Copay vs. Deductible: An Overview
Copays and deductibles are features of health insurance plans. They both involve payment on the part of the insured, but the amount and the frequency are very different. A copay is a fixed amount paid by a patient for receiving a particular health care service, with the remaining balance covered by the person's 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.
Generally, plans that charge lower monthly premiums require higher copayments and higher deductibles, while plans that charge higher monthly premiums have lower copayments and lower deductibles.
A copay, short for copayment, is a fixed amount a health care beneficiary pays, typically after having paid a deductible. In some cases, there is no deductible an individual has to pay first, just a copay. Copays can vary for different services within the same plans, particularly in terms of services that are considered essential or routine and others that are considered to be less routine or the domain of a specialist.
For many insurance plans, treatment such as seeing a general practitioner (GP) for a physical and bloodwork once a year is routine. For women of a certain age, a mammogram or gynecological exam would be seen as routine. For these and other routine exams, the copay might be low, in some cases, as low as $15 per visit. In other cases, there is no copay for a routine exam like this. But for more elaborate or specialized treatments, such as something that pertains to a specific condition, the copay might be higher, for many insurance companies, as high as $25 or more. In some cases, a copay is only required after a deductible has first been met.
A deductible is an amount that must be paid for covered health care services before insurance begins paying. After paying a deductible, beneficiaries typically only pay a copayment or coinsurance for any services that are covered by your plan.
A number of plans will pay for basic services, like checkup or disease management services, even before a deductible has been met. Plans offered through the Patient Protection and Affordable Care Act pay in full for routine checkups and other screening considered preventative, like mammograms, or a colonoscopy for someone over a certain age.
Some plans will have a separate deductible for prescription drugs, or other services. With family plans, there is often an individual deductible and one for the whole family.
Copay vs. Deductible Example
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.
- Copayments and deductibles are both features of most insurance plans.
- Copayments are typically charged after a deductible has been met, but in some cases are applied immediately.
- Many plans cover a yearly checkup and other preventative services even before a deductible is met; many plans also provide these kinds of services with no copay.