Fee-for-Service Health Insurance: Understanding the Basics

A fee-for-service insurance plan allows the plan holder to make independent choices about health care spending. Instead of buying into a large, managed care policy where most of the expenses are prepaid, plan holders have more flexibility to control the costs of their health care spending with a fee-for-service plan.

Basics of a Fee-for-Service Plan

As the plan holder, you can choose to see a medical care professional at your own discretion. Then, you can submit a claim, and the claim may be paid in full, or in part by the insurer.

Benefits of a Fee-for-Service Plan

A managed care plan has a large, upfront cost that prepays for a number of services. The concept is that prepaying saves a large part of the cost. You can see the doctor frequently without having high co-payments or deductibles because you already paid for the service.

However, many advocates of fee-for-service plans argue this encourages irresponsible spending on behalf of participants. They believe using a fee-for-service plan results in better decisions on how to spend health care dollars in the long run.