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Health Insurance Glossary

Definitions for common health insurance terms

fixed-dollar indemnity plan

DEFINITION: A fixed-dollar indemnity plan is a type of medical insurance that pays a pre-determined amount on a per-period or per-incident basis, regardless of the total charges incurred.  Plans might pay $200 upon hospital admission, for example, or $100 per day while a person is hospitalized.

The original rules released by the Department of Health and Human Services stipulated that fixed-dollar indemnity plans would only be exempt from Affordable Care Act regulation if they paid benefits on a “per-period” basis as opposed to a “per-service” basis. (So for example, they would need to pay a fixed-dollar amount per day in the hospital, as opposed to paying a fixed amount for each doctor visit, prescription, surgery, etc.)

But in early 2014, HHS proposed relaxing those guidelines and allowing per-service fixed-dollar indemnity plans to be exempt from Obamacare rules, as long as they are only sold to people who have minimum essential coverage in place through another policy (among other requirements).  In short, these plans may be useful as supplement for high-deductible health plans, but are not adequate as stand-alone health coverage.