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Indemnity Health Insurance Plans

Concern about medical costs has been rising in America in recent years. With the price of health care rising, many Americans are feeling the pinch. There were about 89.6 million Americans that reported not having health insurance in 2006 on a survey made by health consumer organization Families USA. This number should keep increasing more than likely due to the rising costs in the health care industry that are outpacing inflation and the low wages paid by some employers in the United States.

Rising Health Insurance Costs

The problem with health insurance is that monthly premiums keep rising, and if you choose to purchase coverage with lower monthly premiums it will more than likely not cover all your expenses at the time of an accident or an illness. So the question remains, is it better to pay the high premiums and get good coverage? To pay little premiums so you are still covered at least to a small degree? Or is it best to just save some money in case of an accident or a disease?

Medical Bills and Bankruptcy

The bottom line is that everyone in the United States should have some form of health insurance coverage. The single biggest cause of personal bankruptcy in the United States is unpaid medical bills. This drives home the fact that no one plans on being hit with a big medical bill but one can prepare for the unexpected as best as possible by keeping adequate health insurance coverage.

Indemnity Health Insurance Companies

Indemnity health insurance plans are being used more and more frequently by insurance companies all over the United States as a solution for consumers who want to find lower monthly premiums and are willing to give up some of the comprehensive benefits normally associated with major medical health insurance plans. In order to find an Indemnity Plan that suits you it’s important to shop around, whether is it online or on the phone, and to ask a lot of questions about what the plan does and does not cover.

How Indemnity Health Plans Work

What an indemnity health plan does, is reimburse you for any medical expenses you have regardless of who provides the service. An example of this would be for a person to go have a medical test done. At the end of the visit they would be given a bill that they would send to the insurance company, and the company would pay part of the bill. In some cases however, your reimbursement amount may be limited, so it’s important to check with the insurance company first before you decide on enrolling with them.

Warning About Indemnity Health Plans

It is very important to note that indemnity plans pay benefits on a stated amount schedule that is often very limited. The insurance company will reimburse you the amount that is on your policy schedule no matter how much the actual medical bill is. For instance, if you have surgery and the cost is $25,000 and the indemnity plan has a reimbursement schedule of $10,000 for that particular procedure then they will only pay $10,000 and you are responsible to pay the remaining $15,000. This is a very important distinction between most comprehensive major medical plans that pay the medical provider directly and offer maximum out of pocket or stop loss limits. This is the single biggest reason why most indemnity plans are able to be purchased for such a reduced rate.

Indemnity Health Plan Coverage

Most Indemnity Plans have deductibles that you will have to meet before they actually pay for your services. Once you meet the deductible, most companies will pay what is called the “Usual and Customary” charge for covered services. Most indemnity plans will cover you for prescriptions, medical tests and hospitalizations, however; some don’t cover for preventive care (regular check-ups).

Indemnity Health Plans vs. PPO, HMO, and POS Plans

In contrast with managed health plans you will have to pay more out of pocket costs (deductibles and co payments) when using the services, but the cost will also be accompanied by more freedom when using the plan. It is important to highlight that with a Health Maintained Organization (HMO), a Preferred Provider Organization (PPO) or even a Point of Service (POS) plan you will have to follow a network if you want to have constant prices. In the Indemnity as discussed above, you can go anywhere at anytime and still be covered under the same price (in other words you don’t have a network). Typically, if you can afford a comprehensive major medical health insurance plan from a PPO, HMO, or POS provider then that is by far the safer option that purchasing an indemnity health insurance plan.

Methods of Reimbursement for Indemnity Health Plans

Methods of reimbursement can vary from provider to provider, for this reason it is important to ask about the insurance company’s reimbursement procedure before deciding to enroll with a particular health insurance company. Some of the most common methods for an insurance carrier to determine how much you will receive for your medical expenses are as follows:

Actual Charges (Reimbursement): If you are enrolled under this type of health coverage, the insurance company will pay you the money for the actual cost of specified procedures or services, regardless of the cost of these.

Percentage of Actual Charges (Reimbursement): What will happen if you have this particular type of plan is that the insurance company will pay only a percentage of the actual charges for those specified procedures and services, regardless of the price. Most companies will reimburse you 80 percent of the actual price, and you will be required to pay 20 percent (In other words you will have a 20 percent co-payment).

Indemnity: With this type of health coverage, an insurer will pay a specified amount per day for a specified maximum number of days. The most important thing to know about this plan is that although the amount of money given back to you doesn’t depend on the actual cost of the services, the amount of money received will never be more than what you spend.

Compare Health Insurance Plans Now

For those people who are very price conscious and do not mind a reduction in benefits then they may want to consider an indemnity health insurance plan. With the popularity of managed health plans however, you will be required to shop around, in order to find the Indemnity Plan that best suits your needs. Use the tool at the top of the page to compare indemnity health plans, PPO health plans, HMO health plans, and POS health plans side by side. Get started with a health insurance quote comparison now!