A copayment or copay is a fixed dollar amount (e.g., $25) you pay out-of-pocket for receiving a covered health care service or prescription medicine. If the service has a copay, you often pay it at the time of service.
Your insurance policy sets copays based on a particular type of provider or service. Copays do not change based on what the provider charges; however, they may vary depending on the type of provider or service received. For example, the copay for seeing a primary care doctor could be $25, while it is $50 for seeing a specialist like a dermatologist.
Some services (e.g., certain preventive care) don’t have copays because insurers must cover 100% of the cost (or a deductible may apply instead). Information on copays and when they apply can usually be found in your Summary of Benefits and Coverage.
How do copays work?
Copays are a form of cost sharing. Insurance companies use them to split the cost of care with you, the insured person. For example, if your health insurer has agreed to reimburse $100 for an orthopedic visit, and your policy has a $25 copay for specialists, you would owe $25. The insurer would cover the rest ($75). Even if the provider charges more for a service—say the orthopedist charges $150 for a visit instead of $100—you would still only owe the $25 copay. The insurer would cover the rest ($125).
Keep in mind that there may be times where you pay a copay for one service from a provider and then have to pay additional amounts out-of-pocket for other services. Suppose you may have a copay for a checkup with your primary care physician, but the doctor orders bloodwork. You could have to pay additional costs toward your plan’s deductible because they are considered different covered services. You should always review your health plan policies when determining what you may owe out-of-pocket.
Depending on the policy, copays may apply before or after you meet your deductible. Suppose in the original example above, you hadn’t met your deductible at the time of the doctor’s visit. In that case, your plan might require you to pay the full $100 instead of the $25 copay. Whether you have to satisfy your deductible before your insurer shares the cost of service with you depends on your health plan. If the policy requires you to meet the deductible before allowing for copays, you might have a High Deductible Health Plan. Generally, once your deductible is met, you are still responsible for paying any copays or coinsurance until you reach your out-of-pocket maximum for covered services. It’s always a good idea to review your plan’s Summary of Benefits and Coverage to know for sure.
Do some health plans have higher copays than others?
Like many forms of cost sharing, health insurance plans with lower premiums tend to have higher copays. Plans with higher premiums tend to have lower copays.
What is the difference between a copay and a deductible?
Your annual deductible is a fixed dollar amount (e.g., $5,000) that you must pay out-of-pocket before your health plan pays for covered services you receive. As noted, when a copay applies (i.e., before or after the deductible is met) will depend on your policy.
Read Gusto’s explanation of health insurance deductibles and how they work.
What is the difference between a copay and a coinsurance amount?
Coinsurance is a percentage of the cost of covered services you are responsible for after meeting your deductible. For example, your policy may require you to pay 30% of the cost of specialist visits. If you go see a dermatologist who bills your insurer $100, your coinsurance would be 30% of that cost–so you owe $30. Unlike copays, you are usually responsible for paying coinsurance only after the deductible has been met. In comparison, copays are a fixed dollar amount you pay regardless of the covered services or prescription’s total price.
Read more in Gusto’s explanation of coinsurance.