Putting Hospital & Doctor Indemnity Insurance IN
Terms You Can Understand
Recently you may have heard more about the availability of Hospital and Doctor indemnity insurance,F10 also called fixed indemnity insurance. That may have led you to ask, “What is indemnity insurance?”
A fixed indemnity plan pays a certain predetermined amount for specific, covered health care expenses without your having to pay copays or out-of-pocket deductibles. Under a fixed indemnity health insurance plan, the amount specified in your plan is paid for a particular service.
Often, fixed indemnity plans differ from major medical plans, which require you to meet deductibles, copays and coinsurance payments before the insurance company takes over to pay what’s left of your costs.
In what other ways is an indemnity plan different? A look at some key terms can help.
Note: As with other types of insurance, indemnity plans exclude some services, so check any plan before you buy to make sure it covers what you want. Take note, most indemnity insurance plans exclude payment for any service related to a preexisting condition.
Assignment of Benefits
An authorization by the insured party stating that the insurance company may pay claims directly to a third party (doctor, hospital, etc).
Most major medical plans involve an assignment of benefits that pays doctors and facilities directly. Not all Hospital & Doctor plans have this feature; some instead pay you, the insured, cash for your covered expense.
Benefits
Benefits are the services covered under a health insurance plan.
For indemnity health insurance plans, the plan brochure discusses the fixed monetary amount paid out to the plan holder or provider for the covered services.
Coinsurance
In major medical plans, coinsurance is the percentage of your medical expenses you’re required to pay after meeting your deductible. For example, if you have a $100 doctor’s bill and your coinsurance is 20/80, you would pay 20% of that $100, or $20. The insurance company pays the other 80%.
Fixed indemnity insurance has no coinsurance payments. In fact, any benefits paid out by an indemnity plan can go toward paying your major medical coinsurance responsibility.
Copay
A copay is a fixed amount you pay for a certain service. For example, you may have a $40 copay for a doctor’s visit. Copays do not usually count toward your deductible.
Because a fixed indemnity plan pays a certain amount of money per covered service, payments you receive from it can help you more easily meet your copay and/or deductible requirements for your major medical plan.
Deductible
Your deductible is the amount you owe for covered services before your health insurance plan begins to pay. If your deductible is $1,000 for the year, your insurance company will not start paying until you’ve paid that $1,000.
Generally speaking, indemnity health insurance plans do not have deductibles. Once you submit a covered expense, you are immediately paid the amount specified for that service.
Note: Some plans may feature a deductible that differs from a normal “deductible.” Instead of your paying a certain amount before insurance covers anything, you choose a deductible amount to reduce from your benefits in exchange for a lower premium paid up front.
First Dollar Coverage
First dollar coverage means you are paid your benefit first, without having to meet a deductible or coinsurance payment.
Many fixed indemnity plans, though not all, are first dollar products.
Guaranteed Issue
Guaranteed issue health insurance plans do not turn customers down for coverage based on any preexisting conditions, health issues, or illnesses the client may have. Per the Affordable Care Act, also known as Obamacare, all minimum essential coverage/major medical health plans must be guaranteed issue.
Generally, indemnity insurance plans are underwritten and are not guaranteed issue.
Network
A health care network includes all the health care providers and hospitals that work with a health insurance company to care for members of a certain health plan at a discounted rate. Because of these discounts, it is generally more affordable to see an in-network health care provider.
Fixed indemnity insurance pays a set benefit per covered service, so it doesn’t restrict you to network providers. However, some plans may offer extra savings if you use a provider in the network.
Open Enrollment
Open Enrollment is the period of time during which individuals can choose a major medical health insurance plan for the upcoming year.
Fixed indemnity insurance is not subject to Open Enrollment dates. You may apply for an indemnity plan any time of the year.
Out-of-Pocket Costs
In health insurance, your out-of-pocket costs are the costs you are responsible for paying, things like copays, deductibles and your share of coinsurance.
Hospital and Doctor indemnity insurance is specifically designed as a supplement to major medical plans to help with out-of-pocket costs. You are paid a set amount for covered services that can then be used to offset any medical expenses you are responsible for through your main insurance plan.
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