Overview on USA Healthcare Insurance - Fee-for-Service Plans

Fee-for-Service Plans

Fee-for-Service Plans is a traditional kind of healthcare insurance policy. Insurance companies pay fees for the healthcare products and services provided to the insured individuals covered under the policy. Such a type of health insurance offers an individual wide choice pertaining to doctors, hospitals and other healthcare providers. Under this policy, an individual has the liberty to choose any doctor he/she desires and change doctors any time at his/her disposal.


He/she can go to any hospital in any part of the country i.e. USA to avail medical or healthcare products and services. With fee-for-service, the insurer (or insurance company) only reimburses expenses pertaining to doctors, hospitals and healthcare service providers. The policyholder has to pay a monthly fee called as Premium. A certain amount has to be paid by the policyholder yearly which is known as the Deductible. This deductible is paid by the concerned policyholder before the insurance payments have begun to be reimbursed. The deductible requirement applies each year of the health insurance policy cover. It must be borne in mind by the individual that not all health expenses incurred by him/her account for deductible charges. Before purchasing a policy, it is advisable that the concerned individual needs to check the insurance policy so as to find out which expenses are covered and which expenses remain uncovered, under the ambit of the insurance cover. After the concerned individual has paid the deductible amount for the particular year, he/she shares the medical bill with the insurance company. For example, he/she might be required to pay 20 percent while the insurer (or insurance company) pays 80 percent towards the incurred medical expenses. This is termed as "coinsurance".

To receive payment for fee-for-service claims, he/she may have to fill forms in a prescribed format and dispatch them to his/her insurance company. Many a times, either a physician's clinic or a hospital will assist in making tasks easy for an individual who has been hospitalized. An individual needs to maintain receipts for drugs and other incurred medical expenses. Thus, in short, an individual is responsible for keeping a track of his/her medical expenses incurred as part of the treatment.

There are limits as to how much an insurance company will reimburse for an individual's claim if both - he/she and his/her spouse file for the claim 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 health insurance plans have a "cap" applicable, under which an individual will have to bear medical expenses in any one year. The Cap limit becomes applicable when an individual's Out-of-Pocket expenses (for both - deductible and Coinsurance) total a certain amount. This cap amount could vary drastically based on the health plan availed by the individual. The insurance company then reimburses the full amount in excess of the cap for the items incorporated under the policy cover. The cap does not include what an individual pays for his/her monthly premium.

Some healthcare services have limited coverage or are not covered under the ambit of the health insurance cover. For this purpose, an individual needs to check on preventive healthcare coverage being offered under the plan viz. immunization, well-child care, general check-up, etc.


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

a) Basic Fee-for-Service and

b) Major Medical Fee-for-Service

a) Basic Fee-for-Service protection pays towards the costs incurred on hospital room for accommodation and medical supervision, while being admitted to the hospital. It covers some hospital services and supplies viz. X-ray test, lab tests and medicines prescribed by the physician. It also reimburses the cost of surgery, whether it is performed as an indoor patient or as an outdoor patient including the doctor's visits for follow-up purposes.

b) Major Medical Fee-for-Service insurance takes over where your basic coverage leaves.. It covers the expenses incurred on illnesses or injuries which are long-standing or serious or chronic in nature associated with complications.

Some policies combine basic and major medical insurance coverage into one plan. Such a kind of health insurance policy cover is termed as a "comprehensive plan." It is always advisable to cross-check and verify whether the health insurance policy to be purchased or already purchased by an individual offers both kinds of protection.

References:

1. DEFINITIONS OF HEALTH INSURANCE TERMS - (http://www.bls.gov/ncs/ebs/sp/healthterms.pdf)
2. Glossary of Insurance Terms - (http://www.ambest.com/resource/glossary.html)
3. Patients & Consumers - (http://www.ahrq.gov/CONSUMER/insuranceqa/insuranceqa.pdf)

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