What Is a Copay?

Doctor and patient having a conversation
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DEFINITION

A copay is a specific dollar amount that you’re required to pay for covered health care services or prescriptions, as defined by your insurance plan. Copays are considered an out-of-pocket cost and are typically paid at the time of service.

Key Takeaways

  • A copay is an out-of-pocket cost paid at the time of service for covered health care services such as doctor visits and prescription drugs. 
  • Copays are a fixed dollar amount determined by your plan and stated clearly on your insurance card. 
  • Typically, you must pay 100% of your medical costs until your annual deductible has been exhausted before copays take effect.
  • Copays are important since they tell you the cost of doctor visits, prescriptions, and other medical services.
  • Copays, deductibles, and coinsurance all play roles in your total health insurance costs, as well as your monthly premium.

How Does a Copay Work?

A copay (short for “copayment”) is a fixed amount you’ll pay for each doctor’s visit, prescription, and other medical services. The copay is due at the time of the appointment.

Copays Amounts Can Vary

Copay amounts depend on your plan and may vary for different types of services, such as visits to a general practitioner, specialist examinations, lab tests, and prescriptions. A copay might be higher for a specialist visit than for your primary doctor. Services such as annual physicals or wellness exams may not require a copay. 

Copays are often a key factor in choosing a health insurance plan because they can help you plan for your medical costs. When you’re reviewing health insurance options, consider the total costs of each plan, including copays, coinsurance, and deductibles, as well as your monthly premium. 

Annual Deductible

If your plan has an annual deductible, copays generally take effect only after you've paid it. That means you must pay all health-related costs out of your pocket until you reach the annual deductible amount. Once you've met your deductible, your insurance plan kicks in and pays all or a portion of your medical expenses, depending on the level of coverage within your insurance plan.

Typically, the lower your monthly premium, the higher your copays. Conversely, a higher-premium plan usually has lower copays.

Example of a Copay

Suppose your insurance plan’s copay for each primary doctor visit is $20, you’ll owe $20 at the time of the appointment. Your doctor refers to a specialist, and when you arrive for the appointment, you have a specialist copay of $50 to be paid before services are rendered.

Check your policy paperwork or insurance card to make sure you understand how your plan handles copays. For example, it may exempt certain preventive services from copays, or it may charge a copay instead of the full cost of some services even before you meet your deductible.

Copay vs. Deductible

Copay Deductible
Payments do not count toward your deductible Payments reduce the amount owed toward your annual deductible
Fixed amount per service Fixed annual amount
Typically smaller amounts, such as $20 or $50 Typically larger amounts, such as $500, $1,000, or $2,000

A deductible is the amount you pay out of pocket each year for covered health care services before your health insurance begins to share the cost. Paying bills that total the amount of your deductible is called “meeting your deductible.” After you’ve met your deductible, you’ll pay only copays or coinsurance costs for services covered by your plan. 

For example, say your health insurance has a $1,000 deductible and a $20 copay for visits to your primary care physician. You need to see your doctor, which costs $100. If you’ve only spent $200 on health care so far this year, you’ll be responsible for the full cost of the visit ($100). But if you’ve already met your deductible by spending more than $1,000 on health care expenses, you’ll just owe a $20 copay. 

Choosing a higher deductible often means you’ll pay lower monthly premiums and vice versa. 

Copay vs. Coinsurance

Copay Coinsurance
Fixed dollar amount  Percentage of the cost for a visit or service
Paid after you meet your deductible in most cases Paid after you meet your deductible
Payable at the time of service to the provider Payable at the time of service to the provider

Copays and coinsurance are both forms of cost-sharing with your health insurance provider. Copays are a set dollar amount you’ll pay for a covered service, while coinsurance is a set percentage of the cost of the service. As with copays, you start paying coinsurance after you’ve met your plan’s deductible.

Coinsurance varies by plan, but a common formula is 80/20. That means your insurance provider pays 80% of the cost of the visit, and you pay 20%.

Here’s how coinsurance works: Let’s say you meet your deductible in April and then require a minor surgery in May that costs $2,500. Since you met your deductible, the surgery will be covered by coinsurance. If your plan’s coinsurance is 20%, you’ll need to pay $500, and your insurance company will cover the remaining $2,000. 

Some plans require you to pay both copays and coinsurance, especially if a visit includes more than one service. In the example above, you might have a copay of $20 in addition to the $500 coinsurance amount, for a total of $520.

Frequently Asked Questions (FAQs)

What does it mean when you have a copay?

A copay is a fixed amount you’re required to pay at the time you receive a covered health care service, such as a prescription or doctor appointment. For example, a copay might be $25 for each doctor visit, or you might have a higher copay for a specialist visit, such as a cardiologist. Copay amounts can vary, and not all health plans charge a copay.

What's the difference between a deductible and a copay?

A deductible is the amount you pay each year before your insurance pays for any medical services, appointments, or prescriptions. For example, if your insurance plan has a $1,000 annual deductible, you would have to pay for any medical costs up to $1,000 each year before your insurance begins paying for services.

A copay is usually a much smaller amount than the deductible and is a fee due at the time of a medical service appointment or prescription purchase.

Article Sources

  1. HealthCare.gov. "Copayment."

  2. Cigna. "Copays, Deductibles, and Coinsurance."

  3. BlueCross BlueShield Minnesota. "What Is Coinsurance?"