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First dollar coverage is an insurance policy without a deductible which covers the full amount of an insured event, such as a car crash or a medical procedure. Due to the increased risk these kinds of policies pose for insurers, they tend to have high premiums. First dollar coverage can be found for several different kinds of insurance, such as health, home, and automobile.
It is possible for the full covered value of a first coverage policy to be used on one insured event. Other policies may have a maximum allowable amount of coverage for a single claim. This is to compensate for the lack of coinsurance or a deductible. Depending on the plan and the type of insurance, first dollar coverage may apply only to limited kinds of events. For example, it may cover a broken leg, but not the full cost of childbirth at a hospital.
There are also plans which use a mixture of different kinds of coverage, including first dollar. For example, a health insurance plan may have a high deductible for serious injuries or illness and first dollar coverage for preventative care. Some plans also offer an additional health savings account (HSA) which covers other assorted healthcare costs.
In some healthcare systems, first dollar coverage is a legal requirement for some forms of preventative care. This can include regular health checkups and immunizations. It may also involve screenings such as mammograms, colonoscopies and blood pressure tests. Other costs related to these services, such as additional office visits, may not be applied to first dollar coverage.
Alternatives to first dollar coverage include plans with co-insurance payments and limited benefit amounts. Co-insurance is a system by which patients collectively absorb some healthcare costs on a by-service basis, such as for doctor appointments. Limited benefit amounts provide coverage either up to a certain amount of money, number of doctor visits, or a combination of the two.
There are also plans that combine the HSA with a high deductible health plan (HDHP). This kind of plan offers a lower payment and the benefit of tax-free savings for health expenses which are meant to offset some of the risks of having a high deductible plan. Some plans have a health reimbursement arrangement in which a portion of the payments to the HDHP are credited to an account for potential future use by the patient.
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