What is a copayment in health insurance?

What is a copayment, when is it due, and what does it cover? It can seem overwhelming. That is, until you break it down and understand the way that copays work within the health insurance system. Here’s what you need to know about these fixed dollar amount payments you’ll make for your healthcare. 

What is a copayment in health insurance?

Don’t let the complicated word throw you! Most simply, a copayment (copay) is a fixed amount you pay for healthcare services. Sometimes, copays are not available until after you’ve met your annual deductible. You'll encounter copays for a variety of different services, from primary care to emergency transportation.

The most common place you might find copays are primary care doctor visits or paying for prescriptions. You will typically encounter one copay rate for primary care and another for specialists. Likewise, you'll usually find one set of copay rates for name-brand prescription drugs, and another for generic drugs. Check the summary of benefits for your specific plan to understand when you’ll be paying copays and in what amounts.

How does a copay work?

For most insurance plans, there is one copay amount for your primary care physician, and then another for any specialists. There are also separate copay amounts for emergency room care, urgent care, and other services ranging from speech therapy to physical therapy. 

Be sure to check the details of your specific health plan, though. Some plans may allow you to pay a copay for some healthcare services even before meeting your deductible. 

To break things down further, your deductible is the amount you must first pay out-of-pocket for your healthcare before your health insurance policy begins to pay for some or all of your care. Once you’ve met your deductible, you will only pay copayments and coinsurance amounts for your healthcare. And once you’ve met your annual out-of-pocket maximum, your health insurance plan will cover all your covered medical care.

When you see an in-network provider, that means your insurance company has come to an agreement with that provider on a fixed amount you will owe to see them. If you have not met your deductible, and your plan requires that you meet your deductible first, you will pay the maximum agreed upon amount for that visit. Once you have met your deductible, you will just pay your copay. A copay is always less than the maximum allowable amount for a given kind of visit. 

What is an example of how a copay works?

For example, let’s say you go to your dermatologist. And let’s say your insurance plan has a $40 copay for a specialist visit. If your plan requires you to meet your deductible before paying copays and you’ve done so for the year, you will just pay the $40 copay to see that doctor. If you have not met your deductible, you will pay the maximum allowable amount for that visit, as determined by the agreement between your health insurance company and provider. Before your deductible, you might pay $120 for the visit, in lieu of a copay. After your deductible, you pay your copay and your health plan pays the rest.

Keep in mind, though, that some plans don’t require you to meet your deductible before paying copays. With these kinds of plans, you’ll pay copays from the start. Be sure to check your specific plan details. 

Thanks to the Affordable Care Act (ACA), when you see an in-network provider for a number of preventive care services, those visits come with a $0 copay. In other words, you will pay nothing to see your doctor for your annual check-ups. This also means you won't pay for your yearly well-woman exam. A number of other preventive forms of healthcare are also covered, free of charge to you. And all of this means that your health insurance makes sure that your healthcare is truly affordable. 

There are separate categories of preventive care services covered by a $0 copay for adults, women and children. These no-cost preventive services include everything from STI screening to contraception. You can also receive blood pressure screening, some kinds of cancer screenings, and depression screenings and more at no cost as long as you see an in-network provider. 

When do I have to pay a copayment?

With rare exception, copayments are due at the time of your visit to your doctor. That means that depending on your doctor’s office procedures, you’ll pay your copay either before seeing the doctor when you check-in or after you see the doctor when you check-out. You will not receive a bill in the mail after the fact for your copay amount. 

That said, if you are concerned about being able to afford your copay at the time of your visit, talk to your doctor’s office. Occasionally, an office may be willing to bill you for your copayment amount, instead of having you pay at the time of service. 

What does split copay mean?

A split copay plan is a specific type of health insurance plan. With these kinds of plans, your costs are split between the patient and the patient’s Health Reimbursement Arrangement (HRA) (when held through an employer) or Health Spending Account (HSA) (when funds are held by the insured person directly). So, should you see a doctor with this kind of plan, the amount you owe would be divided so that some comes from you out-of-pocket, and some comes from the funds you have allocated to be in a tax-exempt, healthcare-specific account. Any copays due are the patient’s out-of-pocket responsibility. 

What’s the difference between a copayment and coinsurance? 

What is a copayment?

Remember, your copayment is a fixed amount that you will pay for your healthcare after meeting your deductible amount. For any in-network provider, your provider and your insurance company have agreed on a maximum allowable amount for their services. A copayment is just a portion of that amount that is paid in lieu of the maximum allowable amount. And for many plans, you won’t be paying this amount until after you’ve met your annual deductible. So, for example, after your deductible, you may only pay a $20 copay to see the doctor instead of the $100 maximum allowable amount for that same visit. 

What is coinsurance?

Coinsurance is a little different, though. Your coinsurance percentage is the amount your health insurance plan will pay for a covered service after you’ve met your deductible. So for that same maximum allowable $100 amount for an office visit, if you have a coinsurance of 30% after your deductible, you pay $30 and your plan will pay the remaining $70. If you haven’t met your deductible for the year, you would pay the full $100. So, your coinsurance payments are just another means through which you contribute for your care after you meet your insurance deductible. 

Depending on the specific details of your health plan, after you meet your deductible, you may pay your coinsurance amount for some healthcare services, and a copay for others. 

And after you meet your out-of-pocket maximum, your insurance company pays for your care. 

What’s the difference between a copayment and a deductible? 

Your annual deductible is the amount your individual health plan specifies you must pay out-of-pocket for your care before your insurance company begins to pay for some or all of your care. After you meet your deductible, the real cost savings kick into place. Then you’ll pay copayments and coinsurance, up until you meet your out-of-pocket maximum. 

A copayment, though, is a fixed amount you will pay to see an in-network provider after you’ve met your annual deductible. 

Do copays count towards my deductible?

Typically,  like with your monthly premiums, you copayments do not count towards your annual deductible. Check the details of your individual health plan for specifics on what you need to know about your copays and whether or not they count against your deductible.

Do copays count towards my out-of-pocket max?

Another perk of the ACA. According to the Obama administration’s benchmark healthcare law, copays must count towards your annual out-of-pocket max. This rule is only for ACA-compliant plans, so if you are still uninsured and looking to get covered, contact a member of the HealthSherpa Consumer Advocate Team to learn about your options. Remember, all Marketplace plans available on HealthSherpa are ACA-compliant! You can contact the HealthSherpa Consumer Advocate Team at 855-772-2663.

Will I still have copays after my out-of-pocket maximum is met?

Typically, you will not have to still pay copays after you meet your out-of-pocket maximum. However, there can occasionally be discrepancies on this with individual plans. Make sure you familiarize yourself with the details of your health plan to understand your financial obligations for your healthcare. And again, the HealthSherpa Consumer Advocate Team is always on-hand to go over any details about your plan while you shop and after you enroll. 

How much is the average copayment?

In 2017, the average copay for a person who has insurance benefits through their employer was $25 for primary care. There was an average copay of $38 for specialty care that year, too. 

So, what is a copayment? While it may seem confusing at first, copays are just a basic part of how health insurance works. Once you meet your annual deductible, you’ll often pay a copay amount as your contribution for your healthcare costs. While you’re paying your copay, your health insurance plan is paying the remaining amount for what you would otherwise owe for that same service. Copays are yet another reason why it pays to be insured.