Fee for Service

Fee for Service plans are the traditional kind of health insurance policy. Also called indemnity insurance, they are a type of health care insurance in which payment to health care providers is made at the time of service.

Types of Fee for Service Plans

There are typically two kinds of Fee for Service coverage: Basic and Major Medical. Basic protection pays toward the costs of a hospital room and care if one requires a hospital stay. It covers some hospital services and supplies, such as x-rays and some prescribed medicine. Basic coverage also pays toward the cost of any required surgery, whether it is performed inside or outside of the hospital. Major Medical insurance essentially takes over where the Basic plan stops, covering the expense of long, high-cost illnesses or injuries. Some policies will combine Basic and Major Medical insurance coverage into one plan. This is sometimes called a “comprehensive plan.”

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Costs of Fee For Service Plans

A typical Fee for Service plan’s costs get set up in the following way. A certain amount of money each year, known as the deductible, is paid for the insurance customer before any of their insurance payments begin. In a typical plan, the deductible might be $250 for each person in one’s family, or a family deductible of $500. After one has paid his deductible amount for the year, they then share the remainder of the bill with the insurance company. For example, the insurance customer might pay 20 percent, while the insurance company pays 80 percent, of a specific medical cost.

Most Fee for Service plans have a “cap”: the most one will have to pay for medical bills in any single year. One reaches the cap when one’s out-of-pocket expenses (deductible and coinsurance combined) reach a certain total. The insurance company then pays the full amount in excess of the cap for the items one’s policy says it will cover.

Fee for Service Plan Benefits

The main benefit to choosing a Fee for Service plan is the flexibility they offer. The insurance customer is usually free to choose any doctor or clinic to visit that they wish, or at least they are given a list of doctors and clinics that the insurance company will permit them to visit. Additionally, since the only time money is paid to anyone in the system is when one actually visits a doctor, clinic, or hospital, there are no set, regular payments, apart from the monthly premium, to be concerned with.

Drawbacks of Fee For Service Plan

The drawback to using a Fee for Service policy is the fact that there are often limits to what actually gets covered under the plan. For example, one area that often goes uncovered in Fee for Service plans is preventative care, such as immunizations. This would obviously be a serious issue to consider if one is planning to insure their children, as well as themselves.