Loading the player...

What is 'Co-pay'

A co-pay is a common feature of many health insurance plans, where the insured pays a set out-of-pocket amount for health care services. Insurance providers often charge co-pays for services such as doctor visits or prescriptions drugs. Co-pays are a specified dollar amount rather than a percentage of the bill, and they are often paid at the time the service is rendered.

BREAKING DOWN 'Co-pay'

Co-pay fees vary among insurers but are typically $25 or less as of 2016. For example, an insurance plan with co-pays may require the insured to pay $25 per doctor visit or $10 per prescription. To see if your insurance plan has a co-pay option, check your contract. If there is a co-pay option, it may include different fees for doctor visits, emergency room visits, appointments with specialists and other medical services. Insurance providers often charge higher co-pays for appointments with out-of-network doctors than for doctors that are in their network of approved healthcare providers.

How Do Co-pays Affect Insurance Premiums?

Insurance premiums are the monthly fees you pay to have an insurance policy. In most cases, plans with relatively high premiums are likely to have low co-pays, while plans with low premiums are more likely to have high co-pays.

How Do Co-pays and Deductibles Affect Each Other?

A deductible is the amount of expenses you have to pay out of pocket before your insurance company covers expenses on your behalf. For example, if you have a $5,000 deductible, you pay the entirety of your medical expenses until you reach that limit. At that point, your insurance company covers the costs, but you may still be responsible for co-pays and co-insurance.

For example, imagine your co-pay is $20 per doctor's appointment. You see a doctor, and the cost is $200. If you have not reached your deductible, you pay for the entire visit, but if you have already reached your deductible, you only pay the co-pay of $20.

How Do Co-pays and Coinsurance Work Together?

Coinsurance is another out-of-pocket expense many health insurance holders face. Rather than being a set fee like co-pays, coinsurance is a percentage of the cost. In some cases, health insurance carriers pay both a co-pay and coinsurance for the same medical appointment. For example, imagine you receive a filling from a dentist. Your insurer charges a $20 co-pay for every dental appointment, and it levies a 20% coinsurance fee for fillings. The dentist charges $200 for filings. As a result, you pay $60 for the appointment, the sum of the coinsurance and the co-payment.

RELATED TERMS
  1. Co-Insurance

    A co-sharing agreement between the insured and the insurer under ...
  2. Medical Expenses

    Any cost incurred in the prevention or treatment of injury or ...
  3. Out-Of-Pocket Expenses

    An expense incurred and paid for by an individual for personal ...
  4. Out-of-Pocket Limit

    Out of Pocket Limit
  5. Actuarial Value

    The percentage of total average costs for covered benefits that ...
  6. Balance Billing

    When a health care provider bills a patient for the difference ...
Related Articles
  1. Insurance

    Explaining Co-Pays

    A co-pay is a set dollar amount an insured patient pays when visiting a doctor, filling a prescription, having tests performed or receiving other medical treatment.
  2. Insurance

    Understanding Co-Insurance

    Co-insurance is a cost-sharing agreement between an insurer and an insured party.
  3. Investing

    Affordable Care Plans: Bronze, Silver, Gold, Platinum?

    How to choose among the different coverage levels in the Health Insurance Marketplace. Which metal makes the most sense for you?
  4. Retirement

    Medicare Part D Is Changing How You Pay for Drugs

    As the price of prescription medication rises and the population ages, insurers are looking for ways to cut costs. That's where coinsurance comes in.
  5. Insurance

    Buying Private Health Insurance

    Getting your own policy isn't easy or cheap but in some cases, it's well worth the effort.
  6. Insurance

    3 Huge Medicare Drug Plan Price Hikes on the Way

    December 7 is the 2017 enrollment deadline for Medicare Part D. Be aware of these price increases – and how to minimize them – before you make a decision.
  7. Retirement

    Top 5 Costliest Health Issues Retirees Face

    The healthcare system today is murky, with plans changing what they cover. What are the costliest out-of-pocket or underestimated healthcare expenses that retirees need to watch out for?
  8. Insurance

    How To Assess A Group Health Insurance Plan

    Not all group healthcare plans will match up with your needs. Comparing coverage and costs will help you determine what you need and how much it should cost you.
RELATED FAQS
  1. Is it more important to have a low deductible or a low premium?

    Explore the balancing act that exists between insurance deductibles and premiums, and learn the primary factors to consider ... Read Answer >>
  2. What is the average return on total revenue for the insurance sector?

    Learn about the three main segments of the insurance industry, and find out what the average return on revenues is for the ... Read Answer >>
  3. Can your insurance company cancel your policy without notice?

    Learn about your rights as an insured when it comes to your insurance policy being canceled, including how to access your ... Read Answer >>
  4. What is the usual profit margin for a company in the insurance sector?

    Learn what the average profit margin is within the insurance industry, and what factors can affect the profitability of an ... Read Answer >>
  5. What are examples of the largest companies in the insurance sector?

    Read about some of the largest and most influential companies in the insurance sector, a list that includes Berkshire Hathaway ... Read Answer >>
Hot Definitions
  1. Racketeering

    A fraudulent service built to serve a problem that wouldn't otherwise exist without the influence of the enterprise offering ...
  2. Aggregate Demand

    The total amount of goods and services demanded in the economy at a given overall price level and in a given time period.
  3. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  4. Blue Chip

    A blue chip is a nationally recognized, well-established, and financially sound company.
  5. Payback Period

    The length of time required to recover the cost of an investment. The payback period of a given investment or project is ...
  6. Collateral Value

    The estimated fair market value of an asset that is being used as loan collateral. Collateral value is determined by appraisal ...
Trading Center