Have you ever heard of a plan having first-dollar benefits, no deductibles, and no rate increases? These three descriptors are the basis of fixed indemnity plans. Moreover, fixed indemnity plans operate on a set schedule. To explain, they only pay so much for you to see the doctor, visit a hospital, undergo a surgery, etc. For every medical expense, there’s a set amount that the plan covers. If it’s not on the plan’s schedule, then the plan does not cover it.
These are great plans for a few reasons. For one, they don’t have a deductible. Instead, the plan pays first-dollar, and then the individual must pay the balance. The balance left to the individual is further reduced when using the plan’s network.
Let’s say a doctor’s visit is $140. That’s what the doctor charges but he’s in-network so the price is lower to $80. Of that $80, the insurer will cover $50, leaving you to pay the remaining $30. This is very similar to a co-pay. If, however, you don’t use the network, then the total cost remains $140, and the insurer’s cost remains $50; this means your cost is $90. Out-of-network means no discount. Therefore, it’s important to always use the network with a fixed indemnity plan.
The plans are also great because they’re not limited to an enrollment period. Typically, it is advised to enroll in a qualified health plan (QHP) because it covers pre-existing conditions and offers essential benefits. However, sometimes it’s difficult to get a QHP, especially if the person has missed the open enrollment period (OEP) and does not qualify for a special enrollment period (SEP). Outside of OEP or an SEP, the only way to get a QHP is through an employer. Unfortunately, not every employer offers health benefits. In that case, the only options to an individual are non-qualified plans, such as short-term medical plans for fixed indemnity plans.
Short-term medical are usually the next best option following qualified plans through the Affordable Care Act (ACA). They don’t have enrollment periods like ACA plans; however, they are restricted to three-month coverage periods. Meaning, within a year, a person would have to reapply for short-term coverage four times. Furthermore, carriers don’t renew short-term policies. So in addition to re-applying for coverage, a person would need to reapply with a different carrier. It’s an arduous, repetitive process. So for those looking for something simpler, then the fixed indemnity is the next best option.
Qualifying for fixed indemnity plans is fairly easy. It’s simplified issue so there are few questions that determine eligibility. Once you answer the questions, then you typically get the coverage, and you can begin using it immediately.
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