Which term describes a major type of health plan that repays policyholders for the costs of illness and accidents?

• A. Fee for Service
• B. Health Maintenance Organization
• C. Fee Schedule
• D. Fee for Service

Answer: (A)

Fee-for-service plans reimburse policyholders (or their providers) for medical costs, functioning as indemnity-style coverage. The insured can choose any doctor or hospital, and the insurer pays a portion of the allowable charges after the patient meets any deductible and pays coinsurance. This is different from managed care options like HMOs, which pay providers within a network and often require referrals, and from a fee schedule, which is simply a list of approved payment amounts for various services rather than a plan type. The key idea is that the plan reimburses the costs incurred by illness or injury to the policyholder.