Indemnity Plan
What Is an Indemnity Plan?
An indemnity plan is a type of health insurance plan that reimburses policyholders for medical expenses regardless of which healthcare provider they choose. These plans offer maximum flexibility because patients can visit any doctor or hospital without needing to stay within a provider network.
Indemnity plans are sometimes called “fee-for-service” health insurance plans.
Why It Matters
Indemnity plans give patients full control over their healthcare decisions. Unlike many modern health insurance plans, they do not restrict care to a network of providers or require referrals to see specialists.
However, this flexibility often comes with higher out-of-pocket costs and premiums.
How an Indemnity Plan Works
Under an indemnity plan, the policyholder typically pays medical expenses upfront and then submits a claim to the insurance company for reimbursement.
The insurer reimburses a portion of the cost based on the policy terms, which may include:
- deductibles
- coinsurance percentages
- coverage limits
Because providers are not restricted to a network, charges may vary widely.
Example
A patient with an indemnity plan may visit any doctor of their choice and submit the medical bill to the insurer for reimbursement.
Indemnity Plan vs PPO
- An indemnity plan allows policyholders to see any provider without network restrictions.
- A PPO plan provides preferred providers but may still cover out-of-network care.
FAQs About Indemnity Plans
Do indemnity plans require referrals to see specialists?
No. Patients can see specialists without referrals.
Are indemnity plans common today?
They are less common than managed care plans like PPOs or HMOs.
Do indemnity plans cost more?
They often have higher premiums due to greater flexibility.
Related Terms
- Health Insurance
- Preferred Provider Organization (PPO)
- Health Maintenance Organization (HMO)
- Medical Expenses
- Insurance Coverage
