"Tiered" Networks Explained

"Tiered" Networks Explained

It’s important to make sure you understand your health insurance coverage and how tiered networks work.  After all, the more you understand your insurance and how to use it, the better you can take care of yourself or your family, right?

Tiered networks are designed to help you make smarter choices, including how much you spend on insurance. With a tiered network, your out-of-pocket costs are determined by which tier your doctor is in.  

This is what a lot of tiered networks look like:

  • Tier 1 saves you the most money.  Tier 1 usually includes a select network of providers that have agreed to provide services at a lower cost for you and your covered family members. 
  • Tier 2 provides you the option to choose a provider from the larger network of contracted PPO providers, but you may pay more out-of-pocket costs.
  • Tier 3 includes out-of-network providers, and you will pay the most in out-of-pocket costs.

Below is an example of how tiers can help save money: 


Tier 1

Tier 2

Tier 3

Doctor Visit
Cost: $200

You Pay $15

You Pay $30

You Pay $150

Specialist Visit
Cost: $200

You Pay $30

You Pay $50

You Pay $150

2-Day Inpatient Hospital Stay
Cost: $5,000

You Pay $1,400

You Pay $2,900

You Pay $4,000

Benefit information is based on a $1,000 deductible and 90% coinsurance for tier 1, a $2,000 deductible and 70% coinsurance for tier 2, and a $8,000 deductible and 50% coinsurance for OON. These examples are stand-alone and do not track the member’s out-of-pocket max.

Tier 1 doctors and hospitals provide members care and services needed for a lower cost. As shown in the example above, you receive the highest level of benefits when you visit the doctors and hospitals in Tier 1.

Before receiving care, go online or call the number on the back of your medical ID card, to verify your provider is in tier 1 to get the most from your benefits.