Copayments, or copays, are a common form of cost sharing under many health insurance plans. Cost sharing is simply the portion of costs covered by you out of pocket. Splitting the cost of medical services between the insurance company and the policyholder keeps your monthly medical bills in check.
If you’re enrolled in coverage through a small business plan or group health insurance, your employer is typically not responsible for copayments. Copayments are usually the responsibility of the policyholder.
Understanding how this system works helps you make smart insurance choices that suit both your health care needs and budget. Here’s what you need to know when it comes to health insurance copays and other out-of-pocket costs.
Introduction to Copayments
Copayments are a common term in health insurance, but what exactly do they mean? In simple terms, a copayment, or copay, is a fixed amount that you pay out of pocket for covered healthcare services. It’s typically a set dollar amount, such as $20 for a doctor’s visit or $10 for a prescription medication. Copayments are a way for insurance companies to share the cost of healthcare services with policyholders. Understanding how copayments work can help you better manage your healthcare expenses and make informed decisions about your coverage.
What is a Copay?
A copayment, often referred to as a “copay,” is a fixed, predetermined amount that an individual pays out-of-pocket for specific healthcare services or prescription medications. It is a cost-sharing arrangement between the individual and their insurance company, wherein the insurer covers the remaining portion of the medical expense. Copayments provide a simple and predictable way for individuals to contribute to their healthcare costs at the time of service, making it easier to access medical care without bearing the full financial burden.
Copayment vs. Coinsurance vs. Deductible
It’s important to understand the cost-sharing details of any health insurance plan you’re considering, especially for frequently used services or prescriptions. Keep in mind that these are out-of-pocket costs you’ll pay in addition to monthly premiums and costs for non-covered services.
Cost sharing primarily comes in three forms:
- Copayment: This is a fixed, flat fee for certain kinds of office visits, prescription drugs, or other services. Because the health insurance copay is fixed, you’ll know ahead of time exactly how much you owe. If your policy lists a copayment of $25 for a doctor visit, you pay that amount each time you see the doctor.
- Coinsurance: This is a percentage of the total cost for a covered medical service, instead of a fixed copayment. If the insurance company owes a doctor $100 for your visit, and you have a coinsurance of 25 percent, you’ll pay $25 for the visit. You may pay it at the time of service or get a bill for your portion after the visit.
- Annual deductible: An annual deductible is a set amount that you may be required to pay toward covered medical care within a single year. For example, if you have a $3,000 annual deductible, you may need to pay that amount out of pocket toward covered medical care before the insurance company will begin paying your claims.
How Copayments work
Generally, you’ll pay completely out of pocket for covered medical services until you reach your plan’s yearly deductible. After that, your insurance starts to pay for its share of costs, and you may owe a copayment or coinsurance for certain services as your “share.”
It’s also important to note that certain preventive medical services may not have cost sharing. For example, annual preventive care checkups, certain screenings, and childhood vaccines are generally not subject to copays, coinsurance, or deductibles. This means they’re generally covered without out-of-pocket costs.
Do Copays count towards the Deductible?
Yes, copayments typically count towards the deductible in most health insurance plans. When you pay a copayment for a covered service or prescription, the amount you contribute is applied to your annual deductible. Once you meet your deductible, your insurance coverage may change, such as transitioning to coinsurance, where you pay a percentage of the cost of covered services rather than a fixed copayment. It’s important to review your specific health insurance plan to understand how copayments contribute to your deductible and how your coverage changes once the deductible is met.
Do you pay a Copay after your Out-of-Pocket Maximum is met?
No, once you reach your out-of-pocket maximum, you generally do not have to pay copayments or any other cost-sharing for covered services for the remainder of the plan year. Your insurance plan will cover 100% of the allowed amount for covered services after the out-of-pocket maximum is met. However, it’s important to note that some services, such as non-covered or out-of-network services, may still require payment even after reaching the out-of-pocket maximum. Always review your specific health insurance plan to understand the coverage details and any exceptions.
Some health insurance plans have an “out-of-pocket maximum,” which is a cap on the amount you’ll pay for covered services each year. Health insurance copayments and other forms of cost sharing count towards this amount and are capped by the out-of-pocket maximum listed for the policy.
For example, if your plan has a $6,500 out-of-pocket maximum, once your contributions reach that amount, you stop paying any cost sharing amounts. From that point, your plan should cover all costs for the rest of the year for covered services.
Example Copayment scenario
Let’s consider a health insurance plan with the following details:
- Plan Type: Health Maintenance Organization (HMO)
- Monthly Premium: $150
- Annual Deductible: $1,000
- Copayment for Primary Care Visit: $25
- Copayment for Specialist Visit: $40
- Out-of-Pocket Maximum: $3,000
Real-Life Scenario:
John, a 35-year-old self-employed individual, has enrolled in the HMO plan mentioned above. He pays a monthly premium of $150 to maintain his coverage. In January, John starts experiencing persistent headaches and decides to visit his Primary Care Physician (PCP) to get checked out.
