Approved Charge

Example

“Although the surgeon billed $5,000 for the procedure, the insurance company's approved charge was only $3,500, leaving the patient responsible for the $1,500 difference.”

Memory Tip

Think 'approved charge' like getting 'approval' for your spending limit - the insurance company approves only up to a certain charge amount.

Why It Matters

Understanding approved charges is crucial because you may be responsible for paying the difference between what your doctor charges and what your insurance approves. This can result in unexpected out-of-pocket costs, especially when using out-of-network providers who don't accept approved charges as full payment.

Common Misconception

Many patients assume their insurance will pay the full amount their doctor charges, but approved charges are often less than actual bills. This can lead to surprise medical bills when providers charge more than the insurance company's approved amount, particularly with out-of-network care.

In Practice

Lisa needs an MRI that costs $2,000 at her local imaging center. Her insurance policy has an approved charge of $1,200 for MRIs based on regional averages. With her 20% coinsurance, Lisa expects to pay $400 (20% of $2,000). However, she actually owes $1,040: $240 coinsurance on the approved $1,200 charge, plus the $800 difference between the provider's charge and the approved amount. If she had chosen an in-network provider who accepts approved charges as full payment, she would have paid only the $240 coinsurance.

Etymology

"Approved" from Latin "approbare" meaning "to make good or prove," and "charge" from Old French "chargier" meaning "to load or impose a fee," reflecting the insurer's acceptance of specific fee amounts.

Common Misspellings

Related Terms

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Other insurance terms you should know

See Also