Texas General Lines — Life, Accident, Health and HMOHealth InsuranceHard
A client receives a bill for a medical procedure. Their health insurance plan pays a specific, predetermined amount for the procedure, regardless of the actual charges billed by the provider. The client is responsible for any amount exceeding this predetermined payment. This payment structure is characteristic of which type of health insurance plan?
- APoint of Service (POS) plan
- BIndemnity plan (Fee-for-Service)
- CManaged care plan (HMO/PPO)
- DHigh Deductible Health Plan (HDHP)
Show answer & explanationAnswer & explanation
Correct answer: B. Indemnity plan (Fee-for-Service)
An indemnity plan, also known as a fee-for-service plan, pays a specified benefit amount for each service, and the insured is responsible for the difference between the actual charge and the benefit paid. This differs from managed care plans which negotiate rates or HDHPs which focus on deductibles.
Why the other options are wrong
- A. POS plans combine elements of managed care and indemnity, but the defining characteristic in the scenario is the fixed payment regardless of actual charge, which is classic indemnity.
- C. Managed care plans typically negotiate discounted rates with providers and involve co-pays/coinsurance on those rates, not fixed payments regardless of charge.
- D. HDHPs are characterized by high deductibles, not necessarily fixed payments per service regardless of charge.
Indemnity Health Plan (Fee-for-Service)
A traditional health insurance plan where the policyholder pays the provider for services and then submits a claim to the insurer for reimbursement, often based on a predetermined schedule of benefits.
- Offers the most freedom in choosing providers.
- Insured typically pays for services first, then is reimbursed.
- Insurer pays a specified dollar amount for each service.
- Insured is responsible for any balance billing (difference between charge and benefit).
Memory trick: How your health plan pays the bills defines its type.