Important Facts about Health Insurance Policies – Indemnity and PPO

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Science / Health

Health insurance is one of the strongest shields to mankind in the time of global pandemics. Rising medical costs, treatment of illness, and sudden medical expenses have become overwhelming for common people. Arranging funds can be difficult while picking the best medical services. This can become more daunting when there are emergency needs. Health insurance here comes as a savior. This can protect one from sudden financial and mental strain.

Health insurance can be availed in many forms. However, the most used ones are indemnity PPO. Choosing a proper insurance policy covers the whole or a part of one’s medical expenses and secures the required treatments and care needed.

Preferred Provider Organization (PPO)

PPO is a part of managed care health insurance program designed for families and individuals as well. PPO is one of the popular health insurance policies that constitute contracted networks between health insurance companies along with medical professionals. PPO covers the expenses of both in-network and out-of-network providers and offers services at a reduced rate for the policyholders. For instance, when in an emergency if one selects a medical professional who comes under the contracted network of PPO, the person receives maximum PPO or the whole coverage of the expense. On the other hand, if he/she chooses treatment from out of the network of PPO, they get coverage.

How does PPO work?

A preferred provider organization gets its name as it constitutes a network of preferred medical professionals and facilities. PPO includes primary and specialty physicians, hospitals, and other such health care professionals who contract with insurance companies to set up deals that render services to the subscribed participants.

PPO works by following specific considerations that include-

Cost-sharing

Cost-sharing ensures keeping costs in check. In simple terms like every other insurance policy, when one avails of health care services, he/she pays the cost of those services in the form of deductible, coinsurance, and copayments. This reduces the use of unneeded services. Thus, PPOs also maintain lower monthly premium charges as the more one pays for their services, the lesser PPO pays.

Provider networks

When policyholders select health care services from the contracted network of medical professionals and facilities, they pay very little as PPO covers the major portion of expenses. When the person chooses out-of-network services, PPO pays coverage. However, it is important to understand that a PPO policy can have either a large network or a smaller network. Hence, to stay in their in-network plans, one needs to select broad network PPO policies.

Prior authorization

This is a process of ensuring PPO’s policy only to the necessary health care services. PPO requires a pre-authorization of every policyholder even before they can avail of expensive tests, procedures, or treatments. Only a prior authorization can get one of the services available and PPO can reject any claim if prior authorization is not done.

No PCP required

Through PPO policy, one can directly contact any specialist without a referral from a primary care physician or PCP.

What is Indemnity?

Indemnity PPO are most common health insurance policy, and however, unlike PPO, indemnity provided protection against all of the medical expenses of its policyholders. This is also known as traditional indemnity plans and pay for actual hospitalization expenses. This offer is generally up to the policy sum insured limit. Indemnity health policies are both regular and comprehensive for individuals, families, and senior citizens.

How does indemnity work?

Indemnity works in the following ways-

Extensive coverage

This constitutes coverage for everything that a patient needs starting from pre-hospitalization expenses, in-patient treatments, doctor’s fees, ICU, room charges, diagnostic tests, surgery, medicines, along with post-hospitalization expenses and daycare treatments. The only requirement of this plan is the patient needs to be hospitalized for at least 24 hours to be eligible for the claim.

Cashless treatment

Unlike other health insurance policies, indemnity policies also tie up with a large array of medical professionals and service providers. Indemnity offers two major advantages to the policyholders

·        One can choose from several hospitals and medical facilities according to their choice

·        They enjoy a cashless treatment in the in-network hospitals as the medical bill directly goes to the insurance providers, and the policyholders need not pay a single penny except co-payment share.

Copayments and sub-limits

Copayments define the portion of the medical bill paid by the policyholders and both the insurance providers. This is either a fixed amount or a fixed percentage of the total medical expense. The majority of the indemnity PPO policies come up with a copayments option and policies with higher copayments where the policyholder pays a larger percentage of the medical expenses and costs lesser monthly premium charges. However, these health plans also come with a sub-limit which is applicable to room rent and other associated medical expenses. For instance, if one selects a room with a rent beyond the sublimity, a proportioned deductible would be charged on his inpatient hospitalization claim. Hence, it is generally suggested to not buy an indemnity with a sub-limit which otherwise reduces the overall coverage.

Which one is better- Indemnity or PPO

Amongst all the available health insurance policies, indemnity PPO is the most popular and used one. Both the policies include some general health insurance characteristics such as copayments and sub-limits. However, there are huge differences in the fundamentals of indemnity and PPO. Some of these major differences between indemnity and pro are discussed here-

  • PPO is generally a managed care program with a broad network of medical professionals and insurance companies, whereas indemnity does not include any provider network.
  • Both the policies do not require a PCP, however unlike indemnity, one needs to choose a medical professional from the contracted network under PPO insurance Subscription.
  • PPO offers some part of the preventive care to the policyholders, whereas indemnity does not include preventive care.
  • Relative cost for a patient under PPO policy varied from medium to high, but in the case of indemnity, the cost is generally high.
  • Indemnity offers cashless treatment to its policyholders, which is not the general case of PPO.

Conclusion

Above mentioned comparisons will help one to better understand health insurance policies and make an informed choice while buying indemnity PPO. However, having subscribed to any of these two prevents policyholders from unwanted stress and financial suffering during emergencies.