Fee-For-Service Plans

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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.

If you are paying the substantial premium amounts and all the additional costs associated with a fee for service plan, you are paying for complete freedom within the health care industry. You can see any doctors you want at anytime without the restrictions that managed health care plans usually have, and there are no referrals to worry about.

No Restrictions or Referrals

Fee for service health plans are the most expensive type of health insurance out there, due in most part to the flexibility the plan provides. Also, doctors do not have to follow any financial guidelines imposed by a larger organization. They are free agents, operating on their own and if they choose to, they can build their own price bracket around their services.

FFS Payments

You can see any doctor that you like as a member of a fee for service insurance plan. After you meet your deductible, the insurance company will make some financial contributions to offset the cost of your medical expenses. The cost for services rendered will be under a coinsurance structure where both the insured and the insurer are responsible for the financial obligation. That cost to the policyholder can be 30%+ of the medical bill.

Additionally, since there is no referral system required for a fee for service medical insurance plan, it is important to realize that the insurance company will need to control their costs someway. If they find your doctor is charging more than what is "usual, customary and reasonable," you will be saddled with the responsibility of paying the additional portion of your charges.

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