What Is a Health Insurance Copay?

Miranda Marquit
Written by
Miranda Marquit
Miranda Marquit
Written by
Miranda Marquit
Insurance Writer
Miranda Marquit, MBA, is a freelance financial writer covering various markets and topics since 2006. She has contributed to numerous media outlets, including Forbes, TIME, The Hill, NPR, HuffPost, Yahoo! Money, and more. Her work has been syndicated by MSN Money, Marketwatch, Credit.com, and other publications. She has written about insurance topics for Clearsurance, HealthCare.com, and various other websites. She is also an avid podcaster and co-hosts the Money Talks News podcast. Miranda has a Master’s Degree in Journalism from Syracuse University. Connect with her on LinkedIn.
Evelyn Pimplaskar
Edited by
Evelyn Pimplaskar
Evelyn Pimplaskar
Edited by
Evelyn Pimplaskar
Editor-in-Chief, Director of Content
Evelyn Pimplaskar is Insurify’s director of content. With 30-plus years in content creation – including 10 years specializing in personal finance – Evelyn’s done everything from covering volatile local elections as a beat reporter to building fintech content libraries from the ground up.Prior to joining Insurify, she was editor-in-chief at Credible, where she launched and developed the lending marketplace’s media partnership’s content initiative, and managed the restructuring of the editorial team to enhance content production efficiency. Formerly, as Credit Karma’s tax editor, Evelyn built a library of more than 300 educational articles on federal and state taxes, achieving triple-digit year-over-year growth in e-files from organic search.Her early career included work as a content marketer, vice president and managing officer of a boutique public relations agency, chief copy editor for 14 weekly Forbes publications, reporting for large and mid-sized daily newspapers, and freelancing for the Associated Press.Evelyn is passionate about creating personal finance content that distills complex topics into relatable, easy-to-understand stories. She believes great content helps empower readers with the information they need to make important personal finance decisions.

Updated December 12, 2022

Reading time: 4 minutes

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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.

How do copayments work?

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?

When will you have a copay?

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.

Good to Know:

Some health plans that have high deductibles won’t require you to pay a copay for office visits or prescription drugs.

Check Out: Medicare Premiums & Tax Deductions: Here’s How to Save Big

Copay vs. deductible: What’s the difference?

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?

What is an out-of-pocket maximum?

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.

Can you use HSA funds to cover your copay?

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

Copay FAQs

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.

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Sources

  1. HealthCare.gov. "Copayment." Accessed December 12, 2022
  2. Cigna. "Copays, Deductibles, and Coinsurance." Accessed December 12, 2022
  3. BlueCrossBlueShield. "What is a copay?." Accessed December 12, 2022
  4. Experian. "How Do Health Insurance Deductibles, Coinsurance and Copays Work?." Accessed December 12, 2022
  5. HealthCare.gov. "Out-of-pocket maximum/limit." Accessed December 12, 2022
  6. HealthCare.gov. "Health Savings Account (HSA)." Accessed December 12, 2022
Miranda Marquit
Written by
Miranda Marquit
Linkedin

Insurance Writer

Miranda Marquit, MBA, is a freelance financial writer covering various markets and topics since 2006. She has contributed to numerous media outlets, including Forbes, TIME, The Hill, NPR, HuffPost, Yahoo! Money, and more. Her work has been syndicated by MSN Money, Marketwatch, Credit.com, and other publications. She has written about insurance topics for Clearsurance, HealthCare.com, and various other websites. She is also an avid podcaster and co-hosts the Money Talks News podcast. Miranda has a Master’s Degree in Journalism from Syracuse University. Connect with her on LinkedIn.

Learn More
Evelyn Pimplaskar
Edited by
Evelyn Pimplaskar
Linkedin

Editor-in-Chief, Director of Content

Evelyn Pimplaskar
Edited by
Evelyn Pimplaskar
Editor-in-Chief, Director of Content
Evelyn Pimplaskar is Insurify’s director of content. With 30-plus years in content creation – including 10 years specializing in personal finance – Evelyn’s done everything from covering volatile local elections as a beat reporter to building fintech content libraries from the ground up.Prior to joining Insurify, she was editor-in-chief at Credible, where she launched and developed the lending marketplace’s media partnership’s content initiative, and managed the restructuring of the editorial team to enhance content production efficiency. Formerly, as Credit Karma’s tax editor, Evelyn built a library of more than 300 educational articles on federal and state taxes, achieving triple-digit year-over-year growth in e-files from organic search.Her early career included work as a content marketer, vice president and managing officer of a boutique public relations agency, chief copy editor for 14 weekly Forbes publications, reporting for large and mid-sized daily newspapers, and freelancing for the Associated Press.Evelyn is passionate about creating personal finance content that distills complex topics into relatable, easy-to-understand stories. She believes great content helps empower readers with the information they need to make important personal finance decisions.