What is Medical Indemnity Insurance?

Medical  Indemnity Insurance

We have just stepped into 2021 and we are hoping for a fresh and better beginning in terms of health and finance. Like most people, you may also be wondering how long the aftermath of the pandemic will last. You may also be thinking about either buying new medical health insurance or adjusting the existing one and the amount of extra cash you will have to shell out. It is a fact that most insurers have already increased premiums and others will follow to make up for their increased costs.

Besides, from the pure health perspective, soaring costs of both pre-and post-hospitalization are prompting many people to choose between defined benefits plans and indemnity-based plans. Although defined benefit plans can meet such health expenses, indemnity-based plans have their benefits.

What is Medical  Indemnity Insurance?

The Basics of Indemnity Medical Insurance Plans

In an indemnity-based medical health insurance plan, the concerned health insurance company reimburses the actual expense incurred during hospitalization. The total cost of health expenses will depend on the maximum amount insured under the policy and it requires the submission of enough medical bills. In a medical indemnity insurance plan, you have the flexibility of selecting your preferred doctor, clinic, or hospital and the insurance provider. 

An indemnity medical insurance is of two types:

  • Conventional medical indemnity plan
  • Fee-based plan
  • These plans protect people against high medical costs.

Benefits of Medical Indemnity Insurance Plans

Indemnity medical health insurance policies are significantly different compared to IPAs, HMOs and PPOs with managed care, which may require you to select a primary healthcare provider. Let us assume that an indemnity-based plan has an insured sum of $500,000. If an individual undergoes a hernia surgery that costs $200,000, the insurance company will reimburse the actual incurred cost after receiving the bill. The balance amount will remain in the policy for any future medical needs. Indemnity health insurance does not cover any pre-and post-hospitalization expenses, which can be a downside.

Decide the Suitability of an Indemnity Medical Insurance Based on These Features

Indemnity medical health insurance policies can be beneficial for you if the factors mentioned below are crucial to you:

  • You want the flexibility of choosing your own doctor. 
  • You are fine with incurring slightly higher costs for your health insurance
  • You are okay with the costs for physicians and consultants, which may go beyond the UCR (usual, customary or reasonable) amount. Keep in mind that your preferences may affect your medical costs.
  • You live in a geographic area where access to your preferred doctors and medical services would not be part of a PPO or HMO plan.

Costs of Indemnity Medical Health Insurance Policies

An indemnity insurance policy pays a part of the treatment cost under your preferred service provider but has its deductibles. In such plans, the deductible may be between $100 for an individual and $500 for families on average. It varies from one insurance company to another. After paying the deductible, the policy will incur the remaining medical expenses up to the maximum threshold specified in the agreement. Indemnity plans may also come with co-insurance and co-pay clauses.

Four Crucial Areas of an Indemnity Medical Plan

In case you are considering buying an indemnity medical health insurance plan, it is worth remembering the following facts:

1. The UCR Rate

The UCR rate is something the health insurance provider in your region will charge for their services. It is because indemnity insurance plans have no network with specific rates that providers charge and are mainly self-managed health plans.Compare the cost that your indemnity health plan states as UCR with the cost of your preferred service provider before buying.

2. Costs

The costs of indemnity plans involve co-payment and deductible amount to get the policy benefits. After paying the deductible, a co-payment may be required, which is a portion of the outstanding charges after the deductible.

There are indemnity health plans, which also set the highest threshold amount, which you need to bear as co-insurance. The benefit of indemnity plans is that once they reach the highest threshold amount, you do not have to pay the co-insurance anymore.

3. No Restriction due to Geographic Regions

In an indemnity medical health insurance plan, you have the freedom of selecting your physician or hospital. On some occasions, PPO and HMO may limit these available options by geographic regions or by the areas where the service provider operates. Indemnity medical insurance plans do not have such restrictions.

4. Preventative Health Care Feature

Some of the indemnity medical health insurance policies may not give you preventative care coverage, whereas others will provide the same. Preventative healthcare services may include annual medical check-ups and medical examinations to shield against illnesses.

      Also Read: Overview Of Medical Health Insurance Programs In California

Before We Go

Before buying a health insurance, make sure you consult an insurance broker to get details on all the benefits of an indemnity medical health insurance plan, including the expected compensation.

A reputable insurance brokerage firm like us can help you obtain the best health care plan, which will provide excellent benefits to you and your family. If you live in California, connect with us to buy comprehensive and affordable health insurance. Give us a call at 1-888-505-7988 or fill out the online contact form, and we will get things rolling!


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