Indemnity insurance is a form of health insurance that pays a fixed amount per service or for a period of time. For example, an indemnity policy might pay $50 towards a doctor's office visit. This means that regardless of the total cost of that visit to the doctor the indemnity policy pays $50. Another common example is the indemnity policy may pay $500 per day that the policyholder is in the hospital. If the policy holder had a 2 day hospital stay that cost $8000 the policy would pay $1000 ($500 x 2) and the policy holder would be responsible for the remaining $7000 in hospital expenses.
There are many variations on the indemnity policy theme and they are often combined with accident and/or critical illness policies to provide more financial protection. In any event, indemnity policies are not major medical policies and by design provide defined and limited financial protection to the policy holder. These policies were really designed more as a supplement to major medical insurance than as a replacement for it. If you have a premature baby that racks up $500,000 in neonatal intensive care bills an indemnity policy will not go very far towards covering that expense.
Also, indemnity policies do not meet the Minimum Essential Benefit requirements for health insurance under the affordable care act (ObamaCare) and will leave such a policyholder subject to the individual mandate tax penalty if that is the only medical insurance a person has.
With the high cost of ObamaCare compliant plans the lower costs of hospital indemnity plans can be a tempting option for some people but you should be under no illusion that these policies cover the full range of medical services a person might need or that they provide protection against the costs of serious illnesses or injuries that might run into the 5, 6 or 7 figure range.
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There are many variations on the indemnity policy theme and they are often combined with accident and/or critical illness policies to provide more financial protection. In any event, indemnity policies are not major medical policies and by design provide defined and limited financial protection to the policy holder. These policies were really designed more as a supplement to major medical insurance than as a replacement for it. If you have a premature baby that racks up $500,000 in neonatal intensive care bills an indemnity policy will not go very far towards covering that expense.
Also, indemnity policies do not meet the Minimum Essential Benefit requirements for health insurance under the affordable care act (ObamaCare) and will leave such a policyholder subject to the individual mandate tax penalty if that is the only medical insurance a person has.
With the high cost of ObamaCare compliant plans the lower costs of hospital indemnity plans can be a tempting option for some people but you should be under no illusion that these policies cover the full range of medical services a person might need or that they provide protection against the costs of serious illnesses or injuries that might run into the 5, 6 or 7 figure range.