An indemnity plan pays you a benefit to cover costs associated to healthcare.Â But there are two different ways the benefits are calculated.Â One is a fixed benefit â€“ the amount is fixed.Â The other is an â€˜up toâ€™ amount â€“ 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.Â And Iâ€™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.Â A fixed benefit plan may say it will pay $700.Â That means it will pay $700.Â If it actually cost $500, you still get $700.Â If it cost $900, you get $700.
If your plan pays up to the â€˜reasonable and customary amount in your areaâ€™, the amount can vary.Â You will never get more than what the cost was â€“ ever.Â And if the going rate in your area to fix a broken arm is $500, that is what your insurer will pay up to.Â If you only paid $450, you will get $450.Â If you actually paid $550, you will get $500.Â If you move to another state and the reasonable and customary rate there is $700, then that would be the â€˜up toâ€™ number.
If you have an indemnity plan, I encourage you to know in advance how the benefits are calculated.Â If you need help figuring it out, feel free to contact me.