What is an Indemnity Plan?

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by ashley
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A Medical Indemnity plan, or an Indemnity Health Plan, is a health plan meant to give its users a choice when it comes to their doctors, health care providers, and facilities. These kinds of plans provide the most amount of freedom and flexibility when it comes to health insurance plans. Providing various benefits, perhaps its most important one is the protection these kinds of plans offer against the rising costs of medical care.

The Benefits of Indemnity Plans 

The benefits with an indemnity plan are extensive. Besides having the most flexibility and freedom, users can see whatever doctor or specialist they want without the necessity for a referral. Additionally, there is no need to declare a primary care physician. Most indemnity plans offer no geographic restriction when it comes to picking where to go for care. Some indemnity plans even offer global emergency and urgent care converge 24 hours a day all week. Now, these plans don’t involve a provider network. This means that the costs of a doctor’s visit may be higher than the definition of the UCR (usual, customary, and reasonable rate).

The Costs of an Indemnity Plan

Indemnity plans work by paying a portion of the enrolle’s medical costs. In some cases, however, a deductible has to be factored in. The cost of a deductible is to be determined by the insurance company ahead of time. If there is a deductible, this must be paid by the enrollee and then the remainder will be covered by the insurance company. Depending on the insurance provider, patients may need to pay the cost of services received immediately and then file a reimbursement claim with the insurance company. In addition to the possibility of a deductible, there is the possibility of a co-payment, which is a percentage of the remaining charges after the deductible that the enrollee must pay. 

What is a Managed Care Plan?

Through employing a network of healthcare providers, managed care plans offer comprehensive health care to its members. These services come at a pre-set price which protects the enrollee from rising medical costs. Members are encouraged to take advantage of the services offered within the network. One of the best benefits of a managed care plan is the lower cost, but it does come with a limited amount of services. There are two types of managed care plans, Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs). A hybrid version of these two plans exists and is known as a Point of Service (POS) plan.

PPO

A preferred provider organization plan, or a PPO, is an insurance plan often accessible through a sponsor like an employer or an insurance company. When joining a PPO, enrollees have access to select doctors and hospitals that provide their services. PPO members do not have to prepay for their medical care, instead they pay for services as they are provided and reimbursement for these charges are taken care of by the sponsor. Another possibility is having the physician send the bill directly to the insurance company which in turn covers the cost for the enrollee, excluding a copayment. The price of each service is established ahead of time between the doctors, hospitals, and the PPO sponsor.  

HMO

A health maintenance organization, or an HMO, provides members with medical treatment on a prepaid basis. Members pay a specific monthly fee and that’s all, no matter how much medical care is needed that month. This monthly fee covers a variety of services like yearly checkups, doctor visits, hospitalization, and even surgery. HMOs do require enrollees to choose a specific primary care physician. To enjoy these services, enrollees have to receive care within the HMO approved network. 

POS

A point of service plan, or a POS, is a mixed managed healthcare system that combines points of the PPO style with the HMO style. Those enrolled pay no deductible and usually only have to pay a small copayment when seeing a within network healthcare provider. The network does require a primary care physician to be chosen who will be in charge of all in network referrals. The plan does allow enrollees and their dependents to go outside of the network but this will result in a deductible and a substantial co-payment.

Indemnity Plan Vs. Managed Care Plan

Indemnity plans, unlike HMO and PPO plans, allow enrollees the freedom to choose any doctor, specialist, or hospital without having to worry about if it’s in-network or not. Additionally, there is no need to have a specific primary care doctor and no need for a referral to see any specialist. Indemnity plans may be more expensive than other plans, but with that price comes the relief of flexibility and options. In comparison to these plans, the premiums for managed care plans are far lower – but this is because they do come with more restrictions. These plans offer comprehensive health care through its networks, meaning that there is a restriction on where to get service but treatment is overall cheaper. Managed-care plans also protect members from the risk of paying for a service, being later denied coverage, and not getting a reimbursement. Although both insurance options are great, the main differing points are cost and the ability to choose where to get service. 

Who Should Choose an Indemnity Plan?

Indemnity plans are best for those looking for freedom of choice, like not having to commit to a certain primary care doctor. Along with this freedom comes the freedom to roam as these plans and the doctors covered as usually not restricted to specific geographic regions. In the case that freedom is the main priority, an indemnity plan is best as long as paying a little extra for health insurance or a deductible is not a problem. This is also the best option for those looking to have the freedom of self-referral to have easier access to specialists for the best health care possible. Indemnity plans can be used to access high-quality care and are best for those willing to pay extra for freedom and flexibility.

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