Indemnity or Fee for Service Insurance Plans

Indemnity insurance plans are also called as fee for service plans. These plans have features common to both the HMO and PPO plans. You can choose any doctor you wish and can change doctors at any time. You may not need a specific referral to see a specialist, but you may need some paper work from your primary care physician in order to get reimbursed.

 

The indemnity or fee for service plans, pay only a part of the health expenses you incur when you visit a doctor or a hospital. The rest of the expense is to be covered by you. This makes the indemnity plan costlier. However, if you are a healthy person who may not need to visit a doctor as often, you save a lot of money as these plans are fee for service only plans.

 

The indemnity plans also have deductibles that are higher or similar to the PPO plan deductibles.

 

Indemnity plans cover costs only when needed. These plans therefore do not encourage periodic checkups or tests that can find a health condition right in the early stages when they are curable.

 

Indemnity plans also have paper work that is sometimes similar to what you might have with a PPO plan. Some doctors need you to make the entire payment at the time of the visit and you need to claim that amount from the insurance company that reimburses you a part of the expense.

 

Indemnity insurance plans may also have an out of pocket maximum. Once you have reached the out of pocket expense limits, the insurance would cover the entire amount from thereon.

 

 

Advantages of indemnity plans

  1. Flexibility to choose or change doctors

  2. Since there is no network of the service providers, there is no concept of in-network or out-of-network service providers.

  3. There is often an out of pocket maximum limit which can keep the expenses on your side limited.

 

Disadvantages of the indemnity plans

  1. The out of pocket expenses and deductibles are higher as compared to the HMO or the PPO plans.

  2. There is no emphasis for preventive health care.

  3. Some doctors might ask you to make the entire payment at the time of the visit and you need to submit paper work to the insurance company to get reimbursed. This means you should have enough financial “cushion” to meet unexpected health conditions.

  4. There is extra paper work involved.