Fee-for-Service
This is the traditional kind of health
care policy. Insurance companies pay fees for the services provided
to the insured people covered by the policy. This type of health insurance
offers the most choices of doctors and hospitals. You can choose any
doctor you wish and change doctors any time. You can go to any hospital
in any part of the country.
With fee-for-service, the insurer only
pays for part of your doctor and hospital bills. This is what you pay:
- A monthly fee, called a premium.
- A certain amount of money each year,
known as the deductible, before the insurance payments begin. In a
typical plan, the deductible might be $250 for each person in your
family, with a family deductible of $500 when at least two people
in the family have reached the individual deductible. The deductible
requirement applies each year of the policy. Also, not all health
expenses you have count toward your deductible. Only those covered
by the policy do. You need to check the insurance policy to find out
which ones are covered.
- After you have paid your deductible
amount for the year, you share the bill with the insurance company.
For example, you might pay 20 percent while the insurer 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 medical expenses.
There are limits as to how much an insurance
company will pay for your claim if both you and your spouse file for
it under two different group insurance plans. A coordination of benefit
clause usually limits benefits under two plans to no more than 100 percent
of the claim.
Most fee-for-service plans have a "cap,"
the most you will have to pay for medical bills in any one year. You
reach the cap when your out-of-pocket expenses (for your deductible
and your coinsurance) total a certain amount. It may be as low as $1,000
or as high as $5,000. Then the insurance company pays the full amount
in excess of the cap for the items your policy says it will cover. The
cap does not include what you pay for your monthly premium.
Some services are limited or not covered
at all. You need to check on preventive health care coverage such as
immunizations and well-child care.
There are two kinds of fee-for-service
coverage: basic and major medical. 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 insurance takes over where your basic coverage leaves
off. It covers the cost of long, high-cost illnesses or injuries.
Some policies combine basic and major medical
coverage into one plan. This is sometimes called a "comprehensive
plan." Check your policy to make sure you have both kinds of protection.
What Is a "Customary"
Fee?
Most insurance plans will
pay only what they call a reasonable and customary fee for a particular
service. If your doctor charges $1,000 for a hernia repair while most
doctors in your area charge only $600, you will be billed for the $400
difference. This is in addition to the deductible and coinsurance you
would be expected to pay. To avoid this additional cost, ask your doctor
to accept your insurance company's payment as full payment. Or shop
around to find a doctor who will. Otherwise you will have to pay the
rest yourself.
Questions to Ask About Fee-for-Service
Insurance
- How much is the monthly
premium? What will your total cost be each year? There are individual
rates and family rates.
- What does the policy cover?
Does it cover prescription drugs, out-of-hospital care, or home care?
Are there limits on the amount or the number of days the company will
pay for these services? The best plans cover a broad range of services.
- Are you currently being
treated for a medical condition that may not be covered under your
new plan? Are there limitations or a waiting period involved in the
coverage?
- What is the deductible?
Often, you can lower your monthly health insurance premium by buying
a policy with a higher yearly deductible amount.
- What is the coinsurance
rate? What percent of your bills for allowable services will you have
to pay?
- What is the maximum you
would pay out of pocket per year? How much would it cost you directly
before the insurance company would pay everything else?
- Is there a lifetime maximum
cap the insurer will pay? The cap is an amount after which the insurance
company won't pay anymore. This is important to know if you or someone
in your family has an illness that requires expensive treatments.
