Employee Benefits

What’s the Difference Between a Deductible vs Copay? 

4 min read
Aug 30, 2023

When navigating the world of insurance there are some key terms you should know about. Among them are deductibles and copays. Both copays and deductibles are examples of expenses you’ll need to pay out-of-pocket when using health insurance and some dental and vision insurance plans. When comparing deductibles versus copays, the biggest difference comes down to how much you pay and when. Read on to learn more.

Key takeaways

  • A deductible is the set amount of money you pay out of pocket for covered services per plan year before your insurance starts to share costs.
  • A copay is also a set amount of money, but it’s a fixed fee attached to certain covered services.
  • Copays don’t always count towards your deductible. It depends on the insurance plan.
  • Carefully review the terms and specifics of your insurance plan to learn about your copay and deductible responsibilities.

How do deductibles work?

A deductible is the set amount of money you pay out of pocket for covered services per plan year before your insurance starts to share costs. Once your deductible is met, your insurance starts to pay some service costs.

Most services covered by your plan are subject to deductibles, as outlined in your policy terms. If the service isn’t covered, you’re typically responsible for the full cost — regardless of whether you’ve reached your deductible or not.

There are some types of care that don’t require you to meet your deductible before your provider covers the cost. Typically, routine exams, cancer screenings, and other types of preventive care are fully covered.

It’s also important to note that some insurance plans, like the following, may have multiple deductibles.

  • Prescriptions: If your policy covers prescriptions, there may be a deductible that’s separate from other medical services.
  • Family plans: Typically, health insurance plans that cover multiple members of a family have two deductibles: one for the individual policyholder and one for their covered family members.

Does your deductible count toward your out-of-pocket maximum?

“Out-of-pocket maximum” refers to the most you’ll pay for covered services in a plan year. Once that limit is reached, insurance pays the cost of covered services. The money you put toward your deductible contributes directly to your out-of-pocket maximum.

How do copays work?

A copay, or copayment, is a fixed fee applied to services covered by your insurance. Most plans have different copays for different types of treatment. For example, a $100 emergency room copay will always be $100 — regardless of what the emergency is, though there may be additional costs related to the ER visit. Keep in mind that not all plans have a copay.

Do copays count toward deductibles?

Copayments generally don’t contribute to a deductible. However, some insurance plans won’t charge a copay until after your deductible is met. Once that happens, your provider may charge a copay as well as coinsurance, which is another out-of-pocket expense. Other plans may charge copayments from the get-go, even as you’re still working toward your deductible. Certain services can also have a copay associated with them, but no other expenses. For instance, some plans might charge a copay for a standard doctor visit appointment, but you won’t have to pay anything more than that, even if you haven’t hit your deductible yet. Keep in mind, that some preventive services must be fully covered, so pay special attention to that subset of care when reviewing your policy.1

Do copays count toward your out-of-pocket maximum?

Copays typically count toward meeting your out-of-pocket maximum. Review your specific insurance policy to understand how copayments are applied to your out-of-pocket maximum and if any exceptions or limitations exist.

Copay vs. deductible in action

Let’s look at an example of how copays and deductibles work together. Alex signed up for a traditional health insurance plan through his employer’s benefits package. The plan he chose has a $1,000 deductible and various copays, such as a $20 copay for a doctor’s appointment and a $100 copay for an urgent care visit.

When Alex had sinus infection symptoms, he only pays the $20 copay to see the doctor — not the full cost of services. But that $20 didn’t count toward meeting his plan’s deductible. When Alex sprained his ankle and went to a nearby urgent care clinic, he paid a $100 copay for the visit. The care providers at the clinic also X-ray his ankle. Since Alex hadn’t met his deductible yet, and X-rays aren’t considered a covered routine service, he had to pay the full cost ($400) for that procedure.

Even though his $100 copay didn’t count toward his deductible, the $400 payment for the X-rays did. He’s now that much closer to meeting his deductible and having his plan start to pay. Remember, this is just an example. The numbers for an actual insurance policy may differ.2 When reviewing your options during open enrollment, always carefully read the terms, so you know what you’re signing up for.

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1 “Preventive health services” HealthCare.gov
2 This is just an illustrative example and actual costs of services will vary

This article is intended to provide general information about insurance. It does not describe any Metropolitan Life Insurance company product or feature.