In Network vs. Out of Network: What’s the Difference?

Key Takeaways

• A network is the group of medical service providers that your insurance company will offer coverage for.
• The concept of in-network coverage provides less freedom to choose a provider for your healthcare needs, but it’s also more cost-effective.
• Out-of-network providers are often not covered by a health insurance plan, so the individual is stuck paying more of the cost.
• Before choosing a plan, individuals should weigh whether they value more freedom in choosing their provider or cost savings.

Among the many nuances of health insurance that are important to understand is an insurance company’s network. Knowing the difference between in-network vs. out-of-network helps you make more thoughtful decisions when seeking medical services.

Understanding in-network vs. out-of-network coverage can save you considerable money on your healthcare expenses and ensure you get the best possible care. This guide will equip you to understand the difference between the two so you can take control of your healthcare journey and avoid overspending.

In-Network vs. Out-of-Network

A network is the group of healthcare providers, clinics, or specialists that your health insurance will cover services for. This network is established by an agreement between your health insurance company and these providers.

• In-Network – Any provider that has an agreement with your insurance company to take your coverage is considered in-network. In-network providers often cost less to visit because of these agreements.
• Out-of-network – Out-of-network providers are not part of the group covered by a health insurance plan. In many cases, out-of-network care is far more expensive, if covered at all.

How Do Provider Networks Work?

When a provider joins an insurance company’s network, they’re agreeing to accept a designated amount of money for given services. When you receive that service under insurance coverage, you pay a lower price than you would otherwise.

Providers and insurance companies have contracted relationships that determine the rates that they’ll charge for certain services. The process typically works like this:

1. A medical provider sends a bill for a given service, for example, of $5,000.
2. Your insurance company covers a select amount for the service, for example, $3,000.
3. If a provider is not in your network, you may receive a bill from a provider for the $2,000 difference between what they charged and what your insurance company covers—this is considered balance billing.
4. If a provider is in your network, they’re not allowed to charge you for the difference in cost.

Provider networks often depend on the type of plan that you have. The two most common types of insurance plans are:

• Preferred provider organizations (PPO) – PPO plans often provide coverage for both in-network and out-of-network care, but you often have to pay more of the cost.
• Healthcare-managed organization (HMO) – HMO plans often don’t include coverage for out-of-network care.

Cost Difference: In-Network vs. Out-of-Network

The biggest reason for knowing the difference between in-network and out-of-network care is the cost difference. When you receive care outside of your network, you can expect higher out-of-pocket costs.

Out-of-network care costs more for several reasons:

• Some plans may require you to pay the difference between what the provider charges and what your plan covers for in-network care. In-network providers have an agreement not to charge you the difference. With out-of-network providers, there is no such agreement.
• The services often cost full price, as your insurance company does not have a contract with out-of-network providers to discount any of the costs, and they have no control over what the provider decides to charge.
• You may have to pay a higher share of the service costs. Plans usually require policyholders to pay a percentage of medical service charges, known as coinsurance. Coinsurance for an out-of-network provider is often much more expensive.

Ultimately, the medical provider charges more because they don’t have a deal with your insurance company. Then, because your insurance provider didn’t agree to cover your service past a certain amount, you’re left to eat more of the cost.

Coverage Difference: In-Network vs. Out-of-Network

With considerable cost differences between in-network and out-of-network care, it’s important to prepare for any coverage differences as well. In-network services often coincide with better, more comprehensive insurance coverage since there are fewer cost and coverage limits.

Meanwhile, the coverage your insurance company is willing to percentage for out-of-network care depends on your plan. Sometimes, insurance will cover a percentage of the cost of services, and other times, they may not cover any.

With an established network, insurance providers often don’t cover care outside your city or specified service area. This can complicate your ability to access healthcare when traveling out of state or out of the country.

Plans with an established network may often require you to select a primary care provider (PCP). When you choose a PCP, they are your first step for receiving preventive or primary care, and you must visit them first before seeking support from a specialist.

Access and Choice of Healthcare Providers

The main drawback of a plan that only covers in-network services is that you have less freedom in choosing your healthcare provider. Instead of choosing any doctor for a given medical service, you’re limited to choosing from a set list of providers.

For some, the freedom to choose any healthcare provider is paramount. However, others are willing to sacrifice some of this freedom for lower healthcare costs. As you look for a health plan, you must weigh whether you value freedom of choice or cost savings more.

Emergency Care

Although out-of-network is usually more costly than in-network care, there are often exceptions for emergency care. After all, you didn’t intend to need healthcare out-of-network. Most plans will cover emergency care if you visit an emergency room or urgent care facility, even if they’re considered out-of-network. This is typically the case regardless of whether you have an HMO or PPO plan.

Still, the policy will vary by insurance provider and plan, so it’s always good to be aware of your insurance plan’s policy on emergency care before an urgent need arises. Be sure to read through a plan’s emergency care coverage before you sign up.

Tips for Managing Healthcare Costs

Your health is the most important resource you have, so healthcare costs shouldn’t get in the way of you being able to access quality care. Knowing a few strategies can help you cut your healthcare costs and make accessing care more affordable.

Some tips for reducing your healthcare costs include:

• Research options for health plan providers to determine who offers the best coverage.
• Seek pre-authorization for out-of-network care from your insurance provider.
• Seek regular preventative care to keep yourself in your best health and prevent significant healthcare concerns from arising.
• Understand your health plan thoroughly so you know what’s covered and what’s not.

Why Does In-Network vs. Out-of-Network Care Matter?

Ultimately, knowing the difference between in-network and out-of-network care matters so you can manage your healthcare expenses and avoid overspending on medical services. Knowing the difference lets you be proactive about your healthcare services and ensure you visit a provider that takes your insurance.

You can stay informed by exploring your health plan documents, researching which providers are in your network, and looking into what your insurance plan’s requirements are regarding in-network vs. out-of-network coverage.

At Redirect Health, our network features over 700,000 providers nationwide, but if you already have a preferred primary care provider, our team will work with them to get them into our system so you can keep the relationships that matter to you. We make it easy to access care, too—simply initiate a healthcare need through our Redirect Health Member App, and we’ll connect you either virtually or in-person with a quality provider that will get the service done right while saving you costs.

Explore our individual and family plan options for yourself and see all the ways you stand to gain with Redirect Health.