The Types of Health Insurance Coverage: Health Sharing Ministries
Fixed Indemnity Health Insurance Coverage
Fixed Indemnity health insurance plans are also referred to as Limited Benefit health insurance coverage, No Deductible plans, or First Dollar Coverage plans.
Pros
- No deductibles to meet.
- Very affordable.
- Provides access to large PPO networks.
- Use with any doctor or hospital.
- Coverage doesn’t expire. Long term coverage.
- No referral needed to see a specialist.
- Typically coverage for pre-existing conditions after the first year.
Cons
- Fully underwritten.
- Must answer medical questions to qualify.
- Typically no coverage for pre-existing conditions in the first year.
- No maximum out of pocket.
- The amount the plan pays is not based on the amount billed. These plans pay a fixed amount.
- Small benefits for emergency room services could leave you owing large amounts.
- Limited prescription coverage is typically a reimbursement benefit.
- Limited or no coverage for preventive care.
First Some Important Health Insurance Terminology
- Network – Fixed Indemnity Health Insurance Plans typically use large national PPO networks.
- Network Type
- PPO or Preferred Provider Organization – A PPO network is the best option because it allows you to see doctors both in and out of network and gives you control over your own healthcare.
- Network Size – The size of the network directly affects the number of doctors you have to choose from. The bigger the network, the more providers you have access to.
- #1 United Healthcare
- Network Discount – This is an often overlooked component of fixed indemnity health insurance coverage but is one of the most important. Each network has it’s own discount amount. This directly affects how much you will pay out of your own pocket. The insurance carrier negotiates rates for you and this is reflected in the network discount. The bigger the network discount, the less you pay. These aren’t easy numbers to research because they aren’t readily available. We have used our claims experience to track this information. This allows us to give you real world data not just a promoted number. As you can see below, the Network Discount varies greatly between carriers.
- #1 United Healthcare: Average Network Discount ~60%.
- Aetna: Average Network Discount ~50%.
- First Health: Average Network Discount ~35-50%.
- MultiPlan: Average Network Discount ~15%.
How Fixed Indemnity Indemnity Health Insurance Coverage Works
These plans pay a fixed benefit amount as outlined in the policy towards a doctor’s visit, a day in the hospital, etc. They do not have a deductible to meet.
Example 1:
- Using a Fixed Indemnity Plan With A Great Network: Let’s say you go to the doctor with a United Healthcare fixed indemnity plan that pays a $100 doctor’s visit benefit. Let’s say the visit rang up to $250. The first thing that happens is the network discount is applied to the bill. We’ll use a 50% network discount for this example. Once the network discount is applied, the bill amount drops to $125. Then the insurance company applies your benefit amount of $100 and sends you a bill for the difference of $25. So for that $250 doctor visit you would get a bill in the mail for $25. See the chart below for visual.
| Service | Price |
|---|---|
| Doctors Visit | $250.00 |
| Network Discount | -$125.00 |
| Fixed Indemnity Plan Benefit | -$100.00 |
| Total Bill With A Great Network | $25.00 |
Example 2:
- Using a Fixed Indemnity Plan With A Poor Network: So you go to the doctor with fixed indemnity health insurance that uses a that uses an inferior network. And let’s say the plan pays same $100 doctor’s visit benefit. Using the same $250 doctor’s visit amount, the first thing that happens at the health insurance carrier is the network discount is applied to the bill. We’ll use a 15% network discount for this example. Once the network discount is applied, the bill amount drops to $212.50. Then the insurance company applies your benefit amount of $100 and sends you a bill for the difference of $112.50. So for that $250 doctor visit you would get a bill in the mail for $112.50. See the chart below for visual.
| Service | Price |
|---|---|
| Doctors Visit | $250.00 |
| Network Discount | -$37.50 |
| Fixed Indemnity Plan Benefit | -$100.00 |
| Total Bill Without A Great Network | $112.50 |
Prescriptions:
- To get your prescriptions filled, you use a discount card at your pharmacy to purchase your prescriptions out of your own pocket, and then you send the bill to the carrier and the reimbursement benefit check is mailed to you.
Recommended Fixed Indemnity Health Insurance Plans
- United Healthcare
- Manhattan Life
- National General
NOT Recommended Fixed Indemnity Health Plans
- US Health Advisors/Freedom Life
- HII or Health Insurance Innovations
- Philadelphia American/New Era Life
How To Purchase Fixed Indemnity Health Insurance
- Figure your budget.
- Have a list of your doctors & preferred hospitals that can be checked to see what plans are in-network.
- Your agent will find the best options available for your budget that your doctors are in network with.
- Have the agent send you plan brochures and read the plan limitations before you decide to move forward.
- Choose your plan. If you are purchasing a fixed indemnity plan as your primary insurance, choose one of that company’s top tier plans. The lower tier plans just won’t have enough coverage by themselves if something major happens. Coupling these with a high deductible Short-Term Medical health insurance plan can provide coverage that is quite comprehensive.
- Have you agent fill out the application and your coverage will be effective once your policy is approved on the specified date.
- If you want to self-quote or self-enroll, click the links below. Not every carrier allows self-enrollment.
Conclusion:
Fixed Indemnity health insurance coverage is one of the only plans that you can keep until you turn 65. Major Medical plans change constantly with many people enrolling in a new plan during the Annual Enrollment Period every year. Fixed Indemnity coverage remains in place as long as you pay your premium. Although it works in a different manner than traditional insurance, it can be great coverage for those wanting a national PPO Network on a budget. These make an amazing secondary policy to couple with a Major Medical or Short-Term Medical plan which I’ll discuss more in a future post.
