Indemnity Health Insurance Plans

Understanding indemnity health insurance

Indemnity health insurance, often referred to as fee-for-service insurance, provides policyholders with flexibility in choosing their healthcare providers and reimburses a portion of the costs incurred for covered medical services.

 

What is indemnity health insurance?

Indemnity insurance can apply to several insurance options. However, for those seeking health insurance, indemnity insurance represents a healthcare plan or a supplement to a healthcare plan that allows you to get care from any provider.

Indemnity plans allow you to choose any doctor or medical facility you want. With indemnity insurance, your coverage provider pays a set portion of your total charges. Indemnity plans are also referred to as “fee-for-service” plans.

Indemnity insurance allows you the freedom to choose your own medical provider or healthcare services without worrying about if it’s in the insurance provider’s network or not. As a supplement to a major medical or health insurance plan, indemnity health insurance can also help cover the costs of specific healthcare circumstances.

With indemnity insurance, a specific percentage of your healthcare costs are covered and you’ll be expected to pay the rest.

Indemnity health insurance is another option to consider when reviewing healthcare coverage and may be well-suited for those who want more flexibility.

 

How do indemnity plans work?

Indemnity insurance works very differently than your standard healthcare plan. With indemnity insurance, you have the freedom to see any doctor or specialist. You don’t even have to select a primary care physician.

When choosing who and where to receive care from, there’s no referral required.

When it comes to cost and how you pay for healthcare coverage, there are also some key differences. With an indemnity health insurance plan:

• Coverage for medical costs is based on a percentage of what is considered the average cost of that service in your area.
• You’ll typically pay an annual deductible. Once that’s paid, then the insurance company will pay for some claims.
• You may have to pay upfront for your healthcare services. You’ll then submit a claim for reimbursement.

Indemnity health insurance is usually best suited for those who’s top priority is having control over where they go for medical care.

Key terms and concepts

Understanding key terms and concepts related to indemnity health plans is essential for making informed decisions about your healthcare coverage. Here are some important terms explained:

• Premiums: The monthly fee you pay to your insurance company to maintain your health coverage. This amount is due regardless of whether you use medical services in that month.
• Deductibles: The amount you must pay out-of-pocket for healthcare services before your insurance starts to cover its share. For example, if your deductible is $1,000, you must pay this amount for your care before your insurance begins to pay.
• Coinsurance: The percentage of costs you share with your insurance company after you’ve met your deductible. For instance, if your plan has a 20% coinsurance, you would pay 20% of the cost of covered services while your insurance pays the remaining 80%.
• Out-of-Pocket Maximums: The maximum amount you will pay for covered services in a plan year. Once you reach this limit, your insurance covers 100% of the remaining costs for the year. This includes deductibles, coinsurance, and copayments, but not premiums.

Understanding these terms helps you gauge potential costs and benefits when choosing an indemnity health plan, ensuring you select the best option for your healthcare needs and financial situation.

 

Benefits of indemnity health insurance plans

Indemnity insurance policies offer flexibility and the power to take control of your healthcare coverage. These types of policies can sometimes cost less for those who know how to comparison shop and negotiate their healthcare costs.

In some cases, these types of plans can work well for people who live in areas that have little to no coverage from larger health insurance providers.

 

Freedom to choose healthcare providers

Indemnity health insurance, also known as fee-for-service insurance, offers policyholders the freedom to choose their healthcare providers without the need for referrals. Unlike some managed care plans, such as HMOs or PPOs, which may require individuals to select healthcare professionals from within a network, indemnity plans allow you to visit any licensed healthcare provider or facility. This flexibility means you can see the doctors and specialists you prefer and access medical services without constraints imposed by network restrictions. However, it’s essential to understand how indemnity plans work, including cost-sharing and reimbursement processes, to make the most of this freedom of choice.

 

No network restrictions

Indemnity health insurance is characterized by its lack of network restrictions, providing policyholders with unparalleled freedom when choosing healthcare providers. Unlike managed care plans, such as HMOs or PPOs, which require individuals to select healthcare professionals from within a predefined network, indemnity plans allow you to access care from any licensed provider or facility across the country. This means you can consult with primary care physicians, specialists, or even seek treatment at hospitals of your choice without being limited to a specific network. This flexibility empowers individuals to prioritize their healthcare needs and preferences, giving them greater control over their medical decisions. However, it’s essential to manage your claims, as indemnity plans often involve more paperwork and out-of-pocket expenses than other types of insurance.

