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Fee for Service Health Insurance Plans

By Compuquotes Team on March 27th, 2008
Health Insurance

Fee-for-Service Plans

Of the different types of managed care health plans available in the United States, Fee-for-Service (FFS) plans are more similar to traditional health insurance than any other plan type. More so than other managed care options, the FFS plan provides a high degree of freedom and flexibility for policy owners. FFS plans include an extensive provider network that may cover the entire country, but policy owners can opt to visit non-network providers.

How does an FFS Plan Work?

Owners of an FFS policy pay a fairly low monthly premium, and have virtually unrestricted choice when it comes to selecting doctors and specialists to visit. However, each visit requires payment of a co-pay fee that typically amounts to approximately 20% of the cost of the visit. The insurance company pays the remaining 80% of the fee.

In addition to premiums and co-pays, the FFS plan also includes a yearly deductible that does not carry over from year to year. The average FFS plan has an individual deduction of approximately $250, with a family deduction of $500.

In addition, most FFS plans also place a cap on how much a policy holder must pay in out-of-pocket expenses each year. For example, if your cap is $1,000, your insurance carrier will pay 100% of your medical expenses (as long as they are among those covered) once you hit the cap of $1,000 (which includes co-pays but not necessarily your deductible) in any given year.

What's covered by an FFS Plan?

There are two main types of FFS plans, and each covers different types of medical expenses (similar to traditional non-managed care insurance).

Basic FFS Plans cover doctor's visits, in-patient hospital procedures, surgery, and related healthcare visits. Some plans may also cover out-patient hospital procedures and diagnostic procedures.

Major Medical Plans cover expenses relating to chronic illnesses

Comprehensive Plans combine Basic and Major Medical Plans to provide complete coverage in the same policy.

Similar to most other managed care plans, alternative treatments such as homeopathy and acupuncture are typically not covered by an FFS plan. One major feature of FFS plans, however, is that preventative healthcare visits and procedures are not covered. This includes routine health check-ups, vaccinations, and well-woman and well-baby visits among other things.

Who should use an FFS Plan?

Of all the managed healthcare plans, FFS plans provide the most flexibility and the greatest degree of consumer choice. This aspect of the FFS plan makes them particularly popular with all types of people.

However, this flexibility comes at the price of co-pays and deductibles being included in the costs of the plan. This in turn means that FFS plans can quickly become expensive for people who use healthcare facilities often, and for people who like to focus on preventative healthcare (since preventative visits are not covered at all).

In short, FFS plans are most suitable for people who rarely visit doctors or specialists and who are normally in good health, but want health insurance to provide some security in case they need medical care due to future accident or unexpected illness. These plans are much less suitable for families with children, as children tend to need more frequent medical attention, and a family may incur considerable out-of-pocket expenses before reaching the cap each year.

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