In Network vs Out of Network

Understanding your plan is important and can save you thousands of dollars in out of pocket claims. As a broker, I hear a lot of people say, “I want a PPO Plan so I can see any doctor anywhere!”. This is an accurate statement, but it is misleading. Certain plans cover out of network doctors, but the cost of the claims may still bankrupt you! This article discusses the differences between in network vs out of network claims.

Plan Options

In general terms, there are a few types of health insurance plans approved by the Division of Insurance:

  • Health Maintenance Organizations (HMO): HMO plans include in network benefits only. These plans do not cover out of network benefits (unless in an Emergency Situation).
  • Preferred Provider Organizations (PPO): PPO plans include both in network and out of network benefits.
  • Exclusive Provider Organizations (EPO): EPO plans include in network benefits only. These plans do not cover out of network benefits (unless in an Emergency Situation).
  • Point of Service (POS): POS plans are a combination of HMO and PPO plans. These plans include an in network HMO list of doctors as well as a PPO in network list of doctors. POS plans also include out of network benefits.
  • Indemnity: Many non-ACA compliant plans are indemnity. Be careful! These plans do not have a network list and pay a flat rate fee based on a service, which can barely cover the costs for your medical procedures.

What does In Network Mean?

There are many differences between In network vs out of network. In network refers to a doctor or facility that contracts with your health plan. All health plans, excluding indemnity plans, include a network list of doctors, facilities, and pharmacies. When you visit one of these contracted providers, you will be billed in network. In network claims include a few different discounts:

  • In network providers are contracted with your plan which means their claim costs will be reduced by the insurance company. This is called a contracted rate or negotiated rate. Negotiated rates are different for each provider and each insurance company.
  • Some plans include copay benefits. Copay benefits usually do not have deductible requirements, but sometimes they do. Copays are the best benefit you can receive. Copays are a flat rate fee for an in network service. For example, if you have a $30 copay for an in network primary care physician, you only need to pay $30. The insurance company will pay the rest of the claim for the physician services past the $30 copay.
  • Some plans do not include copays. These plans include deductibles and coinsurance benefits. A deductible is an out of pocket requirement you need to pay first before the insurance company starts paying the bill. You still receive a contracted rate for going in network, but you may have to spend thousands out of pocket before your coverage kicks in. After your deductible is satisfied you may receive a copay benefit or coinsurance benefit. Unlike copays (outlined above), coinsurance is not a flat rate fee. Coinsurance is a percentage split between you and the insurance company. Coinsurance is usually listed as 60/40, 70/30, 80/20, or 90/10.

As you accumulate in network claims throughout the plan year, you will slowly chip away at your in network maximum out of pocket. On ACA-compliant major medical plans, your maximum out of pocket is the total out of pocket claims you pay before receiving 100% coverage for the rest of the plan year.

What does Out of Network Mean?

In network vs out of network claims can be dramatically different in price. When you have an out of network claim, it is because you received medical care from a provider who is not contracted with your insurance plan. Because of this, there are no contracted rate discounts. Furthermore, only certain plans cover out of network claims (outlined above).

When people request a PPO plan for the sole purpose of being able to go out of network, I have to explain that in network vs out of network claims are very different. Going out of network should be used for extreme and rare situations since your out of pocket claims will be substantially higher.