 

Coverage for preventative care

Coverage for preventative care is a valuable benefit of indemnity health insurance because it promotes proactive healthcare practices and helps prevent more severe illnesses down the road. With this coverage, policyholders can access a range of preventative services, such as vaccinations, screenings, and wellness check-ups, without incurring significant out-of-pocket costs. By encouraging regular preventative care, indemnity plans aim to catch health issues in their early stages when they are typically more manageable and less expensive to treat. This not only supports individuals in maintaining their overall health and well-being but also contributes to lower healthcare costs in the long run by reducing the need for extensive treatments or hospitalizations. In essence, coverage for preventative care aligns with the insurance provider’s and policyholder’s interests in promoting health and minimizing healthcare expenses.

 

Ideal for frequent travelers

For individuals who travel frequently, having health insurance that offers nationwide access to providers is crucial. Indemnity health plans provide several benefits that make them an ideal choice for those on the move:

• Nationwide Provider Access: Unlike some health plans that restrict you to a network of providers within a specific geographic area, indemnity plans typically allow you to see any doctor or specialist across the country. This flexibility ensures you can receive medical care wherever you are in the United States.
• No Need for Referrals: With indemnity plans, you usually don’t need a referral to see a specialist. This means you can quickly and easily access the healthcare services you need without the extra step of consulting a primary care physician first, which is particularly beneficial when you are traveling and time is of the essence.
• Emergency Coverage: Indemnity health plans often provide comprehensive emergency coverage, which is essential for travelers who might need immediate medical attention while away from home. Knowing you’re covered for emergency situations offers peace of mind during your travels.
• Out-of-Network Flexibility: These plans typically don’t have the same network restrictions as other insurance types, meaning you have the freedom to choose healthcare providers based on convenience and quality, not network limitations. This is especially advantageous when traveling to areas where your home network does not have a strong presence.

By providing broad access to healthcare providers nationwide, indemnity health plans ensure that frequent travelers can receive necessary medical care wherever their journeys take them, without the hassle of network limitations and referral requirements.

 

Drawbacks of indemnity health insurance plans

While indemnity health insurance plans offer flexibility and broad access to healthcare providers, there are several drawbacks to consider:

 

Higher premiums and costs

Indemnity health insurance plans often come with higher premiums compared to other types of health insurance plans, such as HMOs or PPOs. These higher premiums reflect the plan’s extensive provider flexibility and lack of network restrictions. Additionally, the deductibles and out-of-pocket costs associated with indemnity plans can be substantially higher. For instance, while an HMO might have lower premiums and deductibles, an indemnity plan’s broader access often means paying more out of pocket before reaching the insurance coverage threshold.

 

Complex reimbursement process

One significant drawback of indemnity health plans is the potential for a complex reimbursement process. Policyholders may need to pay upfront for medical services and then submit claims for reimbursement. This process can be cumbersome and time-consuming, as it involves collecting detailed billing information, filling out claim forms, and waiting for the insurance company to process the reimbursement. Unlike network-based plans where providers typically handle billing directly with the insurer, indemnity plan members often face the added burden of managing these administrative tasks themselves.

 

Lack of network discounts

Indemnity plans do not have negotiated rates with healthcare providers, which can lead to higher medical costs. Unlike PPOs or HMOs that secure lower prices through network agreements, indemnity plan members may be charged full price for medical services. This absence of network discounts can result in significantly higher bills for doctor visits, hospital stays, and other healthcare services. The lack of cost control measures in indemnity plans can make them a more expensive option overall, despite their flexibility and wide access to providers.

 

Considerations before choosing indemnity health insurance

Cost and premiums

Costs for an indemnity plan will vary widely, as does the cost of individual health insurance. Premiums for these types of plans tend to cost more than HMO and PPO plans, but that’s not always true. Some types of indemnity health insurance can have lower premium costs. Keep in mind that indemnity policies represent a range of options, not just one type of coverage choice. All the same factors that affect costs for any other type of healthcare plan also apply here. For example, an indemnity plan’s cost can vary based on things like age, pre-existing conditions, location, coverage options, and many other factors.

