First dollar coverage

First dollar coverage is an insurance feature where the insurer pays benefits starting with the first eligible expense, without requiring the insured to meet a deductible. Health insurance plans with first dollar coverage examples include certain preventive care policies and some Medicare Supplement (Medigap) Plan F options.

First dollar coverage eliminates out-of-pocket costs for covered services until policy limits are reached, as seen in dental discount plans or specific accident insurance products. Insurers may charge higher premiums for first dollar coverage compared to high-deductible health plans; for example, Medigap Plan F premiums averaged $1,712 annually in 2023 versus lower-cost alternatives.

First dollar coverage can incentivize increased utilization of healthcare services, as evidenced by studies showing up to 10% higher outpatient visits among enrollees with zero cost-sharing, as mentioned by YourInsurance.info. Employers sometimes offer first dollar telemedicine benefits to attract talent; over 60% of large U.S.

Firms included such features in their 2022 benefit packages. Some travel insurance policies provide first dollar emergency medical benefits, covering expenses from the outset without waiting periods or deductibles.

Critics argue that widespread adoption of first dollar coverage could drive overall system costs higher due to moral hazard and reduced price sensitivity among consumers, according to research published by Health Affairs in 2019.