What is Indemnity Insurance?
An indemnity insurance policy is a type of health insurance plan. A indemnity insurance plan is also known as a reimbursement plan because the insurance pays the covered individual no matter where or whom the covered individual receives health care services from. The insurance company then pays a set amount of total charges. Indemnity plans are also referred to as “fee-for-service” plans.
Most primary health insurance plans do not cover all hospital costs. If you end up in the hospital, you can be left holding the bag for the amounts not covered by your primary insurance. A hospital indemnity plan covers some of the costs associated with a hospital visit and may provide extra coverage that your health plan doesn’t.
With medical indemnity insurance, there are no in-plan doctors or specialists or hospitals – you choose your own doctor or specialist or hospital regardless of whether they are in-plan or not. Many individuals like having the unlimited choices that are available with an indemnity health plan.
A medical indemnity insurance plan offers:
- Flexibility to the insured individual because it allows him or her to choose their own health care service providers.
- Reduced out-of-pocket cost to the insured party, depending on the type of reimbursement agreement that exists between the insurance carrier and the insured individual.
- No need to get referrals to see specialists
How does an Indemnity plan work?
Since referrals are not required with an indemnity plan, you can see the doctor or specialist of your choice. Though you may choose to get the majority of your basic care from a single doctor, your insurance company will not require you to choose a primary care physician. An Indemnity plan may also require that you pay up front for services and then submit a claim to the insurance company for reimbursement.
You’ll likely be required to pay an annual deductible before the insurance company begins to pay on your claims. Once your deductible has been met, the insurance company will typically pay your claims at a set percentage of the “usual, customary and reasonable (UCR) rate” for the service. The UCR rate is the amount that healthcare providers in your area typically charge for any provided service.