Difference Between Health plan and Health Insurance

By | December 31, 2009

Earlier, HMOs (Health Maintenance Organizations) used the term “health plan”, whereas commercial insurance companies used the term “health insurance”. A health plan is associated subscription-based medical care arrangement provided by HMOs, preferred provider organizations, or point of service plans. These plans are related to pre-paid dental, pre-paid legal, and pre-paid vision plans. Pre-paid health plans usually pay for a fixed number of services.

Health insurance is allowance that pays for medical expenses. It is sometimes used widely to include insurance covering disability or long-term nursing or emergency care needs. It can be provided by a government-sponsored social insurance program, or from private insurance companies. It can be purchased on a group basis (e.g., by a firm to cover its employees) or purchased by individual customers. Lifestyle-related factors like increase in obesity due to lack of exercise and unhealthy food habits, too much of alcohol use, smoking, and use of street drugs can increase application of insurance and as a result increase in insurance prices.

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