What does Allowed amount mean?

The allowed amount is the figure a health plan treats as eligible when calculating benefits for a covered service. A plan may use labels such as eligible expense, payment allowance, or negotiated rate. It is not necessarily the provider's original charge, the amount the plan pays, or the amount the patient ultimately owes. Deductible, copayment, coinsurance, network status, prior payments, and applicable billing protections can all affect the result.

On an EOB, compare the allowed amount with the billed charge, plan payment, adjustments, and patient-responsibility columns. For an in-network claim, the provider's contract often limits how much of the difference can be billed to the patient, but the exact rule depends on the service and plan. Out-of-network claims can work differently, and federal or state protections may apply in certain situations. Ask the plan which contract or benefit rule produced the amount, and ask the provider to explain any bill that does not match the processed claim.