Traditional Indemnity Health Insurance

Two basic types of health insurance policies are managed care plans and indemnity plans, also known as Fee-for-Service. Managed care plans include Health Maintenance Organizations, Preferred Provider Organizations and Point-of-Service plans.

Benefits

• The biggest benefit of an indemnity health insurance plan is that it has the most flexibility; you choose a doctor or hospital to perform the service and your insurance company pays their required share. You are not restricted to a certain provider or hospital, and you can move to a different provider when and if you choose.

Drawbacks

• The biggest drawback of an indemnity health insurance plan is the cost. Not only is this the most flexible of all options, it is also the most costly. With HMOs and PPOs, your insurance provider has pre-arranged deals with the provider within its network in order to bringing down the cost of your health care bills---indemnity plans have no network.

Considerations

• Since this is a more costly option for the insurance company, it may also be for you. These plans may have a higher monthly premium, deductible and co-pays than HMOs or PPOs. There may also be more restrictions on what is not covered by a certain indemnity plan, such as yearly checkups or routine office visits.