A co-payment or copay (called a gap in Australian English) is a fixed amount for a covered service, paid by a patient to the provider of service before receiving the service. It may be defined in an insurance policy and paid by an insured person each time a medical service is accessed. It is technically a form of coinsurance, but is defined differently in health insurance where a coinsurance is a percentage payment after the deductible up to a certain limit. It must be paid before any policy benefit is payable by an insurance company. Co-payments do not usually contribute towards any policy out-of-pocket maximum, whereas coinsurance payments do.
Insurance companies use co-payments to share health care costs to prevent moral hazard. It may be a small portion of the actual cost of the medical service but is meant to deter people from seeking medical care that may not be necessary, e.g., an infection by the common cold. In health systems with prices below the market clearing level in which waiting lists act as rationing tools, co-payment can serve to reduce the welfare cost of waiting lists.
However, a copay may also discourage people from seeking necessary medical care, and higher co-pays may result in non-use of essential medical services and prescriptions, thus rendering someone who is insured effectively uninsured because they are unable to pay higher co-pays.
a relatively small fixed fee that a health insurer (such as an HMO) requires the patient to pay upon incurring a medical expense (as for a routine office visit, surgical procedure, or prescription drug) covered by the health insurer
How Co-Pay Works
Copay fees vary among insurers but typically are $25 or less. For example, an insurance plan with co-pay may require the insured to pay $25 per doctor visit or $10 per prescription. Review the terms of your insurance plan to determine your co-payment option.
Please Note:
- Not all medical visits require co-payments from patients.
- Out-of-network visits might have higher co-payments or co-pays than in-network medical providers.
- Deductibles are much larger sums than co-pays.
- Co-pays and coinsurance are not the same things. Coinsurance is a percentage of the bill, a copay is a fixed amount.
Co-pay affect insurance premiums?
A premium is an amount paid for an insurance policy. In most cases, plans with relatively high premiums are likely to have low co-pays, while plans with low premiums are more likely to have high co-pays.
Co-pay Affect Deductibles?
A deductible is an amount an insured party pays out-of-pocket before an insurance company pays a claim. For example, if you have a $10,000 deductible, you will spend the entirety of your medical expenses until you reach that $10,000 limit. At that point, your insurance company covers the costs, less your copay or coinsurance costs.
For example, imagine your co-pay is $80 per medical visit. You see a physician, and the cost is $350. If you have not reached your deductible, you pay for the entire appointment. If you have reached your deductible, you will pay only the copay of $80. Every member of your family will have to make a copay for their medical visits unless one is not required, such in the case of an annual physical, as an example.
Co-pay and Coinsurance Work Together?
Coinsurance is another out-of-pocket expense many health insurance policyholders pay. Rather than being a fixed fee amount as with co-pays, coinsurance is a percentage of the total visit cost. In some cases, health insurance policyholders pay both a copay and coinsurance for the same medical appointment.
For example, imagine you receive a filling from a dentist. Your insurer charges a $60 co-pay for every dental appointment, and it levies a 30% coinsurance fee for fillings. If the dentist costs $250, you pay $60 copay and $100 coinsurance for a total of $160 for the appointment.
Conclusion:
Co-pays are fixed fees insurance companies set as part of an insurance plan. They’re based on the services rendered, including office visits, prescription drugs, and other types of care. Because co-pays are fixed amounts, the insured person knows their financial obligation ahead of time, and they are required to pay it before receiving care.
Many insurance companies choose their co-pays based on the estimated cost of a visit. Because urgent care will be treating you on an urgent basis, the care will likely cost more than a routine checkup with a primary care physician. This is one of the biggest factors in a higher copay for urgent care. As a result, most health plans offer urgent care co-pays ranging from $35-75 per visit, while primary care co-pays range from $20-50.
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