How it pays
Each covered service has a set benefit amount. For example, a plan might pay a set amount for a doctor visit, a different amount for an X-ray, and a daily amount for each day you're in the hospital. The amount is the same whichever doctor or hospital you use, and the money is paid to you or your provider.
If the bill is higher than the benefit, you pay the difference. That's the key trade-off: there's no out-of-pocket maximum like a major medical plan has.
How it differs from major medical and ACA plans
- Major medical / ACA plans pay a share of your bill after you meet a deductible, and cap what you pay each year with an out-of-pocket maximum.
- Fixed indemnity plans pay set amounts per service, often with a deductible only for longer hospital stays, and no out-of-pocket maximum.
- Fixed indemnity is not ACA minimum essential coverage and isn't a substitute for it.
What's usually not covered
The plans I work with don't cover maternity, aren't built for ongoing mental health care, and have a 12-month pre-existing condition limitation. Every plan also has its own exclusions and limitations, and I'll go through them for your plan before you enroll.
Who it tends to fit
Fixed indemnity plans tend to fit healthy people who want a lower monthly bill and don't qualify for a Marketplace subsidy, especially when they're paired with accident, critical illness and specified disease coverage. They're usually not the right fit for someone with serious ongoing health needs.
Who it tends to fit
A private plan may fit
- Healthy households without a subsidy
- People who want to choose any doctor
- Anyone who needs to apply outside Open Enrollment
A Marketplace plan is often better
- Serious or ongoing health conditions
- A planned pregnancy
- People who want a cap on yearly costs
Good to know: The private plans I offer are limited benefit policies (fixed indemnity). They pay set amounts for covered services, you're responsible for any costs above those amounts, and there's no out-of-pocket maximum. They aren't major medical insurance and aren't a substitute for ACA coverage. Pre-existing condition limitation: a condition you were diagnosed with, treated for or took medication for in the 12 months before your coverage starts isn't covered during your first 12 months.
Questions people ask
Is fixed indemnity insurance real health insurance?
It's a type of health insurance called a limited benefit, or excepted benefit, policy. It isn't major medical insurance and doesn't count as ACA minimum essential coverage.
Does fixed indemnity insurance have a deductible?
On the plans I work with most, a deductible applies only to hospital stays of 24 hours or more. Other covered services pay their set amount with no deductible, and you're responsible for anything above it.
Is fixed indemnity insurance worth it?
It depends on your health, your budget and whether you qualify for a subsidy. For some healthy households it fits well; for others an ACA plan is clearly better. I'll compare both honestly for your situation.