INDEMNITY

What is an Indemnity Plan?

Indemnity plans are one of the oldest forms of insurance still available. An Indemnity plan allows participants to obtain services from the licensed provider of their choice. Since there is no network, network versus non-network choice is not an issue for participants in an Indemnity plan. Participants in Indemnity plans are required to meet applicable deductibles and coinsurance. Most Indemnity plans have established UCR levels governing the fee an insurance carrier will honor for services rendered. This means that a participant could be responsible for additional costs if their provider’s service fees are higher than the established UCR level.

What does UCR mean and how does it affect my plan?

If your medical plan includes a non-network option, then UCR limitations are more than likely built in. Regardless of whether your plan is a EPO, POS, PPO or Indemnity, if you obtain services from a non-network provider you will encounter UCR.

UCR refers to Usual, Customary and Reasonable payment limitations imposed by insurance carriers on non-network service charges. UCRs are typically expressed as a percentage. UCRs govern and limit the fee an insurance carrier is willing to honor for services rendered and, as a percentage, reflect the number of providers in a given locale that are charging at or below the established UCR.

What is managed care and how does it impact my medical plan?

One thing most medical plans have in common is "Managed Care". This includes not only HMOs, but most EPO, POS, PPO and Indemnity plans too. The term managed care refers to cost containment features imposed by insurance carriers, by a medical group, or by a State or Federal legislative body. Most plan participants encounter managed care in the form of:

pre-authorization requirements imposed on surgical and other services;
limits on the number of visits available for certain services such as physical therapy, out-patient counseling and chiropractic;
limits on the dollar amounts an insurance carrier will pay for certain services;
penalties for the inappropriate use of an emergency room and other emergency service;
the use of Primary Care Physicians (PCP)/Gatekeepers; and/or
capitation.

Managed care features are specific to a plan and insurance carrier so you may encounter other forms of managed care. The impact of managed care on you will be specific to your plan and personal circumstances.