Cost Plus
What Does Cost Plus Mean?
Cost-plus is a type of contract in which a vendor is compensated for the expenses incurred in providing a service or completing a task, along with an additional fee. In the context of insurance, some policies are structured around a cost-plus model to promote price transparency and reduce overall costs. Additionally, there are cost-plus health insurance plans available as supplements to basic plans.
Insuranceopedia Explains Cost Plus
The primary benefit of cost-plus models is their transparency. Vendors have a clear understanding of their profit margins and do not need to worry about expenses impacting them, while purchasers gain insight into the exact cost of service without the concern of fraudulent, inflated, or duplicate charges. In the world of health insurance, cost-plus models may offer a fairer and simpler approach to managing medical billing, allowing all parties—including patients, healthcare providers, and insurers—to benefit from a model that does not favor any one party over another.
