Copays and deductibles are features of health insurance plans. A copay is a fixed amount paid by a patient for receiving a particular health care service, with the remaining balance covered by their insurance company. A deductible is a fixed amount a patient must pay during a given time period, usually a year, before their health insurance benefits begin to cover the costs.

Copays and Deductibles

For example, suppose a patient has a health insurance plan with a $30 copay to visit a primary care physician, a $50 copay to see a specialist and a $10 copay for generic drugs. The patient pays these fixed amounts for those services regardless of what the services actually cost. The insurance company pays the remaining balance; the amount paid by the insurance company is known as the covered amount. Therefore, if a visit to the patient's endocrinologist costs $250, the patient pays $50 and the insurance company pays $200.

Now suppose the same patient has a $2,000 annual deductible before the insurance company covers the costs. In January, he sprains his ankle playing basketball, and treatment costs $300. He pays the full cost because he has yet to meet his deductible. In April, he has back problems, which cost $500 to treat. Again, he pays the full cost. In August, he breaks his arm playing touch football, and the bill for his hospital visit comes to $3,500. On this bill, the patient pays $1,200; this is what is left of his deductible. Because the deductible is met at this point, the insurance company pays the remaining $2,300.