Plans may also have a more complex benefit design that mimics traditional insurance, requiring enrollees to hit a deductible before payout begins. That is, they pay $100 per visit to the pediatrician (or, in some plans, “per day” an enrollee visits the pediatrician ), $30 per prescription for amoxicillin, and $ 1 ,000 per tonsillectomy. Rather than paying a fixed amount per day of illness or hospitalization, generally, many existing fixed indemnity plans vary payment widely based on the specific health care services enrollees receive. We are not aware of systematic data on fixed indemnity coverage in the individual or group market, but plan materials available to prospective consumers provide a glimpse into the nature of the benefits. However, some modern benefit designs look very different. H ouseholds may of course reasonably choose to buy this product, especially as a complement to traditional health insurance. It i s insuring not against the costs of health care services, specifically, but against the risk of disrupted income at a time of increased expenses. In its historic format – paying a fixed benefit per day of illness, like $ 1 00 per day a patient is hospitalized – fixed indemnity coverage d oes not function as a substitute for health insurance. Notably, the health insurance standards of the Affordable Care Act (ACA) do not apply to excepted benefits, so fixed indemnity coverage may discriminate based on pre-existing conditions, decline to cover the ACA’s essential health benefits, and need not cap enrollees’ annual out-of-pocket spending. Because it was thought to serve a different purpose than traditional health insurance, fixed indemnity coverage has, since the mid-1990s, been defined as an “excepted benefit” that is not subject to most federal health insurance regulations. That is, these policies were intended not to pay for medical care directly but instead to provide an alternative source income at a time when ability to work might be limited just as expenses were rising. Historically, this benefit was understood as a form of income replacement. Rather than paying health care providers for providing specific services, fixed indemnity coverage provides a payment for each day (or month, or other time period) an individual is hospitalized or experiencing illness. Fixed indemnity (also called hospital indemnity) coverage is designed differently, with payments made on a “per time period” basis. Traditional health insurance charges its enrollees a monthly premium, in exchange for paying for some or all of the health care services an individual receives.
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