A copay, sometimes called a copayment, is the amount of money you pay out of your pocket for certain healthcare services. Each health insurance company has its own approach to copays, and your health plan also affects how much you pay.
Let's take a look at how copays work and what you need to know about them as you choose your health insurance plan.
Your copayment is a fixed amount that you pay for certain healthcare services and prescription drugs after you’ve paid your deductible amount.[1] It helps you cover the costs of getting access to medical services.
In general, higher premiums come with lower copayments. But comparing plan options and benefits is a good idea to see what’s likely to meet your needs.
The copay you have depends on your:
Health plan
Type of healthcare services you receive (doctor visit vs. hospital stay vs. emergency room visit)
Out-of-pocket maximum
Deductible
Whether you’re seeing an in-network or out-of-network provider[2]
When you sign up for your health plan, you’ll see your deductible for different services and other information about your insurance policy, such as your premium. If you’re unsure of your copay amount for different services, check with your insurer to find out what to expect.
Check Out: When Is Health Insurance Open Enrollment?
You’ll generally have a copay until you meet your out-of-pocket maximum. You can usually expect to have a copay when you:
Visit a provider in their office
See a specialist
Have a medical procedure
Visit an emergency room or urgent care facility
Fill a prescription[3]
Sometimes, you won’t have a copay. For example, the Affordable Care Act allows you to have preventive care from your primary care physician each calendar year without a copay. You might also not need to pay a copay for some vaccines, including the COVID-19 shot.
Some health plans that have high deductibles won’t require you to pay a copay for office visits or prescription drugs.
Your deductible is how much you must pay out of pocket before your co-insurance kicks in.[4]
Depending on your health plan, your copay might count toward your deductible. However, not all plans allow you to use your copayments toward your deductible.
That said, your copay always counts toward your out-of-pocket maximum. Once you reach your out-of-pocket maximum, your insurance provider covers 100% of your health service costs for the remainder of the year, no copayment needed.[5]
Co-insurance is the percentage of your medical bills that you’re responsible for after you reach your deductible. Your health plan will specify how much you’ll pay.
For example, your health plan might come with an annual deductible of $1,500 and a co-insurance of 20%. Let’s say that your flat-fee copay doesn’t count toward your deductible. You have medical treatment for $4,000. You’re responsible for paying $1,500 to your healthcare provider. However, once you reach that deductible, your insurance company will help with the remainder. With co-insurance, you’re responsible for 20% of the $2,500 remaining on your bill, or $500. Your total amount paid is $2,000.
Learn More: What Is a PPO?
Your out-of-pocket costs are limited to a maximum amount. Once you reach your out-of-pocket limit, you no longer have copay or co-insurance costs, whether it’s a doctor’s visit, generic drugs, or any other covered service. Your insurance company will pay all your covered healthcare costs until the end of the plan year.
The out-of-pocket maximum is usually set each calendar year, so you need to keep up with where you stand regarding coverage. Many health insurance companies allow you to use a website to track how much you’ve spent, how much of your deductible you need to meet, and whether you’ve reached your out-of-pocket maximum.
If you have a health savings account (HSA), you can use the money to cover different types of services and out-of-pocket expenses, including copays.
An HSA is a special tax-advantaged account for those with high-deductible health plans.[6] With this type of plan, you might have lower monthly premiums and a higher deductible amount. Some of these plans also come with higher copayments.
However, the contributions you make to an HSA are usually pre-tax, meaning they don’t count toward your taxable income. The money in your account grows tax-free too, as long as you use it for qualified healthcare costs, like prescription medication, medical visits, and certain health products.
You can use HSA funds at a pharmacy, for professional medical advice at a primary care doctor or specialist visit, for vision and dental expenses, and even for some over-the-counter medicines and products like blood pressure cuffs. Some medical expenses, like elective plastic surgery, aren’t eligible for HSA funds.
See Also: 5 of the Best Sites to Compare Medicare
Here are answers to some commonly asked questions about copays.
Generally, you’ll need to pay a copay any time you visit a doctor’s office or hospital, have a medical procedure, or get a prescription. Copays will apply until you’ve reached your plan’s out-of-pocket maximum for the plan year, after which the insurance company will pay 100% of covered health costs.
That depends largely on your plan. Some insurance plans have one copay for every service, while others may have one amount for prescriptions, another for a visit with your primary care provider, another amount for specialists, and still another amount for emergency rooms. Copay amounts are often listed on your insurance card.
You’ll typically be expected to pay your copay at the time of the service — when you check in or out at your doctor’s office or when you pick up a prescription at the pharmacy. During the pandemic, many healthcare providers switched to billing for copays, and some still continue the practice.
They usually are. Most insurance plans that provide out-of-network coverage will cover a lower portion of costs, so your copay for those out-of-network services will likely be higher.
