Under this type of health coverage, you have complete autonomy.
For years, indemnity or fee-for-service coverage was the norm. Under this type of health coverage, you have complete autonomy when it comes to choosing doctors, hospitals and other health care providers. You can refer yourself to any specialist without getting permission, and the insurance company doesn’t get to decide whether the visit was necessary. You don’t, however, have complete autonomy. Most fee-for-service medicine is managed to a certain extent. For instance, if you’re not already incapacitated, you may need to get clearance for a visit to the emergency room.
On the down side, fee-for-service plans usually involve more out-of-pocket expenses. Often there is a deductible, usually of about $200-$2,500 before the insurance company starts paying. Once you’ve paid the deductible, the insurer will kick in about 80 percent of any doctor bills. You may have to pay up front and then submit the bill for reimbursement, or your provider may bill your insurer directly.
Under fee-for-service plans, insurers will usually only pay for reasonable and customary” medical expenses, taking into account what other practitioners in the area charge for similar services. If your doctor happens to charge more than what the insurance company considers “reasonable and customary,” you’ll probably have to make up the difference yourself. Traditionally, preventive care services like annual check-ups and pelvic exams haven’t been covered under fee-for-service plans. But as the evidence mounts that preventive care can prevent more costly illnesses down the road, some insurers are including them.
Fee-for-service plans often include a ceiling for out-of-pocket expenses, after which the insurance company will pay 100 percent of any costs. Needless to say, the ceiling is usually pretty high.
In a nutshell, fee-for-service coverage offers flexibility in exchange for higher out-of-pocket expenses, more paperwork and higher premiums.