan's network. Deductibles, copays, and coinsurance for medical care are qualified medical expenses under IRS rules, as described in IRS Publication 969. For a side-by-side look at the two accounts, see HSA vs. FSA: Key Differences and How to Choose, and our guide to what you can use your HSA and FSA for.