Index | Health Insurance | Indemnity Plans
When you start searching for a suitable Health Insurance plan, you may find that a wide range of plans available at the health insurance market makes this task quite complicated. Diverse plans and different coverage levels won't confuse you if you know the ropes with the types of health insurance plans and take your time to choose the one that is best for both your health care needs and your budget situation.
Indemnity Plan (Fee-for-Service Plan) is one of the most common types of Health Insurance. The benefits of Indemnity Plan are the flexibility and an opportunity to choose your own physician or hospital when you need health care, without having to deal with provider network. With an Indemnity Plan, policyholders are free to receive their health care services wherever and whenever they choose. Insurance companies pay fees for the medical services provided to the insured individuals who are covered by the policy.
Some people prefer Indemnity Plans because they travel a lot and may need to apply for health care away from home, or because they put special trust in some health care providers who don't belong to a managed health care network. Indemnity plans are likely be the choice of individuals with serious or chronic medical conditions and also those who can afford paying for the freedom of choice.
Flexibility and freedom come along with a higher price. Indemnity Plans are considered to be the most expensive health insurance option, which means higher monthly premium, the deductible to pay annually before the insurance company starts reimbursing you for medical bills, and more paperwork.
A deductible amount may be around $250-$500. The deductible must be met before any benefits are payable to the insured. After that the Indemnity plans pay a co-insurance percentage, typically 70 percent/30 percent or 80 percent/20 percent, where the insurance company pays the higher rate and the insured pays the lower percentage of billed charges. You often have to pay up front for medical services, submitting the bill for reimbursement after that.
Make sure your Health Insurance policy provides an out of pocket maximum (limit) to your coinsurance. Mind that only those medical expenses that are covered by the policy count toward your deductible. Check your insurance policy to find out which ones are covered.
Most Indemnity Plans have a "cap," that is a so-called ceiling one has to pay for medical bills in a year. As soon as your out-of-pocket expenses (deductible and coinsurance) total a certain amount, it means that you have reached your "cap." This amount can be anywhere from $1,000 to $5,000. Then the insurer pays the full amount in excess of the cap for the services covered under your policy.
The Indemnity Plan usually pays for doctors, hospitals, medical tests and prescriptions. Preventive care services, such as check-ups, pelvic exams or immunizations may not be covered. However, recent tendencies to rely more on preventive care as it saves from serious and costly conditions in the long run result in the fact that some insurance companies include preventive care in their list of covered services. Thus, the level of coverage may vary from insurer to insurer.
Indemnity Plans require the use of patient claim forms and reimbursement checks. The insurance company pays the claims using Usual, Customary, and Reasonable charges (UCR) for covered medical services, which is the amount that other doctors charge for similar services. In case your physician charges more than what the insurer claims "reasonable and customary" rates, you are likely to compensate the difference yourself.
There are three types of Indemnity Plans:
1. Basic health insurance
2. Major Medical insurance
3. Comprehensive insurance
Basic health insurance covers the costs of a hospital room and care, some hospital services and supplies, for example x-rays, prescribed medicine, etc. Basic Indemnity coverage also pays toward the cost of surgery and for some doctor visits.
Major medical insurance covers the cost of basic health care, adding the expenses of treatment for long-term, expensive illnesses or injuries, as well as in-patient and out-patient expenses.�
Comprehensive insurance combines basic and major medical coverage into one plan. The cost of your plan largely depends on the�level of coverage you get.�You should check your health insurance policy to make sure you have both kinds of protection to be on the safe side.
In order to receive payment for Indemnity plan claims, you have to fill out forms and send them to your insurance company. Your doctor's office can fill out forms for you. It is important to keep receipts for medicine and other medical costs.
As the price of Indemnity plans rises, many of the relatively healthy people decide to drop this plan and choose to join PPOs or HMOs. Insurance companies use the term "adverse selection" to describe the situation when only a certain group of people (in this case, unhealthy and elderly people with the most expensive health care needs who will benefit from health insurance), tend to purchase it. People who need extensive treatment stay in the plan because it is unreasonable to change physicians interrupting the treatment. As the health care costs keep on exceeding the premiums the insurance company is collecting, the price of the Indemnity Plan continues to rise accordingly. There can be a critical moment when Indemnity Plan turns into prohibitive costs.