Even if you have medical insurance, it doesn’t necessarily mean that you get to visit a doctor, lab, or hospital, or purchase your prescription drugs for free. Instead most insurance companies require the insured to pay a portion of their total bill, at a set amount. In other types of insurance, like auto insurance, you have what is called a deductible, a set amount the insured person pays before the insurance company begins reimbursing the insured or others for damage of property or injury. Health insurance may employ either a copay or a deductible, or both.
In the past, before the advent of insurance care with network doctors and facilities, and primary care physicians, many health insurance companies operated on the 80/20 principle. When you went to a doctor’s office, you paid 20% of the bill, and either you or the doctor’s office billed the insurance company for the rest. This principle may still operate with certain types of insurance. For instance, people who have the ability to choose doctors out of network may pay 20%, or another percentage of the total instead of paying the flat fee they would for visits to network doctors. A network doctor is contracted with the insurance company to accept a set fee for services.
Since the 1970s, the shift in insurance trends has been for most people to be enrolled in a Health Maintenance Organization (HMO) or a Preferred Provider Organization (PPO), making the term copay very familiar. While some services may be offered without a copay or copayment, other services mean you will always have a set copay. For instance you might pay $15-25 US Dollars (USD) for a standard visit to a network or preferred provider doctor.
The statement that the copay is set at a certain amount needs to be further explored. Each service may have a different copayment, and some may not be covered at all. You might pay $100 USD for visiting an Emergency Room, $25 USD for a doctor’s visit, and $15 USD for prescriptions.
You may pay a higher copayment at the pharmacy if you specifically choose a name brand medication instead of a generic medication. Prices may change each year, as companies renegotiate with insurance companies. In early years when the copay was first introduced, amounts for a doctor’s visit were usually between $5-15 USD. Typically copayments are higher now, in the nature of $20-30 USD for a doctor’s visit. The trend in the insurance industry is to raise copayments without raising compensation for doctors; in other words, you pay more and the insurance company pays less to compensate medical professionals.
Deductibles need to be understood too, since it may be necessary for you to fulfill your deductible amount prior to beginning to make copayments for services. For instance you might have a $500 USD deductible on your plan. If you were hospitalized, you may have to pay that amount, rather than simply your copayment. If you have additional doctor’s visits or hospitalizations, once you’ve met your deductible, you will only pay the designated copay amount. Some services are exempt from meeting your deductible, like well-child visits and yearly gynecological exams. Other insurance companies offer a low deductible that is easily met with a few copays to a doctor.