Scenario 1 – Primary Care Visit:
John’s PCP charges $120 for the visit.
Since John has not yet met his deductible, he is responsible for paying the full cost of the visit out-of-pocket. The $120 goes towards his $1,000 annual deductible.
Let’s examine another health insurance plan with the following details:
- Plan Type: Preferred Provider Organization (PPO)
- Monthly Premium: $200
- Annual Deductible: $1,500
- Copayment for Primary Care Visit: $30
- Copayment for Specialist Visit: $50
- Out-of-Pocket Maximum: $4,000
Real-Life Scenario:
Sarah, a 40-year-old marketing professional, has opted for the PPO plan described above. She pays a monthly premium of $200 to maintain her coverage. In April, Sarah twists her ankle while hiking and decides to see her Primary Care Physician (PCP) to assess the injury.
Scenario 2 – Primary Care Visit:
Sarah’s PCP charges $150 for the visit. As Sarah has not yet reached her deductible, she is responsible for covering the full cost of the visit out-of-pocket. The $150 contributes towards her $1,500 annual deductible.
Insurance plans and Copays
Insurance plans often come with copayments, which are fixed amounts you pay for covered services at the time of receiving care. Copays are a standard feature in many health insurance plans and serve as a way to share the cost of healthcare between you and your insurance provider. These copayments can vary depending on the type of service, such as a primary care visit or specialist consultation, and are typically outlined in your plan documents. Understanding how copayments work can help you better manage your healthcare expenses and navigate your insurance coverage more effectively.
Which plans require a health insurance Copay?
Copayments are more common with managed care plans, such as HMOs. Insurance companies offering these plans have contracts with health-care providers that let them pay fixed fees for essential services. This makes it easier to predict overall costs and to offer a cost sharing structure to consumers. It’s also possible, however, to find other plans (such as PPOs) that incorporate copayments into their cost-sharing structure, in addition to annual deductibles or coinsurance.
Plans with cost sharing offer benefits for both insurance companies and members. The structure lets insurance companies keep costs down and helps the insured know upfront what they’ll owe for each service.
Which services have a health insurance Copayment?
The rules for health insurance copayments vary based on the policy and provider. Check the details of your plan’s policy for more information. You may owe a copayment for:
- Office visits with a primary care physician for non-preventive care
- Office visits with a specialist
- Prescriptions
- Physical therapy
- Occupational therapy
- Speech therapy
- Mental health in-office services such as physiotherapy or drug counseling
- Ambulance or ER services
As mentioned above, preventive care is generally exempt from cost-sharing thanks to the Affordable Care Act, so copays would generally not apply for these office visits.
Keep in mind that your plan may have provider network rules. Your costs may be higher if you go out of network or use a non-preferred doctor or provider. If you go out of network, your copayment or coinsurance costs may be more, or you may be required to pay the full amount for the services.
Is the Copayment the same for every service?
The set amount you have to pay for a doctor visit, hospital visit, urgent care visit, or even prescription medication will likely be different.
Copayments based on facility
Your copayment may differ based on the type of medical facility you visit—for example, a regular medical center visit versus urgent care. The same applies to emergency room visits and specialty care. Usually, standard medical care visits have the lowest copayments.
Copayments for name brand vs. generic prescriptions
You might also have a copayment for certain medications. However, generic drugs often have a smaller copayment than name brands. This means that you can take generic brands that work just as well, if not better than name-brand medications, while paying less for your copayment.
HMO vs. PPO Copayments: What’s the difference?
PPO insurance plans, also known as Preferred Provider Organization, are a bit different from Health Maintenance Organization, or HMO plans. For starters, PPO plans are oftentimes a bit more expensive than HMO plans.
PPO insurance plans might also require you to pay a deductible before using your copayment, while some HMO plans might not have a deductible at all.
Copayment costs are usually more for HMO insurance plans, but these plans might cost less month to month. Usually, the higher the copayment cost, the lower the month-to-month cost. They might also be a difference if you have coinsurance in place of or in addition to your insurance copay.
In-network vs. Out-of-network Copayment
While you are free to visit any doctor of your choosing, it’s good to know the difference between in-network and out-of-network insurance copay. If you choose to visit a doctor within your network, meaning one that accepts your type of health insurance plan, then you will pay an in-network copayment, which is usually lower.
