Indemnity Health Plan

Health insurance plans can be categorized into into larger division. One of them is  Indemnity plans or fee-for-service plan, and the other i s Managed care plans.

Indemnity plans are the types of health plans that primarily existed before the rise of (1) Health Maintenance Organizations (HMOs), (2) Preferred Provider Organizations (PPOs), and (3) Point of Service (POS) plans. Indemnity health insurance plans allow the subscriber to choose the doctor, healthcare professional, hospital or service provider of his choice and allow the greatest amount of flexibility and freedom in a health insurance plan.

Under an Indemnity plan, a subscriber may see whatever doctors or specialists he like, with no referrals required. Though he may choose to get the majority of his basic care from a single doctor, his insurance company will not require him to choose a primary care physician. An indemnity plan reimburses him for his medical expenses regardless of who provides the service, although in some cases his reimbursement amount may be limited.  An Indemnity plan may also require that the subscriber pay up front for services and then submit a claim to the insurance company for reimbursement.

The subscriber will have to pay the annual deductibles before the insurance company begins to pay on his claims. Once his deductible has been met, the insurance company will typically pay his claims at a set percentage of the "usual, customary and reasonable (UCR) rate" for the service. The UCR rate is the amount that healthcare providers in his area typically charge for any given service.

Indemnity health plans offer individuals the freedom to choose their health care professionals. An Indemnity plan may be right for a subscriber who is looking for the greatest level of freedom possible in choosing doctors or hospitals to visit . He does not want to designate primary care physicians or get referrals to get specialists. He wants to freely visit any physician he likes.

In general, managed care plans are better suited for the average individual because they end up being more cost effective in the long run. In contrast, indemnity/reimbursement plans usually hit the subscriber with more out-of-pocket charges (in the form of deductibles and co-payments) and often place caps on the amount of benefits he can receive over his lifetime. Indemnity plans do give him more freedom, however, than managed care plans in terms of using the healthcare provider of his choosing. So, as with anything else, the choice between managed care and indemnity plans ultimately depends on subscriber's personal circumstances and preferences. If his goal is to minimize costs, he is probably better off with a managed care plan. On the other hand, if his goal is maximum flexibility and cost is not a major factor, he should consider an indemnity/reimbursement plan.