Fee for Service (Indemnity) Plans

Indemnity policies, also called Fee-for-service plans, are the hallmark of the insurance business. With this kind of policy, subscribers pay a deductible as low as $250, which is a pre-established amount they agree to pay before the plan will pay for anything. Once the deductible is met, the subscribers pay a co-insurance of between 20-30% every time they go to the doctor or hospital for medical care. The insurer pays for the remaining portion. Subscribers must also pay a monthly premium to maintain the coverage.

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Fee-for-Service Plan Details

Those who choose to enroll in a fee-for-service plan do so for many reasons. First, they are free to choose any doctor, in any location to be their primary care-giver. In fact they don't even have to declare a primary provider. There are no gate-keepers (those who decide what is medically appropriate or necessary) and no networks with this plan. The second reason many people choose to enroll in a fee-for-service plan is that carriers place a “cap” on how much one person or family has to pay out-of-pocket per year. Currently it ranges from $1,000-$5,000. After a subscriber reaches this maximum contribution, the insurance company is responsible for paying the rest of his/her medical cost for the year.

There are two kinds of indemnity plans: major medical and basic. Basic coverage pays for the cost of hospitalization, including the room and any laboratory or prescription requirements. Major medical pays for expenses above and beyond confinement, especially in the case of long-term care for high-cost injuries or illness. A “comprehensive” plan combines these two coverage options in to one.

Indemnity plans are best for those who don't expect to make a lot of trips to the doctor's office; families without small children often benefit from this kind of plan because they require only yearly visits. Since subscribers are free to see any doctor around the country without paying more for service, fee-for-service plans are good for those on the go. However, there is something to be said for the organized person when deciding whether to take this plan. Some doctors will require that subscribers  fill out their own claim work, and they will also have to keep receipts for prescriptions and other costs.

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