When it comes to your health insurance, there’s one decision that can have an enormous impact on your wallet — whether you stay in network or venture out of network.
At Carmel Bay Group, we’ve seen firsthand how costly that choice can be for employees and families. Many people assume that “my insurance will cover most of it” no matter which doctor or hospital they choose. Unfortunately, that’s not how it works — and the gap between what you think you’ll pay and what you actually pay has grown dramatically over the last five years.
If you take away just one thing from this article, let it be this: When you go out of network, you take on the risk of paying the difference — and that difference can be staggering.
How Insurance Companies Calculate Payments
Here’s the key point most employees don’t realize:
Your health insurance company has a set “allowable amount” for every medical service. That’s the amount they believe is reasonable for that service if it’s performed by a provider in their network.
If you see an in-network provider, they’ve already agreed to accept that allowable amount as full payment — meaning you pay only your deductible, copay, or coinsurance.
But if you go out of network?
The insurance company still uses the in-network allowable amount to determine what they’ll pay. If your out-of-network provider charges more than that — and they almost always do — you are personally responsible for paying the difference.
This extra amount is called balance billing. And unlike your deductible or coinsurance, it’s not capped.
The Gap Has Grown — A Lot
Five or ten years ago, the difference between in-network and out-of-network charges was smaller. Today, the gap has widened dramatically.
- Specialists: We’ve seen cases where the allowable amount for a procedure is $2,000, but the out-of-network provider bills $5,000. Insurance pays $2,000 (minus your share), and you’re on the hook for the remaining $3,000.
- Hospitalizations: An in-network hospital stay might be $25,000, while an out-of-network facility charges $60,000 for the same services.
- Emergency care: While federal “No Surprises” laws protect you in some ER situations, there are still gaps — especially with certain doctors or services performed during your hospital stay (anesthesiology, radiology, pathology) that may be out of network without you even knowing.
These costs add up quickly, and unlike in-network expenses, there’s no out-of-pocket maximum for balance billing.
Real-World Example
Imagine you need knee surgery.
- In-network total bill: $18,000
- Insurance allowable amount: $18,000
- Your coinsurance after deductible: $1,800 (10%)
Now, the same surgery at an out-of-network provider:
- Provider’s bill: $28,000
- Insurance allowable amount: $18,000
- Insurance pays 60% of $18,000: $10,800
- You pay coinsurance on the allowable: $7,200 + the $10,000 balance bill = $17,200 out of pocket.
The same procedure just cost you nearly ten times more.
Why the Difference Keeps Growing
There are two main reasons this financial gap has been expanding:
- Market pricing — Out-of-network providers can set their rates as high as they want, and many have increased prices well beyond the negotiated rates in insurance networks.
- Insurance plan design — Most modern health plans have reduced out-of-network coverage, increasing your percentage responsibility and limiting the allowable amount they’ll consider.
When You Might Go Out of Network
We understand that sometimes you may need to see an out-of-network provider:
- A highly specialized treatment not offered locally
- Continuing care with a long-time physician who isn’t in the network
- Certain emergencies when you can’t choose your provider
In these cases, it’s essential to understand your plan’s rules, get cost estimates in advance (if possible), and know exactly what portion of the bill you might face.
How to Protect Yourself
- Check the network first — Always confirm a provider’s network status before you make the appointment.
- Ask for cost estimates — If you must go out of network, request a written estimate and ask your insurance company how much they will cover.
- Know your plan’s out-of-network benefits — Some plans cover nothing for out-of-network care except in emergencies.
- Use your broker as a resource — At Carmel Bay Group, we can help you navigate these decisions and even advocate with providers or insurers to minimize your costs.
The Bottom Line
Going out of network can be financially devastating — especially now that the allowable amount vs. billed charges gap is larger than ever. In-network care not only saves you money but also ensures you’re protected by your plan’s limits and negotiated rates.
We’re here to make sure you get the care you need without unnecessary financial surprises. Before making a decision about your healthcare provider, call us. A two-minute conversation could save you thousands of dollars.
Carmel Bay Group Insurance
Trusted on the Monterey Peninsula for over 30 years — here to help you make the most of your benefits.