You’ve done everything you can to avoid getting sick this year. You’ve gotten your flu shot, you wash your hands, and you make sure to get plenty of zinc. But you’ve still found yourself at the doctor’s office with flu symptoms you can’t shake. When you sign in you’re surprised that the receptionist asks you to pay $25 (or more) for your visit.
This fee is called a copay. If you’re one of the lucky 91% of Americans with health insurance, you’re probably not thinking about any costs beyond paying your insurance premium. That’s why it’s a surprise to many when they go to the doctor and they’re told they can’t get in without paying a copay first.
But what is a copay? If you’re not familiar with copays, we’ve got you covered. Read on to learn all about them.
What Is a Copay?
A copay is a fee that insurance companies make you pay when you do things like go to the doctor or visit the dentist. The average copay in the United States ranges from $15 to $25 for a visit to your primary care physician. The cost of your copay rises when you visit specialists (approximately $50 per visit) or the emergency room (up to $300 copay).
Copays cover the cost of the office visit and, in most cases, cover the cost of things like bloodwork or x-rays.
While a copay seems like an inconvenience, especially when you’re paying a premium for your insurance, they are still significantly less expensive than the amount you would pay if you didn’t have insurance at all. For example, a doctor’s visit that includes x-rays would set you back a couple hundred dollars without insurance.
Why Do Copays Exist?
Copays exist because of the expenses many health insurance companies incurred when they allowed their patients to freely choose whichever doctor they wanted. Insurance companies then chose to make deals with doctors to pay less money for their services. Copays help insurance companies split the costs with the insured.
What does this mean for you? It means that if you visit a doctor outside your defined network then you’ll have to pay a higher amount than what you’d pay to see an in-network doctor. These deals are also the reason why copays are higher if you see a specialist or seek emergency medical care.
If you have PPO insurance, you’ll have more freedom to visit doctors outside your network. The downside to this is higher premiums and copays. But if you don’t mind being restricted to in-network doctors, then HMO insurance will save you some money.
How Do Copays Differ from Deductibles?
Deductibles are quite different from copays. A deductible is a set amount, defined by your insurance company, that you must pay each year before your insurance kicks in. Copays are a small fee you must pay each time you visit the doctor and your insurance kicks in to cover the rest.
Different insurances plans have different deductibles, and your premium will reflect the deductible amount. Plans with high deductibles have much lower premiums while plans with low deductibles have higher premiums.
How does this look in the real world? If you select an insurance plan with a $1,500 deductible, then you have to pay for the first $1,500 in care before your insurance will actually cover anything. And your deductible resets every year so even if you paid $1,499 for health care expenses in December, you’ll still have to pay another $1,500 the following year before you get any coverage.
On the one hand, deductibles are significantly less than what you would pay if you had a catastrophic accident or major illness. On the other hand, deductibles can make it seem like you don’t have insurance at all when you only have routine office visits.
How Do Copays Differ from Coinsurance?
Coinsurance is another cost-sharing strategy employed by insurance companies. Coinsurance usually goes along with plans that have a deductible. After the deductible is satisfied, then coverage kicks in, but at a specific percentage (generally 75% to 90%).
Let’s say you have a health insurance plan with a $1,000 deductible. In one year you exceed $1,000 in care because you’re dealing with something like Lyme disease, so your coverage kicks in. Your insurance covers 75% of costs so your coinsurance is the remaining 25%.
Keep in mind that Obamacare limits your out of pocket costs. In 2018, the max out of pocket cost was $7,350, anything above and beyond that has to be paid by the insurance company.
Obamacare also nixed coverage limits, so your insurance company cannot tell you that you no longer have coverage unless you have stopped paying your premiums or are no longer covered under a company insurance policy.
Is It Possible to Have a Copay and a Deductible or Coinsurance?
Absolutely. In fact, it’s possible to have all three payments in one insurance plan.
An insurance company with a deductible may strike a deal with a physician to reduce the cost of the office visit to a certain amount, and that amount would be your copay. Any additional costs incurred at that office visit would have to be paid by you, but it would go toward your deductible.
Some insurance companies count the cost of your copay towards your deductible, while others do not. After you meet your deductible, you would then have to pay coinsurance.
If you’re one of the people who have to pay all of these fees on top of your premium, then it might benefit you to look into purchasing different insurance. Consider checking out a marketplace like Insurdinary to find a plan that costs less out of pocket.
Now You Know!
Insurance is one of the most mysterious parts of modern American life. Between the cost of the premium, copays, deductibles, and coinsurance, you wonder where exactly does the insurance kick in.
So what is a copay? A copay allows you to see a doctor without having to work about exorbitant costs. In today’s economy, this is a very helpful mechanism, even if it is an additional cost to your premium.