Indemnity Care Plans were the most popular type of health insurance coverage. However, because medical costs have continued to soar, this is no longer the case. Although still the first choice of many, more people these days are switching to managed care plans; not necessarily because they want to, but rather because these plans are the ones being offered by their employers. For clarification, Indemnity Care Plans are frequently referred to as ‘fee for service’ plans.
The main difference between Indemnity Care Plans and Managed Care Plans is the freedom to choose any medical care provider regardless of whether the patient first receives a referral or regardless of whether the medical care professional is part of the contracted ‘network’ of providers. Those who choose Indemnity Care Plans can visit the most well-known specialists and the hospitals with the best reputations for their care.
But with that freedom come a price and participants usually end up with higher out of pocket costs. After a participant receives medical care, a bill for his services is forwarded to the insurance company. The insurance company then refers to its list of ‘reasonable and customary’ charges for the services that were provided to determine the amount it will pay. Of that amount, the insurance company will typically pay 80% while the remaining 20% becomes the responsibility of the patient.
In many instances, especially when care is provided by top-notch institutions and/or professionals, the amount billed for the medical services will actually exceed ‘reasonable and customary’ charges. When this happens, the patient is responsible for paying his percentage PLUS the difference.
In addition to paying the above, those who choose Indemnity Care Plans also have to pay a premium and an annual deductible. And even though these costs can be high, this type of health insurance plan is right for many people.
When it comes to managed care plans, a Preferred Provider Organization (PPO) is the plan that most closely matches an Indemnity Care Plan. With a PPO, participants have a wider network of providers from which to choose. Their costs will be lower if they choose a medical professional within the PPO network. Participants still do have the option of choosing to go outside the network, but when they do, their out of pocket expenses will be higher.
Before the insurance company will contribute towards these costs, the person will have to first satisfy their deductible. And after that amount is met, the insurance company will pay a smaller percentage of the overall costs than it would pay had the participant chosen an ‘in-network’ medical service provider.
Advantages of Indemnity Care Plans
- You may choose your own doctors and hospitals.
- You may visit any specialist without getting permission from a primary care physician.
Disadvantages of Indemnity Care Plans
- Deductible: It can be anywhere from $500 to $1,500. These are amounts of covered expenses you must pay before the insurer will start reimbursing you for your medical bills. and then doctors are reimbursed about 80 percent of the bill while you pick up the remaining 20 percent.
- You might have to pay upfront for medical services, and then submit the bill for reimbursement.
- More paperwork.
- You will only be reimbursed for “covered” medical expenses
Fees of Indemnity Care Plans
- A monthly fee, called a premium.
- A certain amount of money each year, known as the deductible, before the insurance payments begin. It may be around $ 250-$500.
- After you have paid your deductible, the insurer generally pays 80 percent of the costs and you pay the other 20 percent, which is known as the coinsurance.
Types of Indemnity Care Plans.
- Basic health insurance
- Major Medical insurance
- Comprehensive insurance
1. Basic health insurance includes Hospital care & Some hospital services such as x-rays and medicine.
Surgery. Some doctor visits.
2. Major Medical insurance includes Basic health insurance, plus. Treatment for long term illnesses. In-patient and out-patient expenses.
3. Comprehensive insurance is a combination of the two. The cost of your plan will vary with the level of coverage.
So which type of plan is better an Indemnity Care Plan or a Managed Care Plan? That all depends on the individual. Those who can afford the higher costs and place a high value on the ability to decide from whom they receive their medical care usually choose Indemnity Care Plans. Those who want more freedom of choice, but who also need to closely monitor medical costs are probably better off with a PPO.