Types of Health Insurance – Traditional Indemnity

May 19, 2008

There are several different type of health insurance in the United States. The two main types are called Traditional Care Insurance and Managed Care Insurance. These types can be further broken down into four smaller categories. You have a traditional indemnity plan, also sometimes called a fee for service plan, a Preferred Provider Organization plan, or a PPO, a Point of Service plan, or a POS, and a Health Maintenance Organization plan, or an HMO.

All of these types of health insurance are very good choices. They have their differences, but will take care of your medical needs. The one you choose depends on what kind of coverage you need. Everyone is different, and that is why having a choice for something as important as health insurance is a good thing.

Traditional Indemnity plans have been around for a long time. They are called fee for service plans for a good reason. These plans work sort of like your car insurance does. You pay a deductible up front, and once this is paid, the insurance takes over and pays most of the bill, around 80 percent. You can choose what doctor or hospital you want to go to, and decide when you want to go. No approval from the insurance company is needed. However, the insurance company does have to approve some medical decisions. The deductible for a

Traditional Indemnity plan can be as low as $200 and as high as $2500. In some cases, you have to pay your medical bills yourself and then be reimbursed by the insurance company. Otherwise, the doctor’s office or hospital will bill the insurance company. Traditional Indemnity is good for medical bills that you perhaps were not expecting, such as from an accident or a sudden serious illness.

You as a policyholder also have more responsibility when your health insurance is Traditional Indemnity. You get to do some of the paperwork for the insurance company! Normally, this consists of completing forms to start a claim. Since you are able to choose when and where to get medical treatment, Traditional Indemnity is one of the higher priced insurances.

Traditional Indemnity plans were at one time just about the only option people had. Modern medicine has improved to the point where people are more healthy now. Medical care also costs more today. Insurance companies found that they were losing money. They had to find some way to make a profit, and developed the Managed Care plan.  It seems that the Traditional Indemnity plan has fallen out of favor somewhat as people have begun to prefer the coverage and choices from a Preferred Provider Organization.

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