What Is Indemnity Insurance?

There are three major types of health insurance: PPO (preferred provider organization), HMO (health management organization) and indemnity insurance. Indemnity insurance usually provides the broadest coverage compared to any other insurance plans.

The advantage of indemnity insurance

Compared to HMOs and PPOs, indemnity insurance does not have a specific provider network. These insurance plans are often known as Cadillac insurances. The insurance plans typically do not require pre-authorizations for services. Instead, patients pay a certain percentage as a copay, and the insurance pays the provider. A policy holder can use the services up to the amount of the policy, which is either a lifetime limit to coverage or a yearly limit. Sometimes, the person may have to pay out of pocket for the medical bills, and then the insurance reimburses the policy holder after the expenses related to the claim are proven.

Services offered

Indemnity insurance usually covers any procedures done. Unlike other insurance companies, indemnity insurance usually does not require that doctors justify claims. Instead, they simply pay the claim up to the value of the policy. This is very useful for people who have preexisting conditions or people who want to have top-of-the-line care. It also removes a lot of hassle in dealing with insurance companies not wanting to pay claims because they did not authorize the claim.

Unfortunately, indemnity insurance policies are less and less common. Usually, they also have extremely expensive premiums, and holders may have to pay very high co-pays, often up to 20 percent. In addition, policy holders may also pay out of pocket and get reimbursed later.