As with any type of health insurance coverage, you can best figure out costs by using eHealth’s search by state and zip code features. This way you can see a range of quotes that will clue you in to what the average price for indemnity insurance coverage might look like.

 

Out-of-pocket expenses

Out-of-pocket expenses are a key aspect of indemnity health insurance that policyholders should understand. While these plans offer the flexibility to choose any healthcare provider, they often come with higher out-of-pocket costs compared to other types of insurance, such as copayments, deductibles, and coinsurance. Policyholders typically pay a deductible amount before the insurance coverage kicks in, and they are also responsible for a percentage of the total healthcare costs (coinsurance) even after meeting the deductible. This means that individuals may need to budget for a portion of their healthcare expenses, which can vary depending on the services received.

 

Claim reimbursement process

The claim reimbursement process in indemnity health insurance is another critical aspect of these plans. Unlike managed care plans that often involve direct billing between healthcare providers and insurance companies, indemnity plan members typically pay for their healthcare services upfront and then submit a claim to their insurance provider for reimbursement.

Here’s how the claim reimbursement process generally works:

1. Seek Medical Care: Policyholders are free to choose their preferred healthcare providers and receive the necessary medical services.
2. Payment: At the time of service, individuals are responsible for paying the full cost of the medical expenses. This includes any deductibles, coinsurance, or other out-of-pocket expenses required by the insurance plan.
3. Claims Submission: After receiving medical care and paying for it, policyholders must submit a claim to their insurance company. The claim typically includes details about the services received, the cost, and any supporting documentation, such as medical bills and receipts.
4. Review and Processing: The insurance company reviews the submitted claim to determine if it meets the policy’s coverage guidelines. This process may involve verifying the authenticity of the claim and assessing whether the services were medically necessary.
5. Reimbursement: Once the claim is approved, the insurance company reimburses the policyholder for the covered portion of the expenses. This reimbursement helps offset the out-of-pocket costs incurred when initially seeking medical care.
6. Payment to Providers: Policyholders are responsible for paying their healthcare providers the full amount of the medical expenses. However, after receiving reimbursement from the insurance company, they can use these funds to cover their out-of-pocket expenses.

While the claim reimbursement process in indemnity health insurance requires policyholders to take a more active role in managing their healthcare expenses, it provides the flexibility to choose providers and services freely. This process empowers individuals to make healthcare decisions based on their preferences and priorities while ensuring that they are financially reimbursed for eligible expenses according to their policy terms.

 

Comparing indemnity plans with other health insurance options

Common types of health insurance coverage include Preferred Provider Organization (PPO), Health Maintenance Organization (HMO), and Exclusive Provider Organization (EPO) plans. But how do they compare to indemnity plans?

With HMO plans, you have to choose healthcare services from the insurer’s network of approved facilities and professionals. This can limit your options significantly, but the tradeoff is usually lower healthcare premiums.

With an HMO, going outside the network can mean you pay completely out of pocket. If you need a specialist, you will typically need a referral from an in-network provider.

PPO insurance plans allow you to go out of the network, but your insurance may not cover as much of the costs as it would if you used an in-network facility or provider. Employers often offer both HMO and PPO plans.

As some types of indemnity insurance do not count as full health insurance coverage, you can use specialized indemnity coverage to supplement your PPO or HMO.

When comparing indemnity health insurance plans to Exclusive Provider Organization (EPO) plans, it’s important to consider the key differences in provider access and cost structure. Indemnity plans offer the flexibility to see any healthcare provider without network restrictions or referrals, making them ideal for those who frequently travel or require a wide range of specialist care. However, this flexibility comes at a higher cost, with increased premiums, deductibles, and the absence of negotiated rates with providers, leading to potentially higher medical expenses.

On the other hand, EPO plans require members to use a network of designated providers and facilities for their healthcare needs, except in emergencies. While this network limitation can reduce flexibility, EPO plans typically have lower premiums and out-of-pocket costs compared to indemnity plans, thanks to the negotiated rates within the network. Thus, the choice between indemnity and EPO plans depends on balancing the need for provider flexibility against the desire for cost savings and simplified billing processes.

The differences between an indemnity insurance plan and other types of health insurance can vary depending on the type of indemnity insurance you choose. For example, some indemnity plans cover a very specific set of circumstances, such as with hospital indemnity insurance or fixed indemnity insurance.

