Allowable Charge

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An allowable charge is a cost that the health insurance company approves and will pay for a particular medical expense. Allowed charges are also called approved charges or allowed amounts. Allowable charges differ from actual charges. Actual charges are the real costs that are associated with the specific care or treatment. In some cases, the insurance company pays the full amount for an allowable charge, even if the actual costs are higher. That means the insurance company will pay for the difference and you won’t be billed, regardless of the actual costs for the services.

What is Included in Allowable Charges

The insurance company pre-determines what is included in actual charges for specific services. The allowable amount is set by each insurance company or provider, so they can vary between different insurance companies. The allowable amount is set for each type of service and can vary based on the type of service, the provider, and the geographic location.
It is helpful to understand the usual, customary, and reasonable (UCR) charges. The insurance company pays for services based on the usual, customary, and reasonable charges for the same or similar medical care in the same region. The insurance company often uses UCR to set the allowable charges for medical services.

In-Network vs. Out-of Network Allowable Charges

When you visit a doctor in your network, the amount of co-insurance is based on the allowable charges, not the actual charges. This is beneficial because in most instances you will not need to pay for any of the costs of treatment. However, if you go to a doctor who is out-of-network, you will need to pay the difference between the allowable charges and the actual charges. This is the amount that was usually absorbed by your insurance provider. When you go out of your own network, you may end up paying more than you would have for the same services.

If you choose to go to a physician who is not in your network, you will get a bill for the difference in costs. You will need to review the details of your insurance plan to find out how out-of-network visits are billed. Insurance companies use balance billing to invoice you for the adjustments between the allowable costs and the actual costs.
Here is an example of a bill that you may receive from your provider for in-network or out-of-network medical services.

In-Network Services Bill
Actual Charges: $500.00
UCR Allowable Amount: $450.00
Insurance Write-Off Amount: $50.00
80/20 Insurance Paid Amount: $360.00
20% Co-Pay: $90.00
Total Cost to You: $90.00

Out-of-Network Services Bill
Actual Charges: $500.00
UCR Allowable Amount: $450.00
Out-Of-Network Amount Not Covered: $50.00
80/20 Insurance Paid Amount: $360.00
20% Co-Pay: $90.00
Total Costs to You: $140.00 (Co-insurance plus amount not covered)
As you can see, you will need to pay the difference between the actual and allowable charges, if there are any. Remember to check the terms of your insurance policy and make sure that you choose an in-network provider when possible.
At Fast Health Quotes we are here to help you choose the best and most affordable health care plan for you and your family. Reach us online or call us at (855) 244-9579.