Fee-for-service or Indemnity Health Plans offer the greatest amount of freedom when it comes to choosing your health care providers.

With a fee-for-service or indemnity health plan you can go to any doctor, hospital or other licensed provider for a set monthly premium.

How it Works

Typically you choose a deductible (an amount of money you will pay out of pocket before insurance kicks in.) Once you meet the deductible, most indemnity plans pay a percentage of what they consider the “usual and customary” charge for covered services. If the provider charges more than the usual and customary rates, you will have to pay both the coinsurance and the difference.

Depending on your health care provider, either they will send the bill to the insurance company and have them pay their share then send you an invoice for the remainder –or- you will pay upfront then submit a claim to the health insurance company to be reimbursed for their share.

The cost of care after your deductible is met depends on the coinsurance set in your insurance policy. For example, if your fee-for-service or indemnity plan comes with an 85/15 coinsurance provision, then once your deductible is met, the insurance company will cover 85% of the bill and you will be responsible for 15%.

There is typically an annual limit on out-of-pocket expenses, so that once an individual or family reaches the limit, the health insurance covers the remaining eligible medical expenses in full.

Most fee-for-service or indemnity health plans will cover the charges for medical tests, and prescriptions as well as from doctors and hospitals. Some, however, may not pay for preventive care (for example, regular checkups.)