Who Pays For Indemnity Health Insurance? 
Indemnity insurance is a form of health insurance that pays a fixed amount per service or for a period of time . For example , an indemnity policy might pay $ 50 towards a doctor 's office visit . This means that regardless of the total cost of that visit to the doctor the indemnity policy pays $ 50 . Another common example is the indemnity policy may pay $ 500 per day that the policyholder is in the hospital . If the policy holder had a 2 day hospital stay that cost $ 8000 the policy would pay $ 1000 -LRB- $ 500 x 2 -RRB- and the policy holder would be responsible for the remaining $ 7000 in hospital expenses . There are many variations on the indemnity policy theme and they are often combined with accident and/or critical illness policies to provide more financial protection . In any event , indemnity policies are not major medical policies and by design provide defined and limited financial protection to the policy holder . These policies were really designed more as a supplement to major medical insurance than as a replacement for it . If you have a premature baby that racks up $ 500,000 in neonatal intensive care bills an indemnity policy will not go very far towards covering that expense . Also , indemnity policies do not meet the Minimum Essential Benefit requirements for health insurance under the affordable care act -LRB- ObamaCare -RRB- and will leave such a policyholder subject to the individual mandate tax penalty if that is the only medical insurance a person has . With the high cost of ObamaCare compliant plans the lower costs of hospital indemnity plans can be a tempting option for some people but you should be under no illusion that these policies cover the full range of medical services a person might need or that they provide protection against the costs of serious illnesses or injuries that might run into the 5 , 6 or 7 figure range . 