Indemnity Health Plans

Health insurance plans can be categorized into larger divisions. One of them is Indemnity plans or Fee-for-service plans or Reimbursement plans , and the other is Managed Care plans. Indemnity plans are the types of health plans that primarily existed before the rise of Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), and 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 visit any doctor or specialist he likes. He does not need any referral for visiting a specialist. 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 gives him medical services. It may be that in some cases his reimbursement amount may be limited.  An Indemnity plan may sometimes require that the subscriber pay up front for services and then submit a claim to his insurance company for reimbursement.

The subscriber will have to pay his annual deductible amount first. After that the insurance company will begin to reimburse him. 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.

In general, managed care plans are better suited for the average individuals because these types of health plans are more cost effective in the long run. In contrast, Indemnity plans or Fee-for-service plans or 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 individuals can receive over their lifetime.

There are subscribers who want highest level of freedom in choosing doctors, clinics and hospitals.  They do not want to designate primary care physicians or get referrals to visit specialists. They want to freely visit any physician they like. Treatment costs are  not any factors for them. As Indemnity health plans offer individuals all these benefits including highest level of flexibility in choosing health care professionals or hospitals, so indemnity plans are best  suited for these types of people.