I have heard of health plans and health insurance. What is the difference?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: May 10, 2010

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Insurance Question from Manhattan, NY

Asked on 05/10/2010

I have heard of health plans and health insurance. What is the difference? NULL

Answer given on June 03, 2010

Heath,

 

"Health insurance" is a stop loss.  This is what you buy to shift the risk away from yourself and onto an insurance company in the event you have an illness or other condition that could potentially cost you a lot of money.  Just like car insurance that you buy in case you have an accident or damage someone else’s property with your car, you buy health insurance to minimize your financial exposure in the event that something bad happens to you health-wise. 

 

Typically, "health plans" are provided by "health insurance".  If you are employed, your company may offer you a "health plan" that allows you to have office copays, drug copays, a deductible amount that you have to cover on your own, and other medical expense benefits as outlined in the health insurance policy that your company buys or has established on their own. 

 

So in summary, a health "plan" is typically provided by utilizing health "insurance".  But they are not always entwined directly by the insurance companies.  Think of it like this.  Consider car insurance ( a general term ) and your auto insurance policy ( your car "plan" ).  Buying the insurance provides you with a policy that guarantees performance based on specific conditions within the contract between you and the car insurance company.  Your car "plan" may be different than 100 other people’s car plans.  But, you all utilized car "insurance" to get a car "plan". 

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