Out-of-network care is one of the most confusing and costly areas of healthcare benefits for employees and employers alike. In a traditional benefits model - what we call the BUCA system (Blue Cross, UnitedHealthcare, Cigna, Aetna) - out-of-network care generally means that an employee sees a provider or uses a facility that has not signed a contract with their insurance plan. This lack of a contract leads to higher costs, unpredictable billing, and a lot of paperwork.
The way most plans handle out-of-network care can be broken down into a few key mechanisms: balance billing, deductibles and coinsurance, and reimbursement limits. Let’s walk through each.
How Out-of-Network Costs Are Calculated
When an employee uses an out-of-network provider, the insurance company typically does not cover the full billed amount. Instead, it pays based on a “usual, customary, and reasonable” (UCR) rate. The difference between what the provider charges and what the insurer says is “reasonable” is often billed directly to the employee. This is called balance billing.
Here’s a simplified example:
- Provider bills $1,000 for a service.
- Insurer’s UCR rate is $600.
- After a deductible and coinsurance (say, 30% coinsurance), the insurer pays $420.
- The employee owes the $180 in coinsurance, plus the $400 balance bill from the provider - a total of $580 out-of-pocket.
Contrast this with in-network care: the provider has agreed to accept the insurer’s negotiated rate (e.g., $600) as payment in full. The employee only pays their share of that $600.
Deductibles and Out-of-Pocket Maximums Differ
Most plans have separate deductibles and out-of-pocket maximums for out-of-network care. These are often higher than the in-network limits. For example, an employee might have a $1,500 in-network deductible but a $3,000 out-of-network deductible. Similarly, their out-of-pocket maximum might be $4,000 in-network but $8,000 out-of-network. This means employees can face significantly more financial exposure if they use care outside their plan’s network.
When Out-of-Network Care Is Covered at All
Out-of-network coverage is not universal. Many Health Maintenance Organizations (HMOs) and Exclusive Provider Organizations (EPOs) provide no coverage for out-of-network care except in true emergencies. Preferred Provider Organizations (PPOs) and Point-of-Service (POS) plans typically cover out-of-network care, but at a lower percentage (e.g., 50%-70% coinsurance vs. 80%-90% in-network).
The Role of Surprise Billing Protections
One recent improvement is the No Surprises Act, which took effect in 2022. This federal law protects employees from surprise out-of-network bills for emergency services, certain non-emergency services at in-network facilities, and air ambulance services. Under this law, out-of-network providers cannot balance bill the patient for more than the in-network cost-sharing amount. Instead, the insurer and provider go to an independent dispute resolution process.
However, this law does not apply to all out-of-network care - for example, if an employee voluntarily chooses an out-of-network provider for a non-emergency visit, the usual out-of-network rules still apply.
Why This Matters in the WellthCare Ecosystem
At WellthCare, we see out-of-network cost handling as yet another symptom of a broken, misaligned system. Traditional plans are designed to manage sickness, not to promote prevention. As a result, employees delay care, use networks inefficiently, and face surprise bills that drain both health and wealth.
Our approach is fundamentally different. WellthCare works alongside your existing health plan and gets used first. Employees access $0-co-pay preventive care, earn free money at the WellthCare Store, and build their Pension automatically - all while avoiding the complexity of out-of-network billing entirely. Because WellthCare is designed to be a zero-risk add-on that rewards prevention upfront, employees rarely need to navigate out-of-network markets for routine care. And when they do, the system’s transparency tools help them make informed choices.
Best Practices for Employers
To reduce confusion and cost related to out-of-network care, employers should:
- Educate employees about network rules during open enrollment and year-round.
- Provide clear, simple tools that show which providers are in-network.
- Consider adding a WellthCare layer to encourage preventive care use first, reducing reliance on expensive out-of-network services.
- Review plan documents to ensure out-of-network deductibles and coinsurance are reasonable and communicated clearly.
- Stay compliant with the No Surprises Act and any state-level protections.
Ultimately, the best way to handle out-of-network care is to design a system where employees don’t need it - because their in-network options are affordable, accessible, and aligned with their health goals. That’s the promise of WellthCare: healthcare that pays you back, without the surprises.