Traditional health insurance as we have known it for years was the fee-for-service or indemnity coverage. With this type of coverage, members were able to choose their doctor, hospital, and other healthcare providers. If the member needed to see a specialist, they simply went – no referral was required. Additionally, it was not the insurance company’s place to determine whether a trip to a specialist was needed. After all, how would they know, they were not doctors.
While the fee-for-service coverage appears a great option, it is not necessarily, what it seems. Usually, a traditional policy will include more out-of-pocket expenses then managed care plans. More than likely, the deductibles are unbelievably high and after the deductible is paid, the insurance company will kick in, usually paying 80 percent of the bill.
People should have the freedom to see the doctor of their choice but keep in mind that the insurance company will often only pay expenses they deem to be reasonable and customary, meaning they look at the rates of other local practitioners and what they would charge for the same treatment. An average cost is determined, which is the amount the insurance company pays. That does not mean you pay the overage, although it can, usually the doctor eats the difference. For example, if you had a treatment that cost $1,000 but three other practitioners in the same area only charge $600, the insurance company will not pay more than $700, which is the average of the four practitioners.
Traditional healthcare premiums can be higher than other types of plans. On average, a policy for one employee per year, the price would be $3,850, with that number on an uphill climb. For costs that are out-of-pocket, deductibles range anywhere from $350 to $1,250. For an insurance policy to work for the employee, the deductibles have to be affordable.
Some policies will limit the amount of coverage based on a particular health condition. Be sure to check the fine print for long-term illnesses and any restrictions that apply. You also want to read carefully regarding any pre-existing conditions. Look for policies that provide a minimum of $1 million of coverage, especially if you have a long-term illness where treatment could become excessively costly.
There is really no plan that is a “one size fits all.” If you use the insurance from your employer, you may not have much choice. However, if you are shopping on the market for health insurance, take adequate time to find the best plan for your specific needs.