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 circ*mstances.
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 does indemnity health insurance 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 reimbursem*nt.
Indemnity health insurance is usually best suited for those who’s top priority is having control over where they go for medical care.
Advantages of indemnity health insurance
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 reimbursem*nt 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.
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 reimbursem*nt process
The claim reimbursem*nt 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 reimbursem*nt.
Here’s how the claim reimbursem*nt process generally works:
- Seek Medical Care: Policyholders are free to choose their preferred healthcare providers and receive the necessary medical services.
- 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.
- 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.
- 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.
- Reimbursem*nt: Once the claim is approved, the insurance company reimburses the policyholder for the covered portion of the expenses. This reimbursem*nt helps offset the out-of-pocket costs incurred when initially seeking medical care.
- Payment to Providers: Policyholders are responsible for paying their healthcare providers the full amount of the medical expenses. However, after receiving reimbursem*nt from the insurance company, they can use these funds to cover their out-of-pocket expenses.
While the claim reimbursem*nt 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.
Frequently asked questions about indemnity health insurance
Indemnity plans vs. PPO & HMO plans – what’s the difference?
Two common types of health insurance coverage include PPO and HMO 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.
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 circ*mstances, such as with hospital indemnity insurance or fixed indemnity insurance.
What are the cons of indemnity health insurance plans?
While indemnity insurance can work well for many, there are some aspects of this type of insurance that may not appeal to everyone. The disadvantages of indemnity insurance will have a lot to do with the indemnity insurance plan you’re considering.
Compared to other types of healthcare insurance, you may find indemnity insurance has higher premiums and deductibles. When that’s the case, these types of plans can cost more than an HMO or PPO. Additionally, not all indemnity insurance plans fulfill the requirements to qualify as full health insurance plans according to the law.
A major drawback of some indemnity insurance offerings is that you may have to pay the full costs of your healthcare out-of-pocket first before you can submit your claim. You will receive your reimbursem*nt according to how the plan pays, but needing to have the funds to pay for healthcare services upfront isn’t an ideal situation for many people.
Can I use indemnity health insurance for emergency care?
Yes.
Is indemnity insurance the right choice for everyone?
No.
