How does a traditional insurance plan work?

Two women sitting in an office discussing a traditional insurance plan.
What Is a Traditional Insurance Plan?

Traditional insurance plans, commonly known as indemnity and “fee-for-service plans,” require insurance companies to pay a set portion of your total medical charges while the plan holder pays the other part of a pre-determined percentage of medical charges. These plans typically work along a ratio scale where providers define how much you and your insurance must each pay.

For example, a particular traditional insurance plan may require that the plan holder pay 20 percent of their total medical charges and will bill their insurance for the remaining 80 percent of their medical charges. These numbers can be inverse or require both parties to split the owed charges 50/50. Numbers vary across numerous plans – it all depends on what insurance plan you choose.

Traditional plans require that plan holders pay an annual deductible before the insurance company begins to pay their portion of medical claims and charges. Once your plan’s deductible has been fulfilled, the insurance company will pay your claims at a set percentage of the “usual, customary and reasonable (UCR) rate” for the services rendered. The UCR rate is the total amount that health care providers in your area or region typically charge for any provided medical service.

The Benefits of Traditional Insurance Plans

Traditional plans differ from Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs) because they grant plan holders the ability to self-refer themselves to specialists without having to obtain a referral to get compensated for choosing to see a specialist.

It’s always best to contact your provider to learn the full scope of your plan’s benefits, rules and guidelines; however, the ever-changing health care market can be confusing to navigate on your own and can be difficult to keep up with, even for providers.

Let Us Help Take the Mystery and Headache Out of Dealing with Insurance Plans

If you’ve been searching for an insurance provider who takes an educational approach to helping you assess your individual or family benefits package and helps you stay current with the latest changes and options, contact Primary Care Insurance Solutions today! We’re proud to be a licensed general health insurance agent as it enables us to offer a wide variety of plans through a number of different carriers, which not only gives you more options, it also drives the prices down out of increased competition.

Our courteous, knowledgeable professionals will go over your insurance benefits, rules and guidelines with you and advise you on the best course of action when deciding which traditional insurance plan is best for you. We look forward to answering all your questions and being your partner in the ever-changing world of insurance coverage.

 

Frequently Asked Questions

What is a traditional insurance plan?

A traditional insurance plan, also known as indemnity or “fee-for-service plan,” requires insurance companies to pay a set portion of your total medical charges while the plan holder pays the other part of a pre-determined percentage of medical charges. The insurance company and the plan holder share the medical charges according to a defined ratio scale.

How is the payment ratio determined in a traditional insurance plan?

The payment ratio in a traditional insurance plan is predefined and may vary across numerous plans. For example, a plan may require the plan holder to pay 20 percent of their total medical charges and bill their insurance for the remaining 80 percent. The numbers can be inverse or require both parties to split the owed charges 50/50. It depends on the insurance plan chosen.

What is the “usual, customary, and reasonable (UCR) rate” in traditional insurance plans?

The UCR rate is the total amount that health care providers in your area or region typically charge for any provided medical service. Traditional plans require that the insurance company will pay your claims at a set percentage of the UCR rate for the services rendered, once the plan’s deductible has been fulfilled.

How do traditional insurance plans differ from HMOs and PPOs?

Traditional insurance plans differ from Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs) in that they allow plan holders to self-refer themselves to specialists without having to obtain a referral to get compensated for choosing to see a specialist.

What services are offered by Primary Care Insurance Solutions?

Primary Care Insurance Solutions offers an educational approach to help assess individual or family benefits packages and stay current with the latest changes and options in the insurance market. They are a licensed general health insurance agent, offering a wide variety of plans through different carriers, helping to drive prices down due to increased competition. Their knowledgeable professionals advise on the best course of action when deciding which traditional insurance plan is best for you.

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