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What is 'Co-pay'

A co-pay is a fixed out-of-pocket amount paid by an insured for covered services. It is a standard part of many health insurance plans. 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 usually paid at the time of service.

BREAKING DOWN 'Co-pay'

Co-pay fees vary among insurers but typically are $25 or less. For example, an insurance plan with co-pays may require the insured to pay $25 per doctor visit or $10 per prescription. Review the terms of your insurance plan to determine your co-pay option. If there is a co-pay option, it may include different fees for physician visits, emergency room visits, specialists' visits, and other medical services. Insurance providers often charge higher co-pays for appointments with out-of-network providers. 

How Do Co-pays Affect Insurance Premiums?

A premium is an amount paid for 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 an amount an insured party pays out-of-pocket before an insurance company pays a claim. For example, if you have a $5,000 deductible, you will spend the entirety of your medical expenses until you reach that $5,000 limit. At that point, your insurance company covers the costs, less your co-pay or co-insurance costs.

For example, imagine your co-pay is $20 per medical visit. You see a physician, and the cost is $200. If you have not reached your deductible, you pay for the entire appointment. If you have reached your deductible, you will pay only the co-pay of $20.

How Do Co-pays and Co-insurance Work Together?

Co-insurance is another out-of-pocket expense many health insurance policyholders pay. Rather than being a fixed fee amount as with co-pays, co-insurance is a percentage of the total visit cost. In some cases, health insurance policyholders pay both a co-pay and co-insurance 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. If the dentist costs $200, you pay $20 co-pay and $40 co-insurance for a total of $60 for the appointment.

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