A copay (or copayment) is a flat fee that you pay on the spot each time you go to your doctor or fill a prescription. For example, if you hurt your back and go see your doctor, or you need a refill of your child’s asthma medicine, the amount you pay for that visit or medicine is your copay.
Your copay amount is printed right on your health plan ID card. Copays cover your portion of the cost of a doctor’s visit or medication.
This is a fixed, flat fee for certain kinds of office visits, prescription drugs, or other services. Because the health insurance copay is fixed, you’ll know ahead of time exactly how much you owe. If your policy lists a copayment of $25 for a doctor visit, you pay that amount each time you see the doctor.
What is Co-Pay in Health Insurance?
Co-pay, or co-payment, is basically a fixed proportional amount that the policyholder has to pay out of his own pocket while making a claim under his/her health insurance plan. Now, you may wonder why one would pay this out-of-pocket amount when they have opted for a health insurance policy.
Here’s what you should know – this out-of-pocket expense is only applicable when the policy terms and conditions mention this. And it is not as if it is a complete disadvantage for the policyholder. This is actually the result of an agreement between the insurer and the insured where both benefit.
On one hand, the insurer benefits from the co-pay option because a part of the claim would be paid by the policyholder. In return, the policyholder gets a lower annual premium while getting a higher sum insured. In the co-payment model, usually, the insured needs to pay 10% to 25% of the claim value. The balance is borne by the insurance company.
Let’s understand this with the help of an example. Let’s say that someone purchased a health insurance policy with a sum insured of INR 10 lakh and a co-payment clause of 10%.
If they get hospitalized and the total bill comes to, say, INR 5 lakh, then they would have to pay INR 50,000 from their own pocket. The rest INR 4.5 lakh would be paid by the insurance company. This works irrespective of whether the plan falls under a cashless claim or the reimbursement one.
By opting to pay 10% or the medical bill, if and when there is a medical emergency, the customer is able to get a relatively lower premium quotation from the insurer, and hence saves money every year.
On the other hand, if they go for the same policy without the co-pay clause, then the insurance company would pay the entire claim amount of INR 5 lakh. However, the customer would have to pay a higher annual premium.
So essentially, one can say that co-pay is a tradeoff between paying higher premium amount every year and paying a part of the claim if such a need arises. By opting for co-pay, one can lower their annual insurance premium by around 20% to 30%.
Copays with Medicare and Medicaid
If you have Medicare, the federal health insurance program for people who are older than 65 or have certain disabilities, you can generally expect to pay less in copays than you would pay for private health insurance or other individual plans from the marketplace. Prices vary by plan but your copays, like for a prescription drug, could be less than $5.
Medicaid plans vary by state, so you should check your individual plan to see what the copays are. However, copays with Medicaid are generally much smaller than they are with other plans. For example, in New York, the copay is $3 for visiting a clinic or getting a brand name subscription.
Do I always have a copay?
Not necessarily. Not all plans use copays to share in the cost of covered expenses. Or, some plans may use both copays and a deductible/coinsurance, depending on the type of covered service. Also, some services may be covered at no out-of-pocket cost to you, such as annual checkups and certain other eligible preventive care services.
When do I pay a copay?
A copay (or copayment) is a flat fee that you pay on the spot each time you go to your doctor or fill a prescription. For example, if you hurt your back and go see your doctor, or you need a refill of your child’s asthma medicine, the amount you pay for that visit or medicine is your copay.
How do I calculate my copay costs?
Since deductibles and copayments are fixed amounts, it doesn’t take a lot of math to figure out how much to pay. A $30 copayment to fill a prescription or see a doctor will cost you $30 no matter how much the total bill for the prescription or office visit was. Your health insurance picks up the rest of the tab