With traditional fee-for-service health plans, an employer purchases a policy from an insurance company and pays a premium on a regular basis. A group health insurance policy is a contract between the employer and the insurance company. The employee does not receive a policy but only a certificate of insurance under the employer's contract. In exchange for the premium, the insurance company agrees to pay for certain medically necessary items for the employees and dependent family members that are included as covered items under the policy.

Under a fee-for-service plan, insureds are free to seek necessary medical care from any physician they wish. With fee-for-service, the insurance company pays for part of your doctor and hospital bills.

The doctor often bills the insurance company directly for the services provided, and the insurance company pays for items covered by the policy. In some cases, the insured may have to submit a completed claim form and attending physician's statement.