Fee-for-Service

Fee-for-Service

This type of coverage generally assumes that the medical provider (usually a doctor or hospital) will be paid a fee for each service rendered to the patient – you or a family member covered under your policy. With fee-for-service insurance, you go to the doctor of your choice and you or your doctor or hospital submits a claim to your insurance company for reimbursement. You will only receive reimbursement for “covered” medical expenses, the ones listed in your benefits summary.

When a service is covered under your policy, you can expect to be reimbursed for some, but generally not all, of the cost. How much you will receive depends on the provisions of the policy on coinsurance and deductibles. Here’s how it works:

  • The portion of the covered medical expenses you pay is called “coinsurance.”
    Although there are variations, fee-for-service policies often reimburse doctor bills at 80 percent of the “reasonable and customary charge.” (This is the prevailing cost of a medical service in a given geographic area.) You pay the other 20 percent – your coinsurance.
    However, if a medical provider charges more than the reasonable and customary fee, you will have to pay the difference. For example, if the reasonable and customary fee for a medical service is $100, the insurer will pay $80. If your doctor charged $100, you will pay $20. But if the doctor charged $105, you will pay $25.
    Note that many fee-for-service plans pay hospital expenses in full; some reimburse at the 80/20 level as described above.
  • Deductibles are the amount of the covered expenses you must pay each year before the insurer starts to reimburse you. These might range from$100 to $300 per year per individual, or $500 or more per family. Generally, the higher the deductible, the lower the premiums, which are the monthly, quarterly, or annual payments for the insurance.
  • Policies typically have an out-of-pocket maximum. This means that once your expenses reach a certain amount in a given calendar year, the reasonable and customary fee for covered benefits will be paid in full by the insurer. (If your doctor bills you more than the reasonable and customary charge, you may still have to pay a portion of the bill.) Note that Medicare limits how much a physician may charge you above the usual amount.
  • There also may be lifetime limits on benefits paid under the policy. Most experts recommend that you look for a policy whose lifetime limit is at least $1 million. Anything less may prove to be inadequate.
By |2013-02-19T22:05:23+00:00October 14th, 2011|Categories: Buyers Guide For Health Insurance|Tags: , |0 Comments

About the Author:

Jesse is the Founder and CEO of Smedley Insurance Group, Inc. and iHealthBrokers.com. He is a licensed health and life insurance broker in 47 states and the District of Columbia. Jesse specializes in Medicare and health insurance benefits packages for businesses and their employees. Jesse is the designated responsible broker for Smedley Insurance Group, Inc. He founded Smedley Insurance Group after working for a small captive insurance agency where he was required to sell perhaps the worst health insurance plans to consumers because it was all the company had to offer. He knew there had to be a better way and thus, SIG was born. Jesse can be reached toll free at (866) 260-9829, Ext. 101. His email address is: his first name @iHealthBrokers.com.

Comment or Ask a Question

About Us

iHealthBrokers Medicare Advisors specializes in affordable health insurance solutions for seniors. We also help business owners and individuals under 65. We're A+ Rated with the Better Business Bureau, seven-time recipients of the Angie’s List Super Service Award for outstanding customer service and customer satisfaction. Also voted Best of Kudzu for four years running for Atlanta Insurance Brokers.

Contact Us

By Mail:
Two North Central Ave
18th Floor
Phoenix, AZ 85004

By Phone: (866) 260-9829

By Fax: (866) 300-0127
%d bloggers like this: