Global Privacy Signal Detected
Skip to main content

When “In-Network” Isn’t Enough: The Hidden Dangers of Narrow Networks

What Is a Narrow Network?

Narrow network healthcare plans offer access to providers in a limited, or “narrow” network, for a lower premium cost than a traditional plan, such as an HMO, and with no referrals required. Individuals can purchase narrow network plans on the ACA Marketplace. Some employers also offer group plan options with narrow network coverage.    

Narrow networks often attract individuals seeking lower-cost healthcare but can significantly limit one’s access to specialists and comprehensive medical services. Narrow networks are subject to the availability of a small group of local physicians and facilities in your area. The costs of a narrow network plan can add up quickly if you still need out-of-network care.

How Do You Determine If a Plan Is Narrow?

These plans do not come with a “narrow network” label to differentiate them from other HMOs or similar network-based healthcare policies, so it won’t be immediately apparent. However, a limited network of providers is the definitive characteristic of a narrow network plan. A search in the ACA Marketplace for multiple local physicians and hospitals can help you determine the degree to which a plan limits access. 

Comparing Narrow Networks

Narrow networks can be similar to HMOs or short-term health insurance, but these plans are not all the same.

Narrow Networks Vs. HMOs

HMOs, or health maintenance organizations, only cover providers and services within their own limited networks. Narrow networks operate similarly but with an even more limited range, so they tend to cost less but do not cover out-of-network services like some HMOs. Also, unlike HMOs, narrow network plans do not require a referral from a PCP to see a specialist.

Narrow Networks Vs. Short Term Health Insurance

Short-term health insurance provides temporary health coverage for up to one year for people in the following situations:

  • Individuals who may have let their previous plan lapse
  • Those who missed the ACA enrollment window
  • Young adults who turned 26 and transitioned off of their parent’s health plan

Short-term health insurance is not ACA-compliant, so you must purchase a plan directly from insurers instead of on the Marketplace. Short-term health insurance also tends to include higher deductibles and provide less-than-minimum essential coverage compared to narrow network plans.

Narrow networks were designed to be affordable for everyone involved, including individuals and employees, healthcare providers, and insurance companies. Consumers are especially attracted to narrow network plans with lower monthly premiums amid healthcare costs rising more than 20% since the peak of the COVID-19 pandemic.

Beyond their financial appeal, narrow networks can also provide healthy individuals and employees with the targeted preventive care they need without the hassle of needing a referral for specialist visits. These stripped-down perks also help increase employers’ purchase power for group plans and reduce insurers’ claims for specialized or out-of-network services.    

Do Narrow Networks Really Save Money?

Deciding whether a narrow network plan is actually more cost-effective than standard health insurance depends on your individual health and financial situation. Narrow network plans may save you money if you are willing to trade choice for cost when it comes to healthcare providers. Health Affairs reported narrow networks lowered costs by a mere 16% compared to a traditional plan such as an HMO.

Who Should Consider a Narrow Network?

Narrow network health insurance coverage suits relatively young and healthy individuals. While a narrow network plan may include minimal prescription drug and hospitalization coverage, the ideal candidate for a narrow network plan requires infrequent doctor visits, mostly for preventive or routine medical care. Chronic or preexisting conditions may require a more traditional plan. 

You may also seek out a narrow network plan if you cannot afford a traditional HMO plan. The financial benefits of lower premiums may outweigh the limitations of a small provider network for individuals with minimal healthcare needs. The ideal narrow network patient can rely on their PCP for most of their medical care and does not require frequent specialist visits.   

What Are the Risks of a Narrow Network?

Narrow network plans can offer savings but also come with their own risks and complications. Naturally, narrow networks often exclude preferred providers, which can be devastating to a patient who has developed a strong bond with their doctor or specialist over time.

You also run the risk of developing a new medical condition that requires acute care but find yourself without access to the right provider or facility on your narrow network, especially in rural areas.

If you are forced to go out-of-network, your narrow network health insurance costs could add up. Narrow network plans may choose whether to cover out-of-network costs and even if they do cover the expense, there may be no out-of-pocket cap for such services. Consumers may also feel misled or confused by the enrollment process since plans are not necessarily labeled as a “narrow network.”

How To Get Better Coverage For the Same Price

There are ways to get better coverage than a narrow network provides without breaking the bank.

  1. Determine the type of coverage you need. The first step toward getting your ideal health insurance plan at a superior price is identifying your healthcare goals. Your perfect plan depends on factors such as your location and whether you are relatively healthy or require ongoing medical care for a chronic condition. 
  2. Narrow your actual coverage options. Your approach to finding the best plan will vary depending on whether you seek an individual ACA plan or group coverage through your employer. You may need to switch providers if your preferred physicians are out-of-network in a narrow network plan. Consider asking an agent for help to decide. 
  3. See if you qualify for discounts or subsidies. As an employee, you might be able to choose from a variety of high-quality plans with affordable group rates. If you are considering a traditional plan through the ACA Marketplace, you may qualify for income-based subsidies to lower your monthly premium cost further.    

Policyholders may need to compromise the overall quality of their healthcare in order to enjoy the financial savings of a narrow network plan. Narrow networks often include less than 10% of local healthcare providers, whereas traditional plans cover roughly 70% of local networks, according to Consumer Reports. 

Putting It All Together

Narrow networks offer savings on monthly premium costs for consumers in exchange for a limited network of participating healthcare providers. Narrow networks incorporate a small group of local physicians and hospitals willing to accept a lower reimbursement rate for medical services, passing the savings along to all parties, including patients, employers, and insurers.

Narrow networks often attract individuals seeking a more affordable healthcare plan; however, the savings may not outweigh the lack of choice among narrow network policies. Individuals might enjoy lower premiums and the no-referrals policy of a narrow network plan. Still, they should consider a more traditional healthcare plan if their preferred doctors are out-of-network or need comprehensive or specialized medical care.

You’re just a few steps away from a personalized health insurance quote.

Learn More

You’re just a few steps away from a personalized health insurance quote.

Learn More