Patient guide · 6-min read
What Is Balance Billing — and When Is It Illegal?
Balance billing happens when a provider sends you a bill for the difference between what they charged and what your insurer paid. Sometimes it is legal — often it is not.
The mechanics
A provider bills $5,000. The insurer's allowed amount is $1,200 and pays $960 (after your $240 co-insurance). The "balance" is $3,800. Whether the provider can bill you that balance depends on (a) network status and (b) whether the No Surprises Act applies.
When balance billing is allowed
When you knowingly use an out-of-network provider for a non-emergency, non-ancillary service, and you signed a valid NSA disclosure at least 72 hours in advance. In that case, the contract is between you and the provider — no in-network rate caps apply.
When balance billing is prohibited
In-network providers cannot balance-bill: they accepted the negotiated rate as the full payment by signing the network contract. Out-of-network providers in NSA-covered situations cannot balance-bill: the federal cap on in-network cost-sharing applies. Most state laws also prohibit balance billing for emergency services by any provider.
How to respond to an illegal balance bill
Identify the provider's network status (the EOB shows it). If the provider is in-network, the dispute letter asserts contract violation. If out-of-network and the situation falls under NSA, the letter asserts NSA protection. Copy your state insurance commissioner.
Frequently asked
What is a "PPO penalty"?
Some plans share a percentage of the balance with you when you go out-of-network voluntarily. That is not balance billing per se — it is the plan's out-of-network cost-share.
Can a provider report balance-billed debt to credit bureaus?
Medical debt under $500 is no longer reported. Disputed amounts should be reported as disputed under the FCRA.