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Indemnity plans are slightly different than other health insurances in that you have a little more flexibility with whom you see for health care. Let’s explore what indemnity plans are, how they work, and if they are right for you.


What is an Indemnity Plan?

Indemnity plans, also referred to as “fee-for-service” plans, allow you to direct your own health care and visit almost any doctor or hospital you like. The insurance company pays a set portion of your total charges and may be subject to the deductible. 

The indemnity health policy is different than policies offered by health maintenance organizations (HMOs) and preferred provider organizations (PPOs) because it allows you obtain medical care where you choose instead of from a provider network. HMOs, IPAs, and PPOs use managed care and may force you to choose a primary care provider as part of the plan. 

This may be the plan for you if you don’t mind paying a little more for your health insurance costs or deductible in exchange for flexibility of providers.

How does an indemnity plan work? 

Arrow Pointing in Different Directions

Under an indemnity plan, you may see whatever doctors or specialists you like even without referrals and you’re not required to choose a primary care physician. You may choose to get the majority of your basic care from a single doctor, which is helpful when you live in an area where medical care may be limited.

This plan may also require that you pay up front for services and then submit a claim to the insurance company for reimbursement. You’ll likely be required to pay an annual deductible before the insurance company begins to pay on your claims. Once your deductible has been met, the insurance company will typically pay your claims at a set percentage of the “usual, customary and reasonable (UCR) rate” for the service. The UCR rate is the amount that healthcare providers in your area typically charge for any given service.

Some indemnity health policies also provide a maximum amount that you will have to pay as co-insurance. Once you hit that ceiling, you no longer have to pay the co-insurance and this can help manage the maximum costs you would pay as part of the policy.


Indemnity plans give you the greatest flexibility in choosing your healthcare providers. Deductibles and copays are usually lower than other insurance plans but premiums can be higher. Talk with our insurance agents to see if this plan may fit your lifestyle.

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