What does the term "Indemnity" in indemnity plans imply?

The term "Indemnity" in indemnity plans specifically implies that the insurer reimburses based on predetermined amounts for services rendered. This type of health insurance allows policyholders to choose their healthcare providers and generally does not require the use of a network. Under an indemnity plan, the insured pays for the services upfront and submits the claims to the insurance provider for reimbursement according to the plan's benefit schedule.

This structure offers flexibility to the insured in terms of provider choice and service location, as there is no restriction to a network of providers unlike managed care plans. Since the insurance reimbursement is based on predetermined amounts, the insured individual is aware of the coverage limits and the expected payout for various medical services. This can create advantages for patients seeking a wider range of services and providers, but may also result in out-of-pocket costs that can be significant if the services exceed the reimbursement amounts set by the plan.