Fee for Service Plans: Copayments

A fee for service plan (traditional health care insurance) is the most expensive type of health care insurance you can choose. However, that extra money spent entitles the policyholders to freedom of choice and not having to deal with any type of referral network for medical treatment.

Copayment Structure

Within a fee for service plan, the copayment structure works as a coinsurance arrangement between the policyholder and the insurance provider. Members of a fee for service plan are expected to share the financial burden of their medical expenses with the insurance company. The expenses are shared in several ways including:

  • High premiums
  • Deductible limits that must be met
  • Copayment amounts that can range from 20%-30% of the total medical bill

The copayment benefits for a fee for service plan will only kick in after a deductible is met. A deductible is the amount of money that an insurer needs to pay off before the benefit portion of a plan will kick in. The deductible is an annual limit and for fee for service plans, the amount can range in the thousands of dollars.

Submitting for Reimbursements

To get the copayment portion of the fee for service plan to work, a member will pay out-of-pocket first and then submit their own paperwork to the insurance company. After the deductible is met, the copayments will kick in and the insured will receive reimbursements from the insurance company typically covering 70%-80% of their initial costs.

It is important to note that the actual amount of reimbursement for the copayment will not only fluctuate between policies, but also at the insurance company’s discretion. The insurance provider will deem what are the “usual, customary and reasonable” costs for treatment by location. If that does not kick in, you will be responsible for those costs.