What is Indemnity insurance?

Indemnity insurance can apply to several insurance options. However, for those seeking health insurance, indemnity insurance represents a healthcare plan or a supplement to a healthcare plan that allows you to get care from any provider.

Indemnity plans allow you to choose any doctor or medical facility you want. With indemnity insurance, your coverage provider pays a set portion of your total charges. Indemnity plans are also referred to as "fee-for-service" plans.

Indemnity insurance allows you the freedom to choose your own medical provider or healthcare services without worrying about if it’s in the insurance provider’s network or not. As a supplement to a major medical or health insurance plan, indemnity health insurance can also help cover the costs of specific healthcare circumstances.

With indemnity insurance, a specific percentage of your healthcare costs are covered and you’ll be expected to pay the rest.

Indemnity health insurance is another option to consider when reviewing healthcare coverage and may be well-suited for those who want more flexibility.

How does an Indemnity insurance plan work?

Indemnity insurance works very differently than your standard healthcare plan. With indemnity insurance, you have the freedom to see any doctor or specialist. You don’t even have to select a primary care physician.

When choosing who and where to receive care from, there’s no referral required.

When it comes to cost and how you pay for healthcare coverage, there are also some key differences. With an indemnity health insurance plan:

• Coverage for medical costs is based on a percentage of what is considered the average cost of that service in your area.
• You’ll typically pay an annual deductible. Once that’s paid, then the insurance company will pay for some claims.
• You may have to pay upfront for your healthcare services. You’ll then submit a claim for reimbursement.

Indemnity health insurance is usually best suited for those who’s top priority is having control over where they go for medical care.

*Definitions may vary by plan provider. Please read the provider's Summary of Benefits.

Benefits of an Indemnity health insurance plan

Indemnity insurance plans offer the following benefits:

• You can choose your own primary care provider.
• You can choose not to have a single primary care provider.
• You can seek specialists without a referral.
• You don’t have to use a provider’s network.

Indemnity insurance policies offer flexibility and the power to take control of your healthcare coverage. These types of policies can sometimes cost less for those who know how to comparison shop and negotiate their healthcare costs.

In some cases, these types of plans can work well for people who live in areas that have little to no coverage from larger health insurance providers.

Indemnity plans vs. PPO and HMO plans

Two common types of health insurance coverage include PPO and HMO plans. But how do they compare to indemnity plans?

With HMO plans, you have to choose healthcare services from the insurer’s network of approved facilities and professionals. This can limit your options significantly, but the tradeoff is usually lower healthcare premiums.

With an HMO, going outside the network can mean you pay completely out of pocket. If you need a specialist, you will typically need a referral from an in-network provider.

PPO insurance plans allow you to go out of the network, but your insurance may not cover as much of the costs as it would if you used an in-network facility or provider. Employers often offer both HMO and PPO plans.

As some types of indemnity insurance do not count as full health insurance coverage, you can use specialized indemnity coverage to supplement your PPO or HMO.

The differences between an indemnity insurance plan and other types of health insurance can vary depending on the type of indemnity insurance you choose. For example, some indemnity plans cover a very specific set of circumstances, such as with hospital indemnity insurance or fixed indemnity insurance.

How much does an Indemnity plan cost?

Costs for an indemnity plan will vary widely, as does the cost of individual health insurance. Premiums for these types of plans tend to cost more than HMO and PPO plans, but that’s not always true. Some types of indemnity health insurance can have lower premium costs. Keep in mind that indemnity policies represent a range of options, not just one type of coverage choice.

All the same factors that affect costs for any other type of healthcare plan also apply here. For example, an indemnity plan’s cost can vary based on things like age, pre-existing conditions, location, coverage options, and many other factors.

As with any type of health insurance coverage, you can best figure out costs by using eHealth’s search by state and zip code features. This way you can see a range of quotes that will clue you in to what the average price for indemnity insurance coverage might look like.

Indemnity insurance FAQs

What does indemnity insurance cover?

Medical indemnity insurance can cover many things. You may even have to pick the specific types of coverage you want. For example, you can opt for indemnity coverage for:

• Personal accidents
• Critical illnesses
• Hospital visits

Many more types of indemnity insurance exist as well. Different states and insurance providers have different definitions of indemnity health insurance.

A better question to ask is, what would you like your indemnity insurance to cover? As with any insurance offering, it’s imperative you understand what your policy covers and what it doesn’t. You can do that by reading the policies and information provided by the insurer.

What are the cons of indemnity insurance?

While indemnity insurance can work well for many, there are some aspects of this type of insurance that may not appeal to everyone. The disadvantages of indemnity insurance will have a lot to do with the indemnity insurance plan you’re considering.

Compared to other types of healthcare insurance, you may find indemnity insurance has higher premiums and deductibles. When that’s the case, these types of plans can cost more than an HMO or PPO. Additionally, not all indemnity insurance plans fulfill the requirements to qualify as full health insurance plans according to the law.

A major drawback of some indemnity insurance offerings is that you may have to pay the full costs of your healthcare out-of-pocket first before you can submit your claim. You will receive your reimbursement according to how the plan pays, but needing to have the funds to pay for healthcare services upfront isn’t an ideal situation for many people.

Are indemnity plans good?

An indemnity health insurance policy is an excellent choice for many circumstances. These policies aren’t for everyone and work best as a type of supplemental insurance for most who may need it. Indemnity insurance plans can cover gaps in your main coverage and offer you options that your main coverage doesn’t have.

An Indemnity plan may be right for you if you know precisely what type of healthcare coverage you need. Those with a good working knowledge of how healthcare costs work and how to plan healthcare services to their advantage can gain the most from an indemnity insurance plan.

Indemnity insurance has its advantages and disadvantages, like any other form of insurance. But, it’s just one option of the many available to you. eHealth can help you navigate the complicated world of healthcare insurance to help you find the options that will work best for you or even your business if you need small business health insurance.

Start by looking at what options are available to you, then narrow your choices down to those that represent the best solution for your needs. eHealth will help you at every step along the way.

*Definitions may vary by plan provider. Please read the provider's Summary of Benefits.