Co-pay

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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.