What Is Indemnity Plan?

An indemnity plan is a health insurance plan where the insurance company reimburses you for your medical expenses regardless of who provides the medical service.

Benefits of Indemnity Plan

The benefit of having this plan is that the policyholders have the flexibility to choose their own doctor or hospital when they need medical care or services.

This is especially beneficial for those people who travel a lot because they are free to receive medical treatment from any doctor at any part of the country and not being restricted to a particular health care provider network as compared to a managed cared plan.

Another group of people that are likely to benefit from this plan are those who need extensive treatment from the same physician and not wanting to interrupt the treatment process.

Amount Payable

With the flexibility to choose when and where to receive your medical services, the premium of course will be higher. This plan is considered to be the most expensive type of health insurance. Typically, with an indemnity health insurance plan, you would need to pay:-

1. A monthly fee, called a premium.
2. A certain amount of money each year, known as the deductible, before the insurance payments begin. The deductible for a traditional indemnity plan can be as low as $200 and as high as $2500.
3. After you have paid your deductible amount for the year, you share the bill with the insurance company, commonly known as co-payment. The most common ratio is 80-20% where the insurer pay 80% of the medical cost and you pay the remaining 20%.

Types of Indemnity Plan

There are three types of Indemnity Plans:

1. Basic health insurance.

   Basic health insurance covers the costs of a hospital room and care, some hospital services and supplies, for example x-rays and prescribed medicine, the cost of surgery and for some doctor visits.

2. Major Medical insurance.

   Major medical insurance covers the cost of basic health care, expenses of treatment for long-term, expensive illnesses or injuries, as well as in-patient and out-patient expenses.

3. Comprehensive insurance.

   Comprehensive insurance combines basic and major medical coverage into one plan.

Reimbursement Process

With this plan, some doctor or hospital will bill the insurance company directly, but most often, you are required to pay your medical bills upfront and then submitting the bill and claim forms for reimbursement by the insurance company. Therefore, it is very important that you keep all receipts for medicine and other medical costs.

Also, take note that not all health expenses you have incurred count toward your deductible. Only those covered by the policy do. You need to check the insurance policy to find out which ones are covered.

Summary

The cost of indemnity plans are quite expensive comparing to other medical health insurance and most people tends to avoid buying this plan. However, getting a cheap health insurance is not really impossible with an indemnity plan, it depends on the level of coverage you are looking at.