What does the term "out-of-network" mean?

The term "out-of-network" refers to healthcare providers or facilities that do not have a contract with a particular health insurance plan. When a provider is considered out-of-network, it typically means that the health insurance policy will offer reduced reimbursement rates for services received from that provider, if coverage is provided at all. This can lead to higher out-of-pocket costs for the insured individual, as their insurance may cover a smaller percentage of the expenses or may not cover them at all.

In contrast, in-network providers are those who have agreements with the health insurance plan, allowing for negotiated rates and often resulting in lower costs for members. This concept is crucial for individuals to understand, as seeking care from out-of-network providers can lead to unexpected medical bills. Therefore, recognizing which providers are in-network versus out-of-network plays a significant role in managing healthcare costs effectively.