When you run across the term “Allowed Amount” on your health insurance Explanation of Benefits statement (EOB), it can cause some confusion. Allowed Amount is the maximum amount a plan will pay for a covered health care service. It may also be called “Eligible Expense,” “Payment Allowance,” or “Negotiated Rate.” 


When calculating your reimbursement for a given treatment, your insurance company will apply your benefits against their Allowed Amount for that treatment, if the amount that you paid is greater than their Allowed Amount. Click here to learn more about why this happens.


Here is an example of a reimbursement for a patient that has already met their deductible for the year and has co-insurance of 50% for out-of-network care. 


A patient pays their practitioner $200 for a therapy session and submits a reimbursement claim for this amount. 


The insurance company has an Allowed Amount of $160 for that treatment/CPT code. The insurance company will cover 50% of the Allowed Amount, so this patient is reimbursed $80 for this visit (50% of $160) and the remainder is the “patient responsibility.” 


Allowed Amounts for various health care services are either negotiated between your employer and your insurance company, or they are based on the Usual, Customary and Reasonable (UCR) rate, which is determined by a combination of the geographic location of service (ZIP code) and the type of service, such as psychotherapy (CPT Code).  


Click here to visit FAIR Health, an independent database of treatment costs, where you can search for specific treatments provided in your geographic area, to get an expectation for how much your insurance company might be willing to cover.. Note that there is no legal mandate that insurance companies use the FAIR UCR database. It can, however, give you a general guideline of costs in your market. 

The most reliable way to determine the Allowed Amount that your insurance company will pay for a particular treatment is to contact them via the phone number on the back of your insurance card.