Traditional Health Insurance Author:    Posted under: Health InsuranceHealth Insurance Types

Even before Health Maintenance Organizations (HMOs) came into the picture, traditional health insurance was the known standard.  It is also known as indemnity or fee-for-service health insurance.

With the traditional kind, they offer the most choices for doctors and hospitals.  You do not need a referral or a ‘gatekeeper’ to avail doctors’ services or choosing an accredited hospital for that matter.  You can choose to go to your preferred doctor at any time, without any need for approval, and even enjoy national coverage.  The payment for this kind of freedom of choice is much higher, thereby making traditional insurance more costly for the consumer.  For traditional insurance, you will be subjected to a medical exam before your policy will be deemed approved, and any pre-existing conditions stated in the policy as well.

Although this is the most flexible type of health insurance plan, it is also the most expensive of all.  The deductibles are higher, ranging from $400 to $1,300, still depending on what was agreed with the company.  The amount covered by your insurance as well will also be based on a person’s specific health issues.  Therefore, those with pre-existing conditions will have harsher restrictions that apply.

Traditional insurance operates on the concept of copayments and coinsurance.  First, you will have to pay your monthly fees to the insurance company.  Besides the monthly insurance fees, you are also required to pay a certain amount whenever you visit your doctor, or whenever a procedure needs to be done.  Coinsurance is paying a percentage of the bill after a procedure is done, apart from paying the fees associated with it as well.  For example, if you are coinsured 80-20, then 80 percent of the bill will be footed by your insurance company while the remaining 20 percent will be your share.  Above all these, the insurance company will also determine payments for “reasonable and customary fees” and thereby get the average for any service that you have availed.  You are required to pay the difference if what they deem ‘reasonable’ is below what you have already shelled out.

Traditional insurance also has what you call an out-of-pocket limit.  This entails that if you have reached a maximum amount of payments made, the coinsurance no longer applies, but copayments are still applicable.  Therefore, extra care in your bills should be outlined regarding charges that your health care provider may bill you with.

In this day and age where people are constantly looking for ways to cut down on costs and still maintain the security they need, it would not hurt to do some research on the type of policy that would best suit you as an individual, or as a family.  Do not assume that “one size fits all” for these policies, and maintain the view of “what do I need” when you go and shop for the right insurance plan for you.  There is a variety of insurance plans out there and all you need to do is diligently research, and then select – which shoe does fit?



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