Health Insurance: Fee-For-Service (Indemnity)
A Fee-For-Service (also known as "indemnity") health insurance plan is traditional health insurance that has been around for over 50 years. The name comes from the original purpose: the idea was to reimburse (or indemnify) people for the portion of medical bills that involves an unacceptable or unbearable loss.
Underlying the concept behind this type of health insurance is that the insured has the choice about which health care professionals to see, when to see them, and in what setting, as well as what drugs and treatments to take.
While coverage differs from company to company and from policy to policy, as a general matter, Fee-For-Service policies include the following provisions:
- Covered charges are the medical costs which will be paid by the fee-for-service insurer.
- In order to be covered, a service or test must be "medically necessary".
- A deductible:an amount that the insured pays each year before the company starts to pay anything.
- Co-insurance clause: a percentage of a claim that the insured is expected to pay.
- A "stop clause." which limit s the amount the insured has to pay each year for claims that would be covered under the policy.
- "Usual, Customary and Reasonable": the maximum amount the insurance company will pay for a service or test in your area of the country.
For an example of how the above provisions work together, click here.
If you have one, or are considering a fee-for-service policy, it is useful to understand how to maximize use of the policy. Part of maximizing use of a fee-for-service health insurance policy is staying on top of insurance company reimbursements.
If you are denied payment for the medical care you need, it is generally worth appealing. You can do at least the initial appeal yourself.
For more information, see:
- Fee-For-Service Health Insurance Policies
- Health Insurance Claims
NOTE: Even with the best health insurance, there are costs you will have to pay. These costs can add up.
- If you need help paying deductibles, premiums, co-pays or co-insurance, click here.
- For information about dealing with a financial crunch, click here.