Indemnity Plans - Fixed Benefits or 'Up To' Limits

Written by  Jean Gray
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An indemnity plan pays you a benefit to cover costs associated to healthcare.  But there are two different ways the benefits are calculated.  One is a fixed benefit – the amount is fixed.  The other is an ‘up to’ amount – it pays based on the actual cost incurred for care, "up to" some certain amount.

Now, getting money in any form is generally a good thing.  And I’m not saying one of these methods is necessarily better than the other. But you should know what you are getting.

For example, you break your forearm.  A fixed benefit plan may say it will pay $700.  That means it will pay $700.  If it actually cost $500, you still get $700.  If it cost $900, you get $700.

If your plan pays up to the ‘reasonable and customary amount in your area’, the amount can vary.  You will never get more than what the cost was – ever.  And if the going rate in your area to fix a broken arm is $500, that is what your insurer will pay up to.  If you only paid $450, you will get $450.  If you actually paid $550, you will get $500.  If you move to another state and the reasonable and customary rate there is $700, then that would be the ‘up to’ number.

If you have an indemnity plan, I encourage you to know in advance how the benefits are calculated.  If you need help figuring it out, feel free to contact me.

Last modified on Sunday, 29 April 2012 17:07


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