What Is a Copay? Definition in Health Insurance and Example

What Is Copay or Copayment?

A copay 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 prescription drugs.

Copays are a specified dollar amount rather than a percentage of the bill, and they usually paid at the time of service. Not all medical services ask you for a copay. For example, some insurance companies do not require a copay for annual physicals.



How Co-Pay Works

Copay fees vary among insurers but typically are $25 or less. For example, an insurance plan with copays may require the insured to pay $25 per doctor visit or $10 per prescription. Review the terms of your insurance plan to determine your copayment option.

Key Takeaways

  • Not all medical visits require copayments from patients. 
  • Out-of-network visits might have higher copayments or copays than in-network medical providers.
  • Deductibles are much larger sums than copays.
  • Copays and coinsurance are not the same things. Coinsurance is a percentage of the bill, a copay is a fixed amount.

If there is a copay option, it may include different fees for physician visits, emergency room visits, specialists' visits, and other medical services. Insurance providers often charge higher copays for appointments with out-of-network providers. It is important to be aware of how much out-of-network providers charge for copays, especially if you are making recurring visits.

Copay amounts may change annually, so it is worth checking in with your insurance company or HR department to find out if the amounts have gone up when a new year begins.

How Do Copays 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 Copays 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 copay or coinsurance costs.

Deductibles and copayments are two different payments to your insurance company.

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 copay of $20. Every member of your family will have to make a copay for their medical visits unless one is not required, such in the case of an annual physical, as an example.

How Do Copays and Coinsurance Work Together?

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