What is the difference between the allowed amount and the billed charge?
The billed charge is the provider’s list price. The allowed amount is the rate the carrier has contracted with that provider, and it is the number your deductible, copay and coinsurance are calculated on. In-network, the gap between the two is not yours to pay.
What is behind the short answer.
The short answer is above. These are the details that decide it for a specific bill.
Cost sharing is figured on the allowed amount
Your plan’s deductible, copays and coinsurance are applied to the allowed amount, never to the billed charge. The Summary of Benefits and Coverage shows how each applies.
Out-of-network is where the gap can reach you
An out-of-network provider has no contract, so it may bill the difference between its charge and what the plan allows. Federal rules limit that for emergency care and certain services at in-network facilities.
Allowed amounts differ by provider
Carrier price tools show estimated allowed amounts before care, which is the number to compare when choosing where to go.
Try it on a bill of your own
Enter an allowed amount and the terms of up to three plans to see what you would pay.
One procedure, three numbers.
Sample plan: a $1,000 deductible not yet met and 20 percent coinsurance. The provider bills $3,000 and the carrier’s contracted rate is $1,200.
In-network, you owe the $1,000 deductible plus 20 percent of the remaining $200, which is $40, for $1,040 in all. The other $1,800 is the contractual adjustment the provider writes off. Run the math on the billed charge by mistake and you would expect $1,400, an overstatement of $360.
What the rules say.
The requirements in this section come from the federal sources linked in each card. They are general information, not legal advice.
Surprise-billing protections for plans
42 U.S.C. 300gg-111 limits what an out-of-network provider can collect for emergency services and for certain services at in-network facilities, and ties the member’s share to the in-network cost-sharing amount.
Balance billing for emergency services
45 CFR 149.410 sets the rule that a person receiving emergency services cannot be balance billed beyond the in-network cost-sharing amount.
We compare plans on the allowed amount.
When we show employees what a plan costs, the numbers are built on contracted rates, not list prices, so the estimate matches the explanation of benefits they will receive.
Related pages.
Medical Bill Cost Calculator
Run one bill through three plans and see what you pay.
Summary of Benefits and Coverage
What the standard plan summary shows and how to read it.
No Surprises Act Guide
How federal surprise-billing rules apply to group health plans.
Deductible vs Out-of-Pocket Maximum
The starting line and the finish line of an employee’s share.
Coinsurance, Explained
How the percentage share works after the deductible.
Price Comparison Tools
Estimated contracted rates before care is scheduled.
Questions that come up next.
Quick replies to the next questions employees tend to ask about bills.
Do I owe the difference between the billed charge and the allowed amount?
Not when the provider is in your plan’s network. An in-network provider agrees to accept the allowed amount as payment, so the gap is written off as a contractual adjustment and you owe only your deductible, copay or coinsurance. An out-of-network provider may bill you the difference, except where federal surprise-billing protections apply, such as emergency care.
Where do I find the allowed amount on a bill or an explanation of benefits?
The explanation of benefits the carrier sends after a claim lists the amount the provider charged, the plan discount or allowed amount, what the plan paid and what you owe. The provider’s own bill usually shows only the charge, so use the carrier’s explanation of benefits or member portal for the allowed amount.
Is the allowed amount the same at every provider?
No. Each carrier negotiates its own rates with each provider, so the same service can have different allowed amounts at different providers and under different networks. Your coinsurance is a percentage of that number, which is why the same procedure can cost you different amounts in different places.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents, two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
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