California IP Plans

With an indemnity plan, you can go to the doctor of your choice, and you, your doctor or your hospital submits a claim to your insurance company for reimbursement. Just note that you will only be reimbursed for "covered" medical expenses, a list of which can be found in your benefits summary. The good news is that the vast majority of procedures will be covered under an indemnity plan.

Indemnity plans pay a sizable percentage of what they consider the "usual and customary" charge for covered services in your area. The insurer generally pays 80 percent of the usual and customary costs and you pay the other 20 percent, which is known as the coinsurance. If the provider charges more than the usual and customary rates, you will have to pay both the coinsurance and the excess charges.

For example, if your insurer determines that the usual and customary fee for "X medical service" is $100, the insurer will pay $80 and you will be required to pay the remaining $20. However, if your doctor charges more than the usual and customary fee, $105 for example, you would be required to pay the additional $5, making your total expense $25. Many indemnity plans reimburse at the 80/20 level, but some reimburse at other levels, such as 70/30.

In addition to the coinsurance, most indemnity plans have deductibles. These are amounts of covered expenses you must pay before the insurer will start reimbursing you for your medical bills. These might range from $250 to $500 per year per individual, or $500 or more per family. Generally, the higher the deductible, the lower the premiums, which are the monthly, quarterly, or annual payments for the insurance.

Indemnity policies typically have an out-of-pocket maximum. This means that once your covered expenses reach a certain amount in a given calendar year, the insurer will pay the usual and customary fee in full. However, if your doctor charges you more than the usual and customary fee, you still may have to pay a portion of the bill.

Some policies also have lifetime limits on benefits. Most experts recommend that you look for a policy that has a lifetime limit of at least $1 million.