If you know anything about health insurance, you’ve probably heard of an indemnity plan. If not, that’s okay, we’ll explain it. An indemnity plan is the type of health insurance most people had before PPOs, HMOs, and other in-network plans became popular. With a fixed indemnity plan, your insurance provider pays a predetermined percentage of charges considered “customary and reasonable.”
How Does an Indemnity Plan Work?
The biggest difference between a doctor or hospital indemnity plan and a PPO or HMO is that the provider doesn’t have a contract with the insurance company. Therefore, the health care professional or chosen facility would be “out of network.” Also, since this plan covers a set benefits based on a specific medical expense, you’d ultimately share the total covered cost, minus the deductible.
Fixed Indemnity Health Insurance Pros and Cons
As with any insurance, a fixed indemnity plan has both advantages and disadvantages. The primary benefit is you select the doctor and hospital. Some people have seen one particular doctor for years, so they don’t want to make any changes. The same holds true for hospitals as individuals sometimes have a specific preference where they go.
You can also choose a specialist rather than having to go with one in-network. For people who need special care, the only way they can get the necessary treatment is by first seeing a doctor, which adds to the overall health care cost. With a fixed benefit plan, you don’t need a referral from a primary physician.
Simply put, when looking at a fixed indemnity plan vs. major medical, you have a lot more freedom. With so many restrictions when it comes to health insurance, that alone makes an indemnity plan worthwhile for a lot of people.
However, you also have to think about the disadvantages of a fixed benefit plan. Often referred to as a “fee for service” type of policy, there are a few drawbacks. For example, of all health insurance plans, an indemnity plan is the most expensive. Not only will you pay a higher premium for a policy, but you’ll also have more out-of-pocket expenses.
Also, with a fixed indemnity plan, there’s little to no benefit for preventative health care. That means mammograms, colonoscopies, and annual physicals aren’t usually covered. Unfortunately, some people will forego testing due to the cost. Additionally, with a doctor or hospital indemnity plan, you’re on your own in handling the paperwork. This process is often overwhelming and can lead to multiple corrections and delayed payments.
Talk to an Expert
With so many fixed indemnity health insurance pros and cons, you want to speak with a professional insurance provider. A representative will look at your situation and then help you choose the right policy accordingly. Maintaining good health is a priority, and the plan you go with has a lot to do on achieving that goal. The key is choosing the insurance policy that covers your specific needs. Whether that’s a fixed benefit plan or an in-network policy, it’s essential to ask an expert.
At Freeway Insurance we can help you navigate the health insurance maze. Get a free health insurance quote online, over the phone, or visiting one of our offices near you.