Glossary · Costs
What is an allowed amount?
The allowed amount is the maximum a plan will pay for a covered health care service. It may also be called the eligible expense, payment allowance, or negotiated rate. If a provider charges more, you may owe the difference.
Definition and figures from HealthCare.gov glossary, Medicare.gov, checked October 23, 2026. This page explains the term; it does not recommend a plan.
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Allowed amount: the facts
| Item | Fact | Source |
|---|---|---|
| Other names | Eligible expense, payment allowance, negotiated rate | HealthCare.gov glossary: Allowed amount |
| Medicare term | Medicare-approved amount | Medicare.gov: Does your provider accept Medicare as full payment? |
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Questions
What does allowed amount mean in health insurance?
The allowed amount is the maximum a plan will pay for a covered health care service. It may also be called the eligible expense, payment allowance, or negotiated rate. If a provider charges more, you may owe the difference.
What happens if a provider charges more than the allowed amount?
A provider outside the plan's network may bill you for the difference. This is called balance billing. A preferred provider may not balance bill you for covered services.