How does a traditional insurance plan work?

 In Group Health Insurance

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 Healthcare Consultants, Inc. at (713) 626-2838 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.


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