Fee-For-Service Plans
Fee-For-Service plans (sometimes called “indemnity” or a “traditional” health plans) offer you the widest choice in health care providers (hospitals, doctors, pharmacies, etc.). If you are someone who values this freedom and wants, for example, to choose your own specialist, should the need arise, then a fee-for-service plan may be your best choice.
Such wide-spread coverage means that these plans are usually more expensive than other options.
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Benefits of Fee-For-Service Plans
- Maximum freedom in choosing your doctor, hospital and other health care professionals.
- Maximum choice of specialists, without requiring a doctor’s referral.
- Coverage often extends across the country, and with certain plans, internationally.
Drawbacks of Having a Fee-For-Service Plan
- More expensive than “managed care” plans (PPOs, HMOs, etc.).
- Payment is sometimes expected at the time of service. (The insurance company reimburses you later).
- You may need to file claim forms (with receipts) for each medical expense. Some doctor’s offices will do this step for you.
- Some plans do not cover preventive care.
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Fee-for-Service Product Features
Fee-For-Service plans are the traditional health insurance policies. The insurance company reimburses either you, the consumer, or the doctor for medical expenses. There are two primary types of Fee-for-Service coverage: Basic and Major Medical.
Basic coverage generally helps pay for hospital expenses, along with some of the attendant supplies and services, such as X-rays and prescriptions. It usually covers the cost of surgery and doctor’s visits related to a hospitalization.
Major Medical covers some expenses over and above Basic coverage, paying for part of the cost of prolonged illnesses or expensive injuries.
Comprehensive: Policies that combine both Basic and Major Medical coverage are called “comprehensive plans.”
As with any other plan, you pay a monthly premium. In addition, your expenses include the deductible (the amount you pay before coverage begins) and coinsurance, which is your portion of the costs above the deductible. Most fee-for-service plans come with a “cap,” however, which limits the total amount you pay in any given year.
Fee-for-service plans that qualify (i.e., those with a high deductible) can be combined with a Health Savings Account (HSA) to help keep costs down. Please see the Health Savings Account (HSA) section for details.
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