What Is the Allowed Amount?
The allowed amount (also called the eligible expense, payment allowance, or negotiated rate) is the maximum your insurance company will pay for a covered service, based on the contract it has with in-network providers.
When a doctor bills $500 for a visit but your insurer's allowed amount is $200, the insurer processes the claim based on $200 — not $500. The provider has agreed to accept this as payment in full.
Why It Matters
- Your deductible, coinsurance, and copay are calculated based on the allowed amount — not the billed amount
- Out-of-network providers haven't agreed to the allowed amount, which is why out-of-network care is so much more expensive
- The difference between billed and allowed amount is called the "adjustment" or "write-off"
💡 On your EOB, the "allowed amount" column is the number that matters most — this is what your cost-sharing is calculated from.
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