What is Copay?

A copay is like eating at a buffet…

At a buffet, the cost is the same no matter what you eat. But the catch is that you can’t eat if you don’t pay. With a copay, the amount you have to pay is the same no matter what you’re going to see your doctor for, but you have to pay the copay to get medical care.

A copay is a flat amount that you’ll pay every time you visit the doctor. Copays are usually reasonably low-cost, but they will differ in amount depending on the type of medical care you’re receiving.

For example, you might have a $25 copay for visits to your regular doctor (though some plans waive copays for preventive care), a $50 copay for a visit to a specialist, and a $100 copay for emergency room visits.

Depending on your doctor and your insurance provider, you might pay your copay at your doctor’s appointment, or you might receive a bill later. You also might have copays for your prescriptions, though it’s usually a bit lower than the copay for visits to the doctor.

Copays will usually be higher if you visit an out-of-network doctor (one who doesn’t have a contract with your insurance provider) than they would be if you visited an in-network doctor. Keep in mind, though, not all insurance plans offer out-of-network coverage. Make sure your insurance plan will cover you before seeing a doctor that’s not in your network.

You might also have a health insurance plan that allows you to have a health savings account (HSA). An HSA is a savings account that helps people with high-deductible insurance plans save for out-of-pocket medical expenses in a tax-advantaged account. You can use your HSAs to pay for lots of different medical expenses, including your copays.

Most insurance plans have a copay of some kind. Some plans may not require a copay for certain types of medical care. For example, some insurance plans might not require a copay for preventive care.

The price of the copay will be different across different plans. Certain types of plans, such as health maintenance organization (HMO) plans, tend to have lower copays. This type of plan requires you to visit doctors and hospitals that are within a healthcare network. The catch with HMO plans is that you must always first see your primary doctor, and they have to give you a referral if you need to see a specialist. And if you visit an out-of-network doctor, you risk footing the entire bill yourself.

Another type of healthcare plan, the preferred provider organization (PPO) plan, will typically have higher copay costs. The reason for the higher price is that PPO plans are more flexible and allow you to see any in-network doctor without a referral.

Coinsurance is a percentage of your medical bills that you have to pay out-of-pocket. The coinsurance usually doesn’t kick in until after you’ve met your deductible for the year. For most insurance plans, you’ll have to pay both copays and coinsurance.

For example, let’s say you’ve met your deductible for the year, and you have a $30 copay and a 20% coinsurance. You go to the doctor and end up with a bill of $100. Between the cost of your copay and the cost of your coinsurance, the total amount you’ll owe for that visit is $50 ($30 plus 20% of $100).

A deductible is the amount of money your health insurance provider requires you to pay out of pocket before they cover a more significant percentage of your medical bills. After meeting the deductible, your insurance company will start to cover a bigger chunk of the bill.

You still might have to pay coinsurance until you reach your out-of-pocket maximum for the year (aka the most your insurance company will ever require you to pay out of pocket). Deductibles reset yearly, meaning if you met your deductible in 2019, you would have to start over at square one in 2020.

There’s a catch, though — Your copays do not count toward your deductible. And even after you’ve met your deductible for the year, you still have to pay your full copayment each time you visit the doctor.

Many health insurance policies will include an out-of-pocket maximum. This is the maximum amount of money you could have to pay for your medical care over the year. This amount can be spent on deductibles, copays, or coinsurance. The out-of-pocket maximum does not include the money you spend on your monthly premiums.

Once you have met your out-of-pocket maximum, you will no longer have a copay or any other costs to pay when you visit the doctor. The out-of-pocket maximum will vary across different healthcare plans.

For example, let’s say Paul has a health insurance plan with a $25 copay, 25% coinsurance, a $1,000 deductible, and a $5,000 out-of-pocket maximum. Paul injures his leg playing football with his friends, and they take him to the doctor.

First, Paul pays $25 for his copay. After an x-ray, Paul finds out he’s broken his leg. The total cost for Paul’s medical care for that day is $1,000. Because Paul hasn’t been to the doctor yet this year and hasn’t met his deductible, he has to pay that $1,000 out of his own pocket.

A few months later, Paul goes to the doctor for his annual check-up. Just like with his last visit, Paul pays his $25 copay at the beginning of his appointment. While Paul is there, his doctor draws blood to run a few tests. The bill for these tests comes to $150. Because Paul has already met his deductible for the year, he is only responsible for paying for his 25% coinsurance, which comes to $37.50.

Now let’s say Paul were to face a serious injury or disease later in the year that required extensive medical care. Paul has already paid $1,087.50 this year toward his medical care. Because of his out-of-pocket maximum of $5,000, the most Paul will have to pay toward the rest of his medical care this year is $3,912.50, including copays, deductibles, and coinsurance.

As you can see, all of these cost-sharing mechanisms work together to ensure that patients are paying some portion of their medical care while also not risking the burden of crippling medical bills.

Depending on your healthcare plan, you might not have all of these cost-sharing mechanisms. Some healthcare plans might not have either a copay or coinsurance. Regardless of your plan, it’s important to know what your financial responsibilities are, and you want to make sure that your plan has an out-of-pocket maximum.

A premium is a monthly payment you make to your health insurance company for your health care plan. Think of it as a health insurance subscription. You have to pay the premium every month, even when you don’t use your insurance.

Your premiums are a factor separate from the copay, coinsurance, deductible, and out-of-pocket maximum. Even if you’ve met your deductible and your out-of-pocket limit for the year, you still have to pay the premium. Think of it this way — the premium is the cost you pay for your health insurance, while the copay, coinsurance, deductible, and out-of-pocket maximum are the costs you pay for your health care.

If you get your health insurance through an employer, your employer will often cover part of your monthly premium. It’s also common practice that plans with higher premiums have lower deductibles and lower copays, while plans with lower premiums have higher deductibles and higher copays.