A copay is the amount you pay out-of-pocket for covered services as defined by your insurance policy. Most health, vision, and dental insurance plans will charge a copay for a variety of services, while other services may not have a copay attached.
This copay definition may seem simple enough, but there are nuances. It’s an important part of any insurance plan, so let’s explore the ins and outs.
How Do Copays Work?
Copayment fees will always be a fixed amount of money — not a percentage of your total bill. Let’s say you’re visiting a physician. If the cost of your physical exam is $100, and your insurer charges a $20 copay for physicals, you’ll always have to pay that $20 (but the remaining amount will be covered).
Keep in mind that the copay will often differ for different services. For example, what you pay for a visit to the emergency room will probably not be the same as the copay for a planned appointment, or a visit to a specialist.
Copayment amounts vary by insurer and insurance plan. A policy with a lower premium (that’s your monthly cost for your insurance plan) may have a higher copay for certain services, and vice versa. You can usually find your copay options in the terms of the plan you’re considering.
Is a copay the same as coinsurance?
Coinsurance is another type of fee charged by insurers. Unlike copayments, coinsurance is calculated as a percentage of the total cost of the service. Depending on the provider and service you’re being charged for, you may have to pay both a copay and coinsurance fee.
For example, a 10% coinsurance fee on a $300 medical bill will be $30. If you’ve already met your deductible, you’ll pay the $30 plus your copay.
Speaking of deductibles…
Do copays count towards deductibles?
No, copay fees usually won’t go toward hitting your deductible. Of course, this can vary between insurance plans. Some policies do count your copay toward reaching your deductible. Review your plan’s terms to make sure you know how much you’ll need to pay and when.
(You also might not need to pay a copay until you hit your deductible. So, when you’re checking those plan terms, note when copays come into effect.)
Copay vs. out-of-pocket maximum
Your out-of-pocket maximum is the most you’re required to pay for services covered under your insurance plan in a year. Out-of-pocket maximums for Marketplace plans have a set limit.
Most insurance plans include the copay under the umbrella of the out-of-pocket maximum. So, when you make a copayment, you’re getting that much closer to full coverage. (Premiums and out-of-network care don’t count toward your maximum, however.)
Know what copays to expect with your plan
If you’re preparing for open enrollment, be sure to carefully review plan terms to understand associated costs. Your HR representative or insurance agent can help guide you through the process of finding the right plan for you.