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Difference Between a Copay and Deductible

Copays and deductibles are both out-of-pocket payments you can expect to make with any type of health insurance.

A copay is a common form of cost-sharing under most insurance plans. Copays are a fixed fee you pay when you receive covered care, such as an office visit or pick up prescription drugs.

A deductible is the amount of money you ought to pay out-of-pocket toward covered benefits before your health insurance company begins paying. In most situations, your copay will not go toward your deductible.

What is a Copay?

A copay is a fixed amount of money set by an insurance plan as a cost-sharing measure for certain health services. Insurance plans are a partnership between the consumer and the insurance provider in paying for health care services. Cost-sharing measures, like copays and coinsurances, are essential to consider when buying health coverage.

Types of Health Insurance Plans with Copays

Copays are normally associated more with managed care plans like HMOs. Insurance companies that provide HMO plans have contracts with healthcare providers that let them pay fixed fees for essential healthcare services. It’s easier to predict total costs and offer a health insurance copay system to health insurance customers.

Most PPO plans, and other types of health insurance plans, may include copays into the cost-sharing structures, in addition to deductibles or coinsurance.

Other Out-of-pocket Expenses to Expect

Other typical costs that you can expect to pay in addition to copays are annual deductibles and coinsurances.

Additionally, if you opt to go out-of-network provider for any healthcare services, it is likely you will have less or no coverage (this could mean having to pay a higher copay or having to pay for care at full expense). You will basically have to pay more out-of-pocket to go to that provider.

Are Copays And Coinsurance Similar?

Copays and coinsurances are both types of cost-sharing measures put into place by health insurance providers.

While copays are a set amount of money the consumer pays for covered services, coinsurances are a set percentage for a covered service.

For example, a copay for a physician’s visit can be $25; you would pay a $25 copay for every visit to your doctor. On the other hand, a coinsurance for the same visit could be 30%, and if a doctor’s appointment costs your insurance company $100, then you would owe $30 at the time of your visit.

Bear in mind that some health insurance plans will have both a copay and a coinsurance.

What is a Deductible?

Another cost you should expect to have with your health insurance is an annual deductible. A deductible is a set dollar amount you may be obligated to pay toward covered medical costs within a single year before your health insurance company will begin paying for your care.

For example, if you have an annual deductible of $4,000, you may have to pay $4,000 out-of-pocket to meet your deductible before your insurance pays for your care.

Also, it’s essential to keep in mind that if you have a family plan, you will have to pay toward both a family deductible and individual deductibles before your health insurance starts to pay the bill.

Will I Have a Copay After You Reach My Deductible?

You will likely have to pay your copay and any coinsurances you have after you attain your deductible until you reach your out-of-pocket maximum.

Is There a Maximum to How Much You Can Spend Out-Of-Pocket?

Yes, there is a limit to how much money you have to pay out-of-pocket within a year for your medical costs.

For example, if you have a plan with an out-of-pocket maximum of $6,500 as soon as you reach that amount, you will not have to pay anymore out-of-pocket for covered care for the rest of the year – this consists of coinsurance and copays.

Resources and References:

• How Family Deductibles Work
• Essential Health Services under ACA