What is "indemnity insurance" in the context of health insurance?

Indemnity insurance in the context of health insurance is best understood as a type of health plan that provides reimbursement to the insured for qualified medical expenses, irrespective of the healthcare providers they choose. This means that policyholders can generally visit any doctor or hospital and submit claims for the expenses incurred, and the insurance company will reimburse them according to the terms of their policy after deducting any applicable out-of-pocket costs.

This flexibility is a key characteristic of indemnity insurance, distinguishing it from managed care plans, which typically require insured individuals to utilize a network of providers and may have more restrictive rules regarding referrals and coverage. The fundamental appeal of indemnity insurance lies in its allowance for choice and freedom in selecting providers while ensuring that the policyholder can recoup some of their expenses associated with necessary medical treatments.