How Indemnity Plans Measure Up Against Managed Care Plans
Meredith Miller | Published: June 14, 2018
Are you looking to explore all of your options when it comes to health insurance? With so many different plan types, options, and companies available, the search can get overwhelming. The best way to get started is to figure out what plan type works best for your current and future situation. So let's start breaking this down to give you a better idea of where to start.
The health insurance plans provided by insurance companies are largely categorized into two:
- 1. Indemnity Plan
- 2. Managed Care Plans
What's The Difference Between An Indemnity Plan And Managed Care Plan?
An indemnity plan allows for the reimbursement of incurred medical expenses for insured persons. If you opt for an indemnity plan, you can seek our medical services from any medical provider of your choosing. You will be reimbursed by your health insurance provider, but typically, the reimbursement is limited and will not cover your costs in full.
Managed care plans, on the other hand, are insurance policies that seek to integrate the provision of health care services and financing. Under this plan, organizations collaborate with healthcare service providers. The organizations help the service providers to reach and attract the patients who need their services in exchange for discounts for members.
Comparing Indemnity And Managed Care Plans
- An indemnity plan has limited reimbursement. When a person purchases health care insurance under the indemnity plan, you will receive reimbursement for his or her medical expenses for up to a specified number of days. Under the PPO plan, however, persons who have taken this policy will receive reimbursement for all their medical expenses from specified service providers.
- These plans exist in three main categories: Preferred Provider Organizations (PPO), Health Maintenance Organizations (HMO), and Point of Service (POS). The three categories have various similarities and differences. Indemnity plan has only one category. This limits the options available to clients who have health insurance under this plan. With these plans, clients can choose between the three options based on their preferences.
- The managed care plans involve a prearranged collaboration between an insurer and medical service provider. Clients enjoy the various options under this plan and enjoy prearranged agreements between insurers and various providers of healthcare services. The areas where holders of such a policy can seek medical services are specified in the agreement. The indemnity plan, however, does not involve tying an insured person to a specific medical service provider. This makes it flexible as insured persons can seek medication from facilities of their own choice.
- Under the indemnity plan, there are no set criteria for selecting a medical service provider from which an insured person can access medication. This is different for the managed plan because it has set standards that service providers should meet before being contracted. The set standards are geared towards guaranteeing quality care for the insurance policy holders.
Types of Managed Care Plans
1. Health Maintenance Organizations
The common features of Health Maintenance Organizations (HMO) plans are:
- Provision of medical services on a prepaid basis
- Persons under the plan pay a fixed monthly fee regardless of their monthly medical expenses
- HMO members are required to seek medical services from physicians and facilities under the HMO network.
2. Preferred Provider Organizations
Common features of the PPO plans are:
- They comprise of health facilities and personnel that provide medical services to a specific group of people.
- PPO members are required to pay for the services they get from their own finances.
- Costs of the services under this plan are negotiated earlier between healthcare service providers and the sponsors of PPOs.
3. Point of Service
Some of the features of the Point of Service plans are:
- Insurance cover holders of this plan do not pay for deductibles and incur minimum co-payment when they use services from a service provider within their network.
- Under this plan, you will be required to choose a primary health care expert responsible for all your referrals within the POS network.
- Those who seek medical services outside their POS network are subjected to a deductible. The deductible can range from $300 and above for individuals and $600 and above for families.
- About 30% of the co-payment goes to offset the physician’s charges.