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Indemnity Plans vs Managed Care Plans
When you're choosing a health insurance policy, you will generally find two types: indemnity and managed care. There are several important differences between both policies and these should be taken into consideration along with your personal health record before purchasing a health insurance plan.
Indemnity insurance is often referred to as “fee for service” insurance and permits the individual to visit the physician of their choice. A managed care plan only covers visits to physicians who are part of the health insurance plan's “network.” For this reason, managed care plans usually have cheaper premiums than indemnity insurance plans.
Indemnity insurance plans provide coverage for visits to the doctor, hospitalization, surgery and other associated medical expenses. Often you will need to “top up” an indemnity insurance plan if you want comprehensive coverage for major medical expenses. You can visit any doctor, hospital or health clinic you wish and then submit the receipts for reimbursement to the insurance company in charge of your plan.
However, before you receive reimbursement, you must be up to date with your annual deductible payment. Most indemnity insurance plans require a deductible amount to be paid each year. The higher the deductible, the lower the amount of your monthly premium and vice versa. Most plans also require you to cover up to 20 percent of the costs for doctors charges. You need to take these costs into consideration before signing up for an indemnity plan.
While these charges are one of the drawbacks associated with indemnity insurance, there are several benefits. Flexibility is key and being able to choose which medical professional you go to for treatment is a big advantage. Others include being able to visit specialists without having to gain referrals, and not having to worry about out of network costs associated with managed care health plans.
The other common type of health insurance is managed care. These use networks of specific health professionals that members can visit for services. They usually have lower premiums but offer less flexibility and choice than indemnity plans. The focus of these plans is also more on preventative care and will sometimes not cover trips to physicians for “non essential” medical treatment. They may also limit the types of drugs you can obtain.
Advantages associated with managed care plans include lower premiums and a no limit policy on care during an individual's lifetime. The drawbacks are that coverage is limited for specific procedures and patients have less choice on the types of health professionals they access.
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