Fee-for-Service Plans

Services Covered

There are two kinds of fee-for-service coverage:

• basic
• major medical

Basic Fee-for-Service Plan

Basic protection pays toward the costs of a hospital room and care while you are in the hospital. It covers some hospital services and supplies, such as x-rays and prescribed medicine. Basic coverage also pays toward the cost of surgery, whether it is performed in or out of the hospital, and for some doctor visits.

Major Medical Fee-for-Service Plan

Major medical insurance takes over where your basic coverage leaves off, covering the cost of long-term, high-cost illnesses or injuries. Some policies combine basic and major medical insurance coverage into one plan.

A certain amount of money each year, the deductible, is paid for by you before the insurance payments begin. And, not all health expenses you have count toward your deductible. You need to check the insurance policy to find out which ones are covered. After you have paid your deductible for the year, you share the bill with the insurance company. For example, you might pay 20 percent while the insurance company pays 80 percent. Your portion is called coinsurance.

To receive payment for fee-for-service claims, you may have to fill out forms and send them to your insurer. Sometimes your doctor's office will do this for you. You also need to keep receipts for drugs and other medical costs.You are responsible for keeping track of your own medical expenses.

Services Not Covered

Most fee-for-service plans have a "cap" or limit on the amount you pay for medical bills in any one year. The insurance company pays the full amount in excess of the cap for the items covered under your policy - not including your monthly premium payments.

Coverage Limits

A Fee-for-Service Insurance policy (also called indemnity insurance) is a traditional kind of health insurance. It partially pays for each medical service you get, such as doctor visits or hospital stays. You're responsible for the remainder of the cost. The insurer calculates the amount they cover in one of two ways - by covering a percentage of the approved amount for the service (insurers maintain a list of what they think each service should cost, which can differ from what they actually cost), or a fixed amount. In the case of a fixed amount (also known as a fixed cash benefit), the insurer covers a fixed amount per service - $50 for a doctor visit, for example- even if the medical service costs you more.

One advantage of fee-for-service plans is that you can go to any doctor or hospital you choose. However, you usually pay a higher monthly cost for your medical care than you would as part of a managed care plan.