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What is the difference between “indemnity” and “reimbursement” long-term care insurance?

difference between indemnity and reimbursementAn indemnity plan is a plan that pays up front for the cost of your long-term health care (or another person’s policy).

A reimbursement plan is similar to an extent; one of the big differences is that you pay first and are then reimbursed later on. After this, the healthcare provider submits a bill, which was indicated in the contact, and is then reimbursed.

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The definition of long-term health insurance is a policy that helps to cover the cost of long-term medical care, not covered by your regular health insurance policy.

Benefits of both policy types and the best way to choose between them appear below.

Indemnity Type Policies

So what is the difference in reimbursement and indemnity? The best way to explain some of the differences between the two policies is through the following example. If your medical bills are $300 dollars and you purchased a $500 indemnity policy, you would be given the full $500 regardless of the total cost of the care.

With the reimbursement plan, if your bill was $300 dollars and your coverage was for $500 dollars, they pay the $300 dollar bill and leave the remaining $200 in your account for use on future coverage.

The basic idea behind the indemnity policy is this: it’s your money and you can be in charge of what it is spent on in regards to your long-term care.

Small expenses may spring up and you will have the full amount to decide what to do with it. Of course, this will cost you more for this flexibility.

difference between indemnity and reimbursement long-term careA reimbursement plan takes a more reserved approach, paying only for what is needed, and leaving the remaining funds to “roll-over” in your account. This plan has a more “rainy day” mentality, since it stores unused funds for large emergency expenses that could happen down the road. You may never access some of the available funds.

An indemnity plan will pay up to a fixed amount as outlined in the policy. A reimbursement plan allows you to decide what the amount of the benefit will be and then you can pay accordingly. Neither policy has unlimited benefits.

Reimbursement Type Policies

Other things to consider when choosing a long-term care policy are that of caregivers and service providers. Most reimbursement type policies require a professional and licensed caregiver that is in charge before funds are paid (note: some plans allow you to pay an additional cost to allow others to take on that role).

An indemnity plan may make exceptions and allow family members or less formal helpers to care for you, which can be less expensive than their professional counterparts, and thus help you stretch out your money.

One key question is what you can afford to spend versus your desire for complete access to the funds. If you can only afford to pay the minimal for long-term care insurance then a reimbursement account is better than nothing at all.

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Choosing Plans That Suit Your Needs

difference between indemnity and reimbursement long-term care insuranceWhat is the right plan for you? Only you, your circumstances and your provider, can decide that. You can start by finding a qualified agent and getting a price quote. You can also use the online insurance tool on this page and compare policies and prices to be sure you are getting the best deal.

Be sure to read all fine print and have a clear understanding of details before signing or agreeing to anything.

No matter which policy you decide on, be it indemnity or reimbursement, you can relax and enjoy the peace of mind that comes from knowing you will be well taken care and your family protected.

Advanced planning is always better than wishful and eventually regretful thinking. Start the process by obtaining and comparing several rate quotes.

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