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Health Insurance Guide
When Is It Best To Buy A Traditional Indemnity Health Insurance Plan
Health insurance plans can be split into two broad categories – traditional indemnity plans and managed care plans and, although both provide health insurance cover, they are poles apart in terms of the cover they provide and the way in which they are administered.
Indemnity health insurance plans are designed to provide cover for unexpected medical bills arising principally through accident or illness. Managed care plans by contrast are based upon the principle of supporting care which is designed to prevent illness in the first place, or on detecting and treating illness at an early stage when treatment is often simple and costs are low.
Indemnity health insurance plans are also designed to give the policyholder immediate care of his or her own choosing and put much of the responsibility for administration on the plan (including the initial payment of medical bills and the completion of claims paperwork) on the policyholder.
As indemnity health insurance plans give the policyholder both choice and access to immediate treatment and cover medical events that are frequently very expensive, the cost of indemnity health insurance is often high. As a result, indemnity insurance should only be purchased when you feel that it will best suit your own personal needs, based upon your current state of health and medical history, and when you are satisfied that you can afford the policy, not just today but also in the years ahead.
Indemnity plans will usually be issued as basic health insurance, major medical insurance or comprehensive insurance (a combination of both basic and major medical insurance).
Basic medical insurance can be expected to cover such things as visits to the doctor (other than for regular check-ups and preventative care), hospital care (including the cost of room and board and some services such as x-ray and medication) and surgery (performed either in hospital or at a surgical center or doctor’s office).
Major medical insurance is designed to cover extended treatment of high-cost illness or major injury and will normally cover all hospital costs and subsequent out-patient bills.
This is of course simply a general overview and specific cover will vary between insurance companies and across different plans within the same company. These three types of plan will all have different costs with a basic insurance plan being the cheapest and a comprehensive plan the most expensive.
If your main concern is to find a health insurance plan which will allow you choice and provide you with security, then a traditional indemnity health insurance plan may well give you the cover you are looking for.
Competitive medical plan (CMP): A federal designation that allows a health plan to enter into a Medicare risk contract without having to obtain federal qualification as an HMO.
Funding vehicle: In a self-funded plan, the account into which the money that an employer and employees would have paid in premiums to an insurer or MCO is deposited until the money is paid out.
Non-maleficence: An ethical principle which, when applied to managed care, states that managed care organizations and their providers are obligated not to harm their members.
Quality program: An organization-wide initiative to measure and improve the service and care provided by an MCO.
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