As great as finding cost-effective health insurance is, it is important to ensure exactly what that cost-effective coverage pays. It is commonly said that it is important to look before leaping, and that applies to choosing a health insurance plan, especially as unethical agents could easily mask one type for another. This has become a huge issue since the creation of the Affordable Care Act as some telemarketers have taken advantage of customer confusion.
One of the more common occurrence of masking one healthcare plan for the other is the masking of indemnity plans for major medical plans. This article addresses the dangers of buying indemnity plans as full medical plans and gives pointers on how to avoid falling a victim.
How indemnity insurance plans and full medical plans differ
Indemnity insurance plans are insurance plans with specific features such as no restriction on the doctor one wishes to see. This is the major appeal of these plans since buyers are attracted by the fact that they will not be restricted to seeing the doctor they prefer or who was referred to them by a trusted family member or friend.
When a person buys an indemnity insurance plan, they are not restricted from choosing a doctor from maybe outside their location. This freedom of choice thus makes indemnity insurance plans particularly appealing to persons that are based in locations with plans that do not include access to their preferred doctor.
Indemnity insurance plans are thus suitable for individuals and families that do not want any form of restriction over their choice of primary care provider. Another advantage is not having a deductible to meet. Claims are paid out regardless of how much you have paid out of your own pocket. Most of these plans will contract with a national carrier, like Cigna or Multiplan, this allows plan members to receive some discounted services that the national carrier has negotiated. Indemnity plans are commonly masked as the PPO of the healthcare organization whose network it uses. This is also the reason that often these plans are referred to as the Cigna PPO plan or Multiplan PPO, even though they are not actually products of the national carrier represented in their plan names.
Even with these highly attractive features of indemnity insurance plans, there are other features which persons that buy these plans should note. These features include the cost of the services as well as the kind of healthcare services covered by indemnity insurance plans.
As per costs, indemnity plans are known to be more expensive when utilized than full health insurance plans provided by, for example, a health management organization. Although the increased cost may be naturally expected, with the freedom that comes with indemnity plans, the extent of the extra cost differs across the indemnity insurance plans, especially those that are masked as full health insurance plans.
Most indemnity plans masked as full coverage health have limits on daily claims of $1,000 or less. Thus, for a service that cost $30,000, the indemnity plan could cover only as much as $1,000 and one is left with a $29,000 burden. The increased cost of indemnity insurance plans is also related to the fact that some of these plans are self-managed plans which are not part of any network and the ones that are part of a national network typically do not enjoy the same low repricing that’s negotiated on behalf of the national carriers actual plan members.
Full major medical plan beneficiaries pay deductibles after which they may pay co-insurance when they visit healthcare practitioners within the network. The types of health insurance differ. HMOs, for example, usually provide beneficiaries with healthcare services at the lowest discounted rate. Beneficiaries of HMOs are expected to visit the primary care providers within their network. Other forms of health insurance include PPOs. PPOs allow beneficiaries to choose healthcare practitioners outside the network giving a wider range of choice but usually costing a bit more.
Other forms of health plans include POS and EPO. POS allows beneficiaries to visit their doctor and receive healthcare at an agreed discounted price. EPOs maintain a lot of HMO features but allow beneficiaries to skip visiting a primary care provider before a visit to a specialist if need be. The specialist, however, must be within the network.
How indemnity plans are masked as full health plans
Indemnity plans can be masked as major medical health plans by desperate agents attracted to the high commissions dangling the best features that any buyer will look for and appreciate. They can also be sold by agents that just aren’t aware of the limitations, as I found out several years ago when these plans were becoming popular. Just like there are agents who sell directly to businesses and consumers, there are also wholesale agents that sell to us. Being relatively new to the health insurance field I took the advice of a wholesaler that was very good at pointing out the pros of the indemnity coverage. These features include no restrictions on the doctor my customers can visit and no deductible. However, concentrating on these features may leave out a lot of the unflattering features of these plans. Many are thus marketed as PPOs, since PPOs give beneficiaries the freedom of choosing doctors from outside the network.
True to the way these plans are marketed, no deductibles apply to these plans. However, as mentioned earlier, these plans often have a cap of only $500 or $1,000 for a visit that could cost $30,000, $300,000 or any other amount. The no-deductible feature in this case turns out to be not so good, as the cover equates to having no health cover when one needs the service. Instead of a medical plan where deductibles apply and co-payments apply, when one chooses these masked indemnity plans, they get to bear most of the cost of their healthcare needs, even in emergencies.
Indemnity plans that are masked as health plans also have the feature of access to any doctor one prefers which is true. However, this feature is hinged to the fact that these plans use the network-established health insurance organizations. If you go outside of the network, not only could you end up having very little covered, but you also will not receive any network discounted services.
How to avoid buying indemnity plans as major medical plans
It is easy to fall prey of the tactics used to market indemnity plans as full medical plans. To avoid such costly mistakes, it is important to carry out proper research before choosing a health plan. One common feature of the masked indemnity plans is that the agents that push the sales of these plans close a lot of their deals over the phone. This rush prevents the buyer from going through the fine print and discovering that the cover has little worth. Another trend is that these plans tend to have a somewhat large application or activation of fee, often of $125 or more. While not a definite sign of a bad plan, sometimes high application fees are used to offset high cancellation rates, since the application fee is often non-refundable.
Before choosing a plan, the importance of ensuring services provided by that plan are adequate cannot be overemphasized. It is also important to stay with agents who have proven their credibility over time. Such agents are much less likely to pass off indemnity plans as major medical PPOs.
Instead of a health plan that could leave you with thousands of dollars in unpaid medical bills, choosing an actual major medical plan is a far better route to take. To learn more about the best type of plan for you or your family visit our Virtual Agent page and answer a few questions to get matched with the right coverage. There’s no charge or obligation to use the service and it will even match you to financial help and state programs if it’s best for you and you qualify.