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What Is Fee-For-Service Insurance?

Individuals and families looking to manage their medical decisions can opt for fee-for-service plans. These plans provide members with nationwide access to doctors and specialists of their choice. Insurers pay for some or all of the medical costs once they have been rendered. However, fee-for-service plans present drawbacks and coverage limitations that can cost members a lot of money.

  1. Benefits

    • Members of fee-for-service plans have total control over their medical decisions. Unlike Preferred Provider Organizations (PPOs) or Health Maintenance Organizations (HMOs), where members must access a specific network of doctors, fee-for-service members can visit doctors in any part of the country they choose. The flexibility of these plans benefits individuals who travel or move frequently or need specialized care.

    Considerations

    • Before purchasing a fee-for-service plan, there are several things to consider. First off, these plans are costly. Members will have to pay deductibles and share in the medical costs (coinsurance). Insurers and doctors may require members to pay for services in full before filing claims for reimbursement. Fee-for-service plans generally do not cover preventive care or routine check-ups. Members who decide to seek these services will have to pay for them out of pocket.

    Indemnity Health Insurance

    • Indemnity health insurance plans are commonly referred to as fee-for-service plans. There are three types of indemnity health coverage. There are two reimbursement plans available: one plan covers actual charges while the other pays a percentage, typically 80 percent, of the total costs. The third plan pays the member a specific amount of money each day for a maximum number of days to cover health care expenses.

    Warning

    • Because members of fee-for-service plans have to submit claims for reimbursement after paying their bills, there are instances where they may end up with little or no help from their insurers. Members will not be reimbursed if the services were not covered under the insurance plan. Insurers will also refer to a chart that outlines the reasonable rates doctors charge for services and pay those amounts. If the medical costs are more than these rates, members may be responsible for the amounts that exceed them.

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