FIXED INDEMNITY INSURANCE
Back to GlossaryDefinition
A policy that pays a set cash amount per day or service regardless of actual charges; considered an excepted benefit when structured properly.
Summary
Fixed Indemnity Insurance is a type of supplemental health insurance that pays predetermined dollar amounts for specific medical services or per day of treatment, rather than covering actual medical costs. Unlike traditional health insurance that pays based on actual charges (up to coverage limits), fixed indemnity plans pay the same amount regardless of whether your medical bill is $100 or $10,000. These plans are considered 'excepted benefits' under the Affordable Care Act when properly structured, meaning they don't have to meet the same requirements as major medical insurance plans.
Usage Context
Essential when studying insurance product types, understanding ACA compliance requirements, distinguishing between primary and supplemental coverage options, and analyzing benefit structures in insurance policies.
Common Confusions
- Thinking it covers actual medical costs like traditional insurance
- Believing it can replace comprehensive health insurance
- Confusing it with disability insurance that replaces income
- Assuming all indemnity insurance works the same way
- Not understanding that payments are fixed regardless of actual expenses
