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Indemnity Health Insurance

By Compuquotes Team on October 16th, 2009
Health Insurance

Is Indemnity Health Insurance Better Than Managed Care Insurance?

Unlike PPO, HMO, and other managed-care health insurance plans, indemnity health insurance typically carries a high-level of individual deductibles before payments are made.

What Is Indemnity Health Insurance?

Indemnity health insurance was once the most-common individual health insurance plan in the nation, offering fee-for-service coverage before the advent of today's managed care including PPO and HMO plans. Individuals can still choose indemnity health insurance as an option offered by many providers and employers.

What's the Relative Cost of Indemnity Health Insurance?

Because of the way indemnity health insurance works, premiums are typically more expensive than managed care health plans. Medical procedures offered today are highly scrutinized by insurance providers. Procedures ruled out as unnecessary by managed care plans are often included in indemnity health coverage, therefore increasing the costs to policy holders.

Since managed care health insurance covers groups, with individuals paying a group rate, the costs are often lower than indemnity health insurance plans. Often indemnity health plans cover only a portion of bills beyond the insured's deductible, you'll often pay more than the co-pays more common to PPO and HMO health plans. Some indemnity health insurance plans do not cover all provider's charges, including vaccinations or preventative health visits.

What Does Indemnity Health Insurance Cover?

Most indemnity health insurance plans pay what are called Usual, Customary, and Reasonable (UCR) fees. That means levels of insurance coverage are based on rates that are mapped to the costs of procedures in your geographic area. That may mean your insurance may only cover a percentage of your total bills.

They are also founded on the insured meeting their deductibles prior to paying costs. You can find a less costly individual health insurance plan if you accept a higher deductible. Your monthly premiums may be lower, but you make a larger out-of-pocket payment for procedures and medications before the insurance company pays its portion.

Often, the insurance company pays a percentage of costs after the deducible is met. For instance, if you have a $1,500 deductible and you have to visit the emergency room, you have to pay the full amount up to $1,500 before the insurance company pays its percentage. Most policies come with an out-of-pocket maximum that you can be charged before the insurance company picks up 100% of allowable charges.

So Why Would I Accept Indemnity Over Managed Care?

In many cases, your employer may not offer a managed care health insurance plan. Many businesses are simply too small to qualify for a managed care plan or they cannot afford the premiums.

On the plus side, an indemnity individual health insurance plan offers the user greater flexibility in choosing health care providers and services. There are no network restrictions within a geographic area, for example. Also, many managed care insurers demand that patients get a referral before visiting a specialist, meaning they have to make additional appointments and handle additional co-payments.
If you're shopping around for quotes, be sure to examine all the terms of service and levels of coverage. For example, some insurance company policies do not cover prescription, dental, and vision services. For these, you may have to purchase supplemental coverage.

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