Traditionally, employers offered indemnity or fee-for-service (FFS) insurance that would pay for all, or at least most, of an employee's health insurance expenses. 

Indemnity plans are the most expensive health insurance plans, but they offer the most flexibility and freedom of in selecting physicians and hospitals. If having the ability to choose your own doctor or hospital is your most important concern, then indemnity insurance might be your best choice. 

How Indemnity Insurance Works
With indemnity insurance you can go to any licensed medical practitioner, clinic or hospital you choose. You pay the fees-for-service, and then you, or the practitioner, bill the insurance company for reimbursement. 

Prior to being reimbursed for anything, you will have to first pay a deductible. 

Deductibles can range from $250 to $10,000, depending on your monthly premium. You won't receive any reimbursement until your deductible amount has been met. 

If you pay a low monthly premium, you will have a higher deductible amount. But, if you become seriously sick or injured, this is far better than footing the whole bill. Paying higher monthly premiums will result in lower deductibles. 

Typically, indemnity insurance will cover 75%-90% of your doctor visits. The 10%-25% of the bill that you pay is called the coinsurance, or co-payment. Some indemnity plans have started to take on managed care aspects in these regards. 

Indemnity insurance usually has an out-of-pocket maximum. Once you reach the out-of-pocket maximum, the insurance policy will pay the full amount for all covered services.

Types of Indemnity Plans
Indemnity plans can usually be used in a more flexible manner than other plans, but no plan covers everything. All plans have excluded services. Some typical exclusions are dental, vision, cosmetic, mental health and maternity services. Be sure the services you plan to use are covered by the plan you choose, or be prepared to pay. 

There are several levels of indemnity plans for you to choose from: 

• Basic Coverage. This covers doctor visits, surgeries, hospital visits and other eligible expense.
  

• Catastrophic/Major Medical. Pays for major expenses in the event of serious injury or illness, when basic coverage has been maxed out.
  

• Comprehensive Coverage. Combines basic and major medical coverage. Typically offered by most employers today.