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Is An Indemnity Health Care Insurance Plan Still A Good Option?


It wasn’t to long ago that the most popular form of health insurance was the indemnity heath care plan. This form of health insurance also sometimes referred to as a “fee-for-service” health care plan were preferred over other coverage or plans provided by health insurance companies or providers because they gave the insured the opportunity to choose their own hospital, doctor or health care specialist. Unfortunately, with the rapidly rising costs of medical treatment and hospitalization these plans have taken a back seat to managed health care plans. In fact, most of today’s companies only really offer their employees the opportunity to sign up for a managed health care plan if they even offer health insurance coverage as a benefit of employment.

As was previously mentioned indemnity health care plans were extremely popular because they gave the freedom for anyone subscribing to this form of insurance the ability to keep their own doctor or physician and seek health care from a hospital of their choice. The mainstream version of health care coverage now being offered today is a managed care system where the insured must choose from a list of providers that are part of the managed health care plan. Health Maintenance Organizations or HMOs are what normally comes to mind when people discuss this form of healthcare coverage.

As you can imagine when consumers were offered the choice of choosing their own doctor it came with a price. The fact is indemnity health care plans frequently ended up costing more for their participants based on what the health insurance company or provider deemed as a reasonable charge for any medical treatment or service rendered. In most cases the insurance company would only end up paying 80% of the total bill thus causing the patient to have to cover the remaining 20%. This percentage breakdown only represented the reasonable amount of allowable charges. Anything above that amount was also paid for by the insured so as you can see the amount to b paid for by the individual consumer can easily exceed 20% of the benefits total hospital bill.

As if paying more for the right to see your own doctor or medical health care specialist wasn’t bad enough many indemnity health care plans required a premium payment and a deductible, which was usually paid annually. Still even with these additional costs most folks were happy with and preferred the indemnity health plan simply because of the comfort level afforded by the ability to choose their own health care provider.

In today’s managed health care plans a Preferred Provider Organization or PPO offers many of the same features as an indemnity health plan. These plans offer a much larger list of doctors and physicians to choose from with a good chance that the insured’s health care provider will be on the list. They also offer better rates if someone forgoes their own doctor and chooses a medical care specialist from among the PPO network of providers. Any medical care sought outside of the network results in higher expenses in the form of a deductible before the PPO will start contributing towards the extra costs associated with seeking medical treatment elsewhere.

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