What’s the Difference Between In-Network and Out-of-Network?

We're not talking about In-N-Out Burger™. Sorry.

And we're not talking about computer networks either. Not sorry.

What we are talking about is the difference between in-network and out-of-network health insurance.

In-network just means that your health care provider signed an agreement with your health insurance carrier to accept a discounted rate. And out-of-network just means that there’s no signed agreement in place.

But there’s more you should know. Let’s get started.

What Is a Health Insurance Network?

In simple terms, a health insurance network is a group of health care providers across multiple specialties who have signed an agreement with a health insurance company.

When you choose a health insurance plan, you’ll be given access to one of these health care provider networks. Make sure that the plan you choose—and the plan’s network of health care providers—lines up with your particular health care needs.

What Is In-Network Insurance?

In-network insurance just means that an insurance company has signed agreements with a network of health care providers (e.g., doctors, hospitals, pharmacies, physician assistants, etc.).

To be accepted into the network, these health care providers must agree to accept a discounted rate for the services they provide. For example, if a doctor is part of an insurance network, and normally charges $150 for a service, that doctor has agreed to the network’s discounted rate of $90 for that same service—saving you $60!

As you can see, one of the biggest benefits for you to use in-network health care providers is saving money.

Heads up here, though. We want to be super clear, so we’ll say it again: To save that cash, you must use providers in the network—and not everyone’s in it. So, before you go to a doctor, check your insurance plan’s list of specific providers and facilities (the network) to make sure they’re on the list. That way, you’ll get that in-network discount.

What Does Out-of-Network Insurance Mean?

Out-of-network insurance, as you’ve probably already guessed by now, applies to health care providers who don’t participate in an insurer’s provider network. In other words, the provider didn’t sign an agreement with the insurer.

The biggest downside of using an out-of-network provider is that you pay a higher cost. Insurers either don’t cover anything for out-of-network provider charges or sometimes they’ll cover a portion of the cost but far less than if the provider was part of their network. For example, if a medical procedure costs $1000, in-network coverage might cover 80% of that, but out-of-network coverage might only cover 40%.

Why Would a Health Care Provider Choose to Be Out-of-Network?

Is it just because they want to charge more? That’s one possible reason. But there could be other reasons too.

Insurance companies often require a specific level of accreditation for a provider to participate in their network. Maybe a doctor doesn’t have the right credentials. It’s also possible that they are in a network, just not the one associated with your plan. Or maybe that doctor’s practice is doing fine financially on its own and doesn’t need referrals from an insurance company.

Who knows? The bottom line from a patient’s perspective is that out-of-network health care providers can charge more than in-network providers.

Why Does Out-of-Network Insurance Cost More?

The main reason that using an out-of-network provider costs more is because you’re either paying full price or close to it. If your health care provider isn’t part of your insurance carrier’s network, the insurance company has no say-so over how much the provider charges for their services, and that’s why you’re paying more. Your provider’s rates are probably higher than the discounted in-network rate.

Most health insurance plans are clear about how much they’ll pay for a certain service you receive from an out-of-network provider. If the doctor or facility charges more than your plan is willing to pay, you’re responsible for paying the difference between what the health care service costs and what your plan will pay. That’s true even if your coinsurance kicks in (after you meet your deductible, of course).

How to Get Insurance to Cover Out-of-Network Charges

Surprisingly, there are still insurance plans that cover out-of-network care in some areas, but it’s far less common than it used to be.¹ So, if your favorite doctor isn’t part of your insurance carrier’s network and you don’t want to change doctors, don’t lose hope!

Here are your options for getting your insurance carrier to cover an out-of-network charge:

File a Formal Request

You can submit a formal request (aka an appeal) to your insurance carrier to ask for out-of-network coverage. Your primary care physician (PCP) will typically send your request to the insurance company.

If the insurer denies your first request, don’t give up. You usually have more than one chance to get your case reviewed.

If your request is denied a second time, federal or state law might require your health insurer to let you continue your appeal by contacting an independent, outside group. Your insurance company’s website should have information about how you should follow the appeal process.

Ask for Balance Billing

If your insurance company denies coverage for a hefty out-of-network charge, most health care providers can and do help you set up a payment plan. Since out-of-network providers haven’t signed any kind of agreement with the insurance company, they usually have the leeway to help you make your bill affordable. Just ask.

Request Prior Authorization

Another option for getting your insurance company to cover out-of-network charges is to request prior authorization (aka precertification, pre-authorization, prior approval and predetermination). Prior authorization just means that you’re requesting approval from your insurance company to cover an out-of-network health care charge before you receive the service.

Requesting prior authorization can be a lengthy process—so get the ball rolling as soon as you can.

Get the Right Health Insurance

The most important thing to remember when you’re dealing with in-network and out-of-network charges is that the more you know about your plan and what it does and doesn’t cover, the better off you’ll be. Stay in-network whenever you can.

To avoid surprises, here are some proactive steps you can take right away to get a better understanding of health insurance and what to look for if you're in the market for new or improved coverage.