The least you need to know…
- private medical indemnity insurance is similar to publicly funded programs like medicare and medicaid
- many employers use limited forms of private indemnity insurance for their employees, more commonly known as preferred provider organization (ppo)
- the summary plan description (spd) details the limitations and rules of your private indemnity health insurance plan
- the reimbursement method pays all or an agreed-upon portion of the actual cost of a service, usually directly to the provider
- the indemnity method pays a fixed amount for a service directly to the insured, who can then pay for the service directly
Private indemnity insurance is a type of health coverage that is obtained through a private source, as opposed to a government-sponsored public health care program such as Medicare.
A person can purchase private indemnity insurance on their own or through an employer. These types of insurance plans reimburse a person for visiting any doctor or medical provider.
definition of private liability insurance
many employers use a type of private indemnity insurance program called ppo because it tends to be cheaper than other insurance programs due to limitations in network and program options.
The scope of reimbursement coverage for any type of private indemnity program is generally set forth in a summary plan description (spd). the spd is essentially the “playbook” for how any particular private indemnity insurance program works.
about summary plan descriptions
Before you purchase or use private liability insurance, you should review the fee services or expenses listed in the SPD. Due to the “fee for service” nature of these plans, private indemnity insurance programs often have deductibles.
Deductibles require the insured to pay medical expenses up to a certain amount before the health insurance company covers the remaining expenses. They also often have copays, which require the member to pay a portion of the bill when they visit a doctor, fill a prescription, or go to the emergency room.
Although the model of private indemnity insurance programs overlaps with managed care insurance programs, indemnity programs are structured more like reimbursement programs, while managed care companies pay medical providers directly .
other detailed information in a summary plan description
the spd may also describe limitations on your selection of health care providers. When a private indemnity insurance program offers a more limited selection of health care providers, it is generally referred to as a preferred provider plan. your choices may be restricted to health care providers who are members of the sponsoring insurer’s preferred provider organization, or ppo.
if you use a doctor who is not on the list (or on the ppo), you are “going out of network”. Most PPOs will reduce your level of services, coverage, or claims for reimbursement when you use an out-of-network provider.
Because the spd is the playbook for the private indemnity insurance organization, you should frequently review the specialized rules regarding filing notices, referrals, reimbursements, and claims.
For example, if you want to see a specialist for your allergy condition, the private indemnity carrier may require you to first visit your regular doctor and get their referral and recommendation to see the specialist. If you don’t see your regular doctor first, you may be denied coverage, which means you won’t be reimbursed for expenses associated with your allergist visit.
Reading the fine print is critical to maximizing the benefits of a private indemnity insurance plan. failure by the policyholder to submit a claim for reimbursement in a proper or timely manner may result in a denial of the claim.
Liability Insurance Plans: Frequently Asked Questions
what does compensation mean in insurance?
first of all, what does indemnity mean and what is personal indemnity?
indemnity means a contractual obligation to pay the full amount of a loss.
In the context of health insurance plans, there are two basic ways of providing insurance: the reimbursement method and the indemnity method.
An example of an indemnity model is hospital indemnity insurance, also known as doctors’ indemnity insurance or fixed-indemnity health insurance. The advantages and disadvantages of this type of insurance are that it can eliminate the need to remain in a specific network paying for service.
The downside is that fixed indemnity insurance is not a substitute for comprehensive insurance and will be limited by terms. many fixed-indemnity health insurance plans cover expenses related to specific conditions, for example.
what is the difference between an indemnity plan and a ppo?
A true indemnity plan allows the insured to see any provider, while a ppo requires the insured to use preferred providers to receive reimbursement for coverage. A ppo is a limited type of private indemnity plan.
what is an example of private indemnity health insurance?
Most major health insurance providers offer variations on private indemnity health insurance. Although PPOS are technically private indemnity insurance plans, the unlimited version is also available from most providers.
Like other types of insurance programs, private indemnity insurance programs are regulated by state and federal laws. They have specific duties to the insured and the policyholder.
If you believe your private indemnity insurance organization is improperly or knowingly denying you coverage, consult with a consumer attorney to review available enforcement actions in your state. To find an experienced insurance or consumer defense attorney near you, enter your zip code into our search tool.