However, if you choose to visit a doctor that is outside of your network, you will need to pay the copayment set by the doctor and your insurance provider. These out-of-network copayment fees might be higher and may be determined on a case-by-case basis. Fortunately, the Affordable Care Act has set regulations so that medical care—including copayments—is more affordable.
What is a Copay? FAQs about Copayment costs
What is the average cost of a copayment?
A recent KFF survey found that the average cost of a copayment for a regular doctor’s visit is around $26, while a copayment for a specialty visit is around $44. This will depend on the type of care you need, the doctor you visit, and the insurance plan you have.
When do I pay my Copayment?
Most doctor’s offices will require that you pay your copayment before entering the doctor’s office. When you come in on the day of your appointment, they will ask you to pay through debit, credit, or cash before being seen. If paying for medication, you will typically pay at the register of your pharmacy.
What happens if I can’t pay my Copayment?
If you are unable to pay your copayment at the time of service, the healthcare provider may have specific policies in place to address such situations. Some possible scenarios include:
- Provider Policy: The healthcare provider’s policy may vary. They may allow you to receive the necessary medical treatment or prescription medication, even if you can’t pay the copayment immediately. In such cases, they might bill you later for the copayment amount.
- Payment Plan: Some healthcare providers may offer payment plans or financial assistance options for patients who are facing financial difficulties. You can inquire about these options to arrange a suitable payment schedule.
- Non-Emergency Care: For non-emergency situations, some providers may request that you pay the copayment before receiving treatment. In such cases, they might reschedule your appointment to a later date when you can fulfill the copayment requirement.
- Emergency Care: In emergencies, federal law (Emergency Medical Treatment and Labor Act – EMTALA) prohibits hospitals from denying treatment based on the patient’s ability to pay. If you are facing a medical emergency, you will receive necessary care, regardless of your immediate ability to pay the copayment.
Why am I being charged more than my Copay?
There are several reasons why you might be charged more than your copayment at a healthcare visit. Some possible reasons include:
- Coinsurance: If your health insurance plan includes coinsurance instead of a fixed copayment, you are responsible for paying a percentage of the total cost of the medical service or prescription medication, while the insurance company covers the remaining portion. The coinsurance amount can vary based on the specific service or medication.
- Deductible: If you have not yet met your annual deductible, you will be responsible for paying the full cost of the medical service or prescription medication until the deductible amount is fulfilled. After meeting the deductible, your copayments or coinsurance may apply.
- Out-of-Network Providers: If you receive medical services from a healthcare provider who is not part of your insurance plan’s network, your plan may not cover the full cost of the service. In such cases, you may be charged more than your copayment, and you may also have to pay a higher percentage of the service cost due to out-of-network rates.
- Non-Covered Services: Some medical services or prescription medications may not be covered by your insurance plan. If this is the case, you will be responsible for the full cost of the service or medication, which may exceed your copayment.
- Prior Authorization: Your insurance plan may require prior authorization for certain medical services or medications. If you did not obtain authorization before the visit, your plan may not cover the full cost, resulting in additional charges.
- Balance Billing: In some cases, healthcare providers may engage in balance billing, which means they bill you for the difference between their charges and what your insurance company has allowed for the service. This can occur when the provider’s fees exceed what the insurance company considers to be reasonable or customary.
To understand why you are being charged more than your copayment, it is essential to review your health insurance plan’s details, including deductible, coinsurance rates, network coverage, and covered services. If you have questions or concerns about the charges, contacting your insurance company or the healthcare provider’s billing department can provide clarification and help resolve any discrepancies.
Can I use HSA for Copayment?
While you can use your health savings account (HSA) money to cover medical expenses, such as copayments, keep in mind that most times, you will only have access to an HSA if you have a high deductible health plan, or HDHP.
Can I use FSA for Copayment?
Yes, you can use a Flexible Spending Account (FSA) for copayments. An FSA is a tax-advantaged account that allows you to set aside pre-tax money to cover qualified medical expenses, which includes copayments. By contributing to your FSA, you can use the funds to pay for copayments, reducing your out-of-pocket expenses for medical services and prescription medications. However, it’s essential to be aware of the annual contribution limit and any specific rules or guidelines set by your FSA plan to ensure you maximize the benefits of using FSA funds for copayments.
Find a healthcare plan that fits your budget
According to the Kaiser Family Foundation, about half of U.S. adults say they have difficulty affording healthcare costs. That doesn’t have to be you. It’s to your advantage to shop around and compare cost sharing details for plans you’re considering.
If you need help finding a healthcare plan that fits your budget, has lower copayment options, and fits with your health needs, use our search tool. As a licensed insurance broker, eHealth offers a wide selection of health insurance plans from trusted companies. If you’d like more information on cost sharing, or if you’d like help finding a health plan that fits your health needs and budget, our support staff is here to assist you.
