How does a fixed indemnity plan differ from traditional health insurance?

A fixed indemnity plan is designed to provide a predetermined payout for specific medical services or events, regardless of the actual costs incurred. This means that when an insured individual receives care, the insurance will pay a fixed amount outlined in the policy for services like hospital stays, doctor visits, or procedures.

For instance, if a specific treatment typically costs $5,000 but the fixed indemnity plan stipulates it pays a fixed benefit of $1,000 for that treatment, the insured will receive just the $1,000, not a percentage or the total cost. This model contrasts with traditional health insurance, which typically covers a percentage of each medical expense after the deductible and other out-of-pocket costs are met.

Other choices suggest limitations or features of coverage that do not accurately describe fixed indemnity plans. For example, these plans do not exclusively specialize in preventive services, nor do they eliminate the requirement for premium payments. Most fixed indemnity plans still require regular premiums to maintain coverage.