What is a Health Indemnity Plan? (Better Health Insurance)
“Take care of the patient and everything else will follow.”
– Thomas Frist, MD, founder of HCA Healthcare
In the Health Insurance industry, where mystery bills and out-of-network surprises seem to be the norm, it may seem difficult to find a plan that is conscious enough to realize that participants are actually patients.
This kind of patient – first thinking is truly at the heart of the health indemnity plan, but with so much misinformation about how this kind of plan actually works, it is easy for many people to dismiss this option altogether.
To decide if a health indemnity plan may be right for you, let’s look at what they are, how they work, who should purchase them, and features you should weigh when shopping for one.
Not Your Grandfathers’ Health Indemnity Plan
Health Indemnity plans were very popular among employers in the past. In 1995, 74% of employers offered Health Indemnity plans.
When managed care came along it favored major medical HMO and PPO plans. The expectation was that managed plans would lower healthcare costs.
Today, we can see that managed care has done the exact opposite. Health care costs have skyrocketed:
“In 2018, U.S. health care costs were $3.6 trillion. That makes health care one of the country’s largest industries. It equals 17.7% of gross domestic product.1 In comparison, health care cost $27.2 billion in 1960, just 5% of GDP.2 That translates to an annual health care cost of $11,172 per person in 2018 versus just $147 per person in 1960. Health care costs have risen faster than the median annual income.” – Kimberly Amadeo, The Balance
Smart and educated shoppers are switching back to the indemnity plan.
Historically indemnity plans were only catastrophic or hospital plans, which meant they could not be used for sick visits to your doctor, prescriptions, labs, x-rays or anything that we consider “out-patient” care. (In-patient care refers to care in a hospital, whereas out-patient care refers to care outside of the hospital.)
Through forward thinking and innovation from great companies, like the one we represent; the old hospital indemnity plan has been made new with the addition of out-patient benefits, so that our indemnity plans are now all-encompassing for those who are looking for complete coverage.How Indemnity Plans Work
The term indemnification is a legal term that means to “make whole”. When you indemnify someone, you agree to make them whole in the event that a financial payment is necessary.
In the case of a health indemnity plan, there is an established legal agreement that the patient must be paid the whole amount when using a benefit. That “whole amount” to be paid to you, the patient, is always a pre-determined and fixed amount.
For example, one benefit listed in the health indemnity plan might be for an overnight hospital stay. On our most popular plan, the benefit for that overnight hospital stay is $3,000 per night. With the national average for an overnight stay being $2,424, this benefit more than covers the national average expense.
For you, the patient, who has to spend the night in the hospital, this benefit means that your health indemnity plan would pay the “whole amount” – not the actual $2,424 expense, but the whole $3,000 benefit. The best part of this transaction is that instead of the hospital or insurance company getting to keep the difference between your expense and your benefit, the difference goes directly to you, the policy holder.
Can you actually make money with your health indemnity plan? Yes! Health indemnity plans are structured so that consumers can actually make money from their insurance.
In fact, take a look at Gary’s excess indemnity check below! Gary had only been on his new plan for three months when he was diagnosed with stage 4 esophageal cancer. Facing such a difficult diagnosis, Gary’s family was deeply concerned about, not only his health, but the cost of treatment and the kinds of difficult decisions that lay ahead.
With his new affordable health insurance plan though, they discovered that Gary’s treatments were not only covered, but that Gary would receive over $59,000 in excess indemnity checks (pictured) to spend however he needed to as he battled cancer.
Used with permission from client who was diagnosed with cancer.
Not All Plans Are Created Equal!
The reason that indemnity plans sometimes get a bad rap is not only because as I mentioned earlier, people think they are just catastrophic hospital plans, but also because some of them are outright awful when you consider the benefits they provide, versus the actual cost of healthcare.
While plans like ours pay more than the national average for an overnight hospital stay, you have other plans that only pay (link to comp analysis) $600 per day. Imagine if you bought a health indemnity plan and ended up in the hospital and it only covered $600, of course you would think this type of plan is awful. That is why it’s important to work with an agent or agency like Hercules Health Solutions who has a stellar reputation for being transparent about the pros and cons of their plans.
Is A Health Indemnity Plan Right for Me?
Health Indemnity plans are not the right plan for everyone. Because they are also known as limited benefit plans, they do have limitations. For example, on one of our plans, you are limited to $1M in annual coverage.
So, if you were to have medical bills that exceeded $1M then you would have to pay anything above that amount. When you consider that in 2017 only 194 Americans had insurance claims that exceeded $1M, you can see where $1M would be enough coverage for most people even though it is considered a “limited” plan.
Learn more about this specific Health Indemnity plan’s customizable coverage and extra benefits!
What About Pre-Existing Conditions?
Because health indemnity plans are not subject to the Affordable Care Act, they do not have to follow the same coverage guidelines. While most health indemnity plans do not cover pre-existing conditions, the one we promote does cover them after a 12-month waiting period.
Take me for example; I have asthma and for the first 12 months I had to pay for my asthma medicine with zero coverage. My asthma medicine was $28.89 for an inhaler. Well, it was worth it to me to pay the $28.89 for the first 12 months every time I needed an inhaler because I was saving over $300 per month by being on a health indemnity plan instead of an ACA plan like you would get from Blue Cross Blue Shield or United Healthcare.
The Bottom Line
Every single person’s health status is different. That means that every single person needs their own unique coverage. With Affordable Care Act Plans everyone gets the same plan with a few basic choices. With Health Indemnity plans you can save a tremendous amount of money when you customize the level of coverage that you need specifically for you.
If you are curious as to how much you may be able to save on a health indemnity plan, and whether or not this type of plan can provide you with the right level of coverage, reach out to the Hercules Health Solutions and get a free consultation with an agent that is trained and committed to placing you on the plan that is best for you.