An indemnity plan is a flexible health insurance plan that allows you to choose the doctor, healthcare professional, hospital, and other healthcare service provider of your choice by giving freedom and flexibility. These plans are also called fee-for-service plans and protect you against the costs of medical expenses. This health plan was mostly offered by the insurance companies before the dominance of managed care plans like HMO and PPO.
Distinguish Features of Indemnity Plans
The indemnity health plan is different than managed care plans like HMOs and PPOs because it allows you to receive healthcare where you choose, providing compensation for a set portion of the healthcare costs. A vital feature of this plan is that you do not require to choose a primary care doctor and you can even visit a specialist of your choice, as these plans do not have a healthcare provider network. You do not require to obtain a referral from your primary care provider to see a specialist to get compensated. The great amount of freedom with indemnity plans turns extremely valuable as far as managing your healthcare is concerned.
Check if Indemnity Plans Are Right for You and Your Family
While shopping for Individual and family plans, you can seriously think of Indemnity plans, if the following things are important to you:
- You can afford to pay a little extra for your health insurance costs and deductible.
- You do not want to stick to a doctor as your primary care doctor.
- You want a great amount of freedom and flexibility in your plan.
- In managed-care plans, you have to pay attention to your choice of doctors and hospitals because your choice will affect your costs, but this is not the case with the indemnity plans. Your choice of healthcare providers in Indemnity plans will not be vetted for costs.
- You live in an area where access to doctors and healthcare services of your choice is not included in a managed care plan.
Types of Indemnity Health Plans
Types of Indemnity plans that are available include:
- Major Medical Insurance Coverage
- Hospital and surgery insurance coverage
- Comprehensive coverage, a combination of hospital and major medical plans
Most of the Indemnity health plans provide coverage for hospital stays, outpatient procedures, prescription medications, doctor’s visits, and preventive care.
Understanding Indemnity Health Insurance Plan
If you are planning to purchase an indemnity health plan, then you need to have a proper understanding of this plan to make a sound and informed decision. You should have a proper understanding of the following important points:
UCR Rate – Usual, Customary and Reasonable Rates are the amounts usually charged by the healthcare service providers of your area. Indemnity plans are self-managed health plans having no network of healthcare providers and hospitals. Thus, rates for the healthcare costs are not specified and you will not be aware of the costs charged by your chosen healthcare providers and hospitals. Therefore, you need to familiarize yourself with the costs that your chosen Indemnity plan designates as UCR and the amount your chosen healthcare provider will charge for the medical services. You need to be aware of both the costs to avoid any surprises later on. Generally, there is not much difference between the UCR rate and the amount charged by the medical service providers.
Deductibles and Co-payments for Indemnity Plans – You are required to pay a certain amount before the start of the policy benefits, and this amount is known as the deductible amount. Besides deductible, you also need to pay a certain percentage of the remaining amount, and this charge is known as co-payment. Therefore, while shopping for indemnity plans you need to be aware of deductibles and co-payment of the plan to make sure that you are capable to pay these costs. Some of the indemnity plans also come with a maximum co-payment, and such plans give you an advantage because once you reach the maximum co-payment amount, you no longer have to pay the co-insurance.
Access to Doctors and Hospitals is not restricted based on Geographic Location – With an indemnity health plan, you have the freedom to choose your doctor, specialist, or hospital with some limitations. Whereas HMO and PPOs plan limit your choice for a doctor, specialist, or hospital, by geographic location, or area in which the provider is located. Thus, this plan provides a significant advantage by giving you the freedom and not restricting your access to hospitals and doctors based on the area of your living.
Knowledge of Preventive Healthcare Services – All the Indemnity health insurance plans do not provide coverage for preventive care services. Therefore, before selecting an indemnity health plan, you should make sure about the preventive services that are covered under the plan and the amount of compensation you can expect from the plan. This will help you choose the best possible indemnity plan for yourself.