Medical Expense Indemnity Plans
Limited Medical Indemnity Plans
What is an indemnity health insurance plan?
An indemnity plan, also known as a “fee-for-service” plan, is one of the oldest types of insurance policies. It offers the flexibility for individuals to choose their own healthcare service providers, including doctors, hospitals, and specialists. Indemnity health plans do not have any special requirements, but the company will base eligibility on an individual’s medical history and current state of health.
How does an indemnity plan work?
An indemnity insurance plan will pay a portion of medical expenses. When services are rendered, the individual is responsible for paying fees up front, and will then file the paperwork to be reimbursed by the insurance company for the expenses. Most indemnity insurance plans will have a set deductible amount as well as a coinsurance percentage that must be paid by the policy holder. Deductible amounts can range anywhere from a few hundred to thousands of dollars, depending on the level of coverage chosen. The coinsurance percentage is the percentage of fees that the individual is responsible for paying. For most insurance companies, the coinsurance percentage is between 20 and 25 per cent.
Once the deductible has been met, the insurance company will begin paying the balance of the expenses minus the individual’s coinsurance payment. In addition, most indemnity insurance plans include an annual coinsurance maximum, also known as an “out-of-pocket” maximum. Once the coinsurance maximum has been satisfied, the company will pay 100 per cent of covered medical expenses for the remainder of the calendar year. It is important to review your indemnity plan closely, as some medical expenses may not be covered. This also means that not all medical expenses will be attributed to your deductible amount or to your coinsurance limits.
How does indemnity health insurance compare to managed-care plans?
The major difference between an indemnity insurance plan and the more traditional managed-care plan is the absence or presence of a network of health care providers.
With a managed care plan, there is a network of health care providers that have an arrangement with the insurance company to provide their services at an agreed-upon rate. Because the service providers have a relationship with the insurance company, all paperwork is filed directly between the two entities and the insurance company pays the provider directly. Then, the individual is only required to pay a small percentage of co-insurance or their co-payment amount out of pocket when services are rendered.
Since an indemnity plan has no network of providers, individuals may choose any healthcare service provider they wish; however, the provider may charge considerably more for a particular service than other providers. Indemnity insurance companies allow for this because they typically charge a higher annual deductible, which must be met before a policy holder can seek reimbursement for their medical expenses. Also, the insurance company will only reimburse an individual for the “usual and customary cost” of a particular fee or service. The individual is then responsible for paying their coinsurance percentage as well as the excessive fees. For example, if an individual receives services for $250, and the usual and customary rate for the service is $200, the individual would be responsible for their coinsurance amount as well as the additional $50.
Central United Life
- Guaranteed Issue (primary insured must be gainfully employed, and working an average of 30+ hours/week)
** Maximum total of 4 different sicknesses per year for all dependent children, not per child