 

How to choose the right indemnity health plan

Choosing the right indemnity health plan involves evaluating your healthcare needs, financial situation, and the plan’s specifics. Here’s a guide to help you decide:

1. Assessing Healthcare Needs: Evaluate the frequency of doctor visits, type of care needed, and travel habits. An indemnity plan is ideal if you need frequent specialist care or travel often, as it offers nationwide access without network restrictions.
2. Budget and Financial Considerations: Assess the affordability of premiums, deductibles, and out-of-pocket maximums. Ensure the plan fits your budget, understanding that indemnity plans often have higher costs but provide extensive flexibility.
3. Checking Plan Benefits and Coverage: Look for comprehensive coverage including hospital stays, surgeries, doctor visits, and prescription drugs. Ensure the plan offers preventive care and the ability to see any doctor without referrals.
4. Reviewing Plan Exclusions and Limitations: Understand what the plan does not cover, such as certain elective procedures or experimental treatments. Be aware of any service limits and preauthorization requirements for high-cost procedures.

By considering these factors, you can select an indemnity health plan that best meets your healthcare needs and financial situation.

 

Frequently asked questions about indemnity health insurance

Can I combine indemnity health insurance with other types of insurance?

Yes, indemnity health insurance can be combined with other types of insurance to provide more comprehensive coverage. For example, you can add supplemental insurance, which helps cover out-of-pocket costs such as copayments, deductibles, and coinsurance. Critical illness insurance is another option, providing a lump sum benefit if you’re diagnosed with a serious illness like cancer or a heart attack. By combining indemnity health insurance with these additional policies, you can better manage healthcare costs and ensure broader protection against unexpected medical expenses.

 

How do I file a claim with an indemnity health insurance plan?

To file a claim with an indemnity health insurance plan, policyholders must submit a claim form along with itemized medical bills to their insurance company. The process typically involves the following steps:

1. Obtain a claim form from your insurance provider.
2. Complete the form with required details, including your personal information and the specifics of the medical services received.
3. Attach itemized medical bills and receipts from your healthcare provider.
4. Submit the completed claim form and supporting documents to your insurance company. The insurer will review the claim and reimburse you for a percentage of the covered expenses, based on your policy’s terms.

Can I use indemnity health insurance for emergency care?

Yes, indemnity health insurance can be used for emergency care. This type of insurance allows you to visit any hospital or emergency room, ensuring you receive necessary treatment without network restrictions. For instance, if you suffer a sudden injury or acute illness while traveling, you can use your indemnity plan to cover emergency room visits, hospital stays, and related medical treatments. The flexibility of indemnity insurance provides peace of mind, knowing you can access emergency care wherever you are.

 

Is indemnity insurance the right choice for everyone?

No, indemnity insurance is not the right choice for everyone. To determine if it’s right for you, consider the following factors:

• Healthcare Needs: If you require frequent specialist visits or travel often, indemnity insurance’s flexibility can be beneficial.
• Financial Situation: Assess whether you can afford the higher premiums, deductibles, and out-of-pocket costs associated with indemnity plans.
• Preference for Provider Freedom: If you prefer the freedom to choose any doctor or hospital without network limitations, indemnity insurance may be a good fit.
• Complexity of Claims Process: Consider if you’re comfortable managing the claims process, including paying upfront for services and seeking reimbursement.

 

 

 

 

IMPORTANT: This is a fixed indemnity policy, NOT health insurance.

This fixed indemnity policy may pay you a limited dollar amount if you’re sick or hospitalized. You’re still responsible for paying the cost of your care.

• The payment you get isn’t based on the size of your medical bill.
• There might be a limit on how much this policy will pay each year.
• This policy isn’t a substitute for comprehensive health insurance.
• Since this policy isn’t health insurance, it doesn’t have to include most Federal consumer protections that apply to health insurance.

Looking for comprehensive health insurance?

• Visit HealthCare.gov or call 1-800-318-2596 (TTY: 1-855-889-4325) to find health coverage options.
• To find out if you can get health insurance through your job, or a family member’s job, contact the employer.

Questions about this policy?

• For questions or complaints about this policy, contact your state Department of Insurance. Find their number on the National Association of Insurance Commissioners’ website (naic.org) under “Insurance Departments.”
• If you have this policy through your job, or a family member’s job, contact the employer.