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What Is Fixed Indemnity Insurance? 9 Key Terms To Help You Understand

Hearing more about fixed indemnity insurance1 lately? Don’t overlook these beneficial plans because the name is a little confusing. UnitedHealthcare calls them Hospital and Doctor plans to help simplify what they are, but you may still have questions: What is fixed indemnity insurance? How can a fixed indemnity plan help me?

Fixed indemnity insurance plans pay a predetermined, or fixed, amount for specific covered health services no matter what the total expense is. With fixed indemnity, you, or the provider you choose, are paid benefits directly.

Fixed indemnity health insurance plans differ from the major medical plans you are used to in several ways. A look at nine common insurance terms can help you understand where an indemnity plan might fit in your coverage. 

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Benefits

Generally speaking, benefits are any services covered by a health insurance plan. How the insurance company pays for benefits is a key difference between a major medical plan and a fixed indemnity plan. A major medical plan usually covers a service at a stated coinsurance rate after you reach your deductible.

A fixed indemnity plan pays a fixed monetary amount for covered services and procedures, and pays it first, not following another payment by you, the plan holder.

Coinsurance

Coinsurance is your share of the costs of a covered health care service, calculated as a percent of the allowed amount for the service. You pay your required coinsurance plus any deductibles you may owe for a service, procedure, or visit.

There are no coinsurance payments for fixed indemnity plans. This is what makes fixed indemnity health insurance a good option to help offset out-of-pocket costs that come with a major medical plan. For example, any benefits paid out by a fixed indemnity plan can go directly towards paying your share of medical costs.

Copay

Your copay is a fixed amount (for example, $20) you pay for a health care service, usually at the time you receive the service. The amount can vary by plan, and not all major medical plans have copays. Copays do not usually count towards your medical deductible.

There are no copays for fixed indemnity insurance. The benefits that you receive from your plan can help you replace the money you've paid toward major medical copays.

Deductible

Your deductible is the amount you owe for covered health care services before your major medical health insurance or plan begins to pay. Deductible amounts can vary greatly depending on the type of plan you choose. For example, if you have a $1,000 deductible, you must pay $1,000 towards covered health care expenses before your insurer begins to pay.

Some fixed indemnity plans do not have deductibles. Once you submit an eligible claim, you (or your provider) are paid the specified amount. This means fixed indemnity insurance can help you meet deductibles you have to cover through major medical plans. 

Some fixed indemnity insurance plans feature an alternative form of deductible. In exchange for a smaller premium payment up front, you can agree to reduce the amount of the fixed benefits paid to you. In other words, you don’t pay the deductible. Instead, you agree to receive less benefit payment. Check specific plans for details.

First Dollar Coverage

First dollar coverage plans pay benefits without your having to meet deductibles, copays or coinsurance first.

Most, though not all, fixed indemnity insurance plans are first dollar products.

Guaranteed Issue

A guaranteed issue health insurance plan is one that covers a customer regardless of any pre-existing conditions, health issues or illnesses they may have, as required by the Affordable Care Act (ACA), also known as Obamacare.

Fixed indemnity insurance plans are supplemental insurance, designed to work with other insurance you may have. They are underwritten plans, meaning you have to answer a series of medical questions to apply. They are not guaranteed issue.

Network

Networks are the facilities, providers and suppliers your insurer or plan has contracted with to provide health care services. Network providers offer services at a discounted rate, making it more affordable to stay within your insurance plan’s network. Most major medical health insurance plans require in-network visits in order to receive the most affordable care.

Fixed indemnity plans pay a set benefit per service, so you are not restricted to visiting a network provider.

While you may have the choice of visiting the doctor or provider of your choice with fixed indemnity insurance, some plans offer additional savings if you do decide to visit an in-network provider.

Open Enrollment

Open Enrollment is the time period individuals are able to choose a major medical health insurance plan for the next year.

Fixed indemnity health insurance plans are not subject to specific application dates. You may apply at any time.

Out-of-Pocket Costs

Your out-of-pocket costs are the part of your health care expenses you’re responsible for paying, like copays, deductibles, and coinsurance.

One of the key benefits of fixed indemnity insurance is how it supplements major medical insurance to help offset the out-of-pocket costs you may face from hospital stays, doctor visits or other procedures.

Definitions of terms may vary by insurance plan or company.

1This product provides limited benefits. This is a supplement to health insurance and is not a substitute for the minimum essential coverage required by the Affordable Care Act (ACA). Lack of major medical coverage (or other minimum essential coverage) may result in an additional payment with your taxes.

No individual applying for health coverage through the individual Marketplace will be discouraged from applying for benefits, turned down for coverage, or charged more premium because of health status, medical condition, mental illness claims experience, medical history, genetic information or health disability. In addition, no individual will be denied coverage based on race, color, religion, national origin, sex, sexual orientation, marital status, personal appearance, political affiliation or source of income.

References to UnitedHealthcare pertain to each individual company or other UnitedHealthcare affiliated companies.

Each company is a separate entity and is not responsible for another's financial or contractual obligations.

Administrative services are provided by United HealthCare Services, Inc. or their affiliates.

Products and services offered are underwritten by Golden Rule Insurance Company, Health Plan of Nevada, Inc., Oxford Health Insurance, Inc., UnitedHealthcare Life Insurance Company, UnitedHealthcare of the Mid-Atlantic, Inc., UnitedHealthcare of New York, Inc.

This policy is subject to various exclusions and limitations. For costs and complete details of the coverage, call (or write) your insurance agent or the company (whichever is applicable).

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