Copays - One Way to Choose Your Health Insurance Plan

When your employer offers you health insurance, it's called group insurance. If your employer provides the same health plan for everyone, you don't need to choose. But sometimes you have several plans to choose from - and then there are out-of-pocket costs to consider when making your choice.

Your out-of-pocket costs

  • Copays for medical visits, lab work, and hospitalizations
  • Copays for prescriptions
  • Copays for out-of-network healthcare providers
  • Coinsurance
  • Insurance deductibles
  • Insurance premiums
  • Maximum out-of-pocket
  • Maximum prescription out-of-pocket

Copay definition

A copayment - or copay - is the amount you - as an insured person - pay for an expense when you visit a doctor, laboratory, ambulatory care center, hospital, or pharmacy. It's a set amount of money for a certain kind of provider. For example, if you see a primary care doctor, it may cost you a $25 copay; if you see a specialist, it may cost you a $50 copay. Each time you see that doctor for your health care, you'll pay the same copay at the time of service.

The copayment amount varies depending on your insurance plan. When the copayment is displayed as a pair of numbers - for example, $15/$30 - the first amount is usually for an office visit with your primary provider (this can be a family practitioner, internist, general practitioner, or pediatrician) and the second amount is for a specialist (a heart doctor, for example).

Copays for medical visits

When you go to the doctor, urgent care center, physical therapist, outpatient facility, emergency room, or other healthcare professional, you'll be asked to pay some of the cost upfront with a copayment.

Your insurance copay can be $15 to $45 or even more. A copay can even cost a few hundred dollars, depending on the services you need.

After you've paid your copay, you may not have to pay anything more - if your plan has a network and you go to an in-network provider and if you've met your annual deductible. Copayments generally don't reduce your annual deductible or out-of-pocket maximums.

Copays for lab work and procedures

When you get lab work or a small procedure done at your doctor's office, you probably don't have to pay another copay. However, if you go to a separate laboratory to have a test done - such as some diabetes testing, drug screenings, HIV/AIDS tests - or to an ambulatory care center for an out-patient surgical procedure, you'll have to pay a copay.

Copays for hospitalizations

Different health insurance plans have different ways of charging for hospitalizations. To see what copay you have to pay for a hospital visit, check your Certificate of Coverage or Plan Document.

Copays for prescriptions

Prescription coverage is one of the most-often used health benefits. Most prescriptions require a copay at the time of purchase - often ranging from $10 to $200 or even more - depending on the plan and the kind of medication it is.

Some insurance plans have "tiered copayment levels." With tiered copays, each prescription drug is in one of several levels. And there's a different copayment for each level. You can find out the amount you pay per prescription in your Plan Document.

For example:

  • Tier-one prescription drugs may include low-cost generics
  • Tier-two prescription drugs may include higher-cost generics and lower-cost brand drugs
  • Tier-three prescription drugs may include higher-cost brand drugs
  • Tier-four prescription drugs may include much higher-cost medications - such as some cancer drugs - and instead of a copay, you may pay a percentage of the actual cost of the drug

Copays for Out-of-Network Providers

If you go to a doctor, facility, therapist, pharmacy, hospital or other provider that's not in network for your insurance company, you'll pay a copayment amount for out-of-network providers that's often significantly higher than an in-network provider. That's because the provider doesn't have a network agreement with your insurance company. Some plans, however, don't have a network and allow you to vist any healthcare provider.

Coinsurance

Coinsurance is the amount you pay after your visit to the doctor, laboratory, or hospital - and it's expressed in percentages. Your health insurance pays the remaining percentage. This is often expressed as 80/20 - where you owe the 20% and your plan pays the 80%.

Insurance Deductible

Throughout your plan year, the coinsurance amount you pay adds up to meet a certain predetermined amount - called your deductible - which can range from $1,000 to $5,000 a year. Once you meet your maximum out-of-pocket, you won't have to pay coinsurance for the rest of the plan year. You will, however, have to continue to pay copays. Generally, once you meet your deductible, your plan benefits kick in. Though some benefits may be available before a deductible, it depends on the plan.

Insurance Premium

An insurance premium is the monthly amount you pay for your health insurance. It usually comes out of your paycheck. Although it's tempting to simply choose the lowest premium offered to you, be cautious. Oftentimes, the premiums are balanced against the deductible - so, a low premium may mean a high deductible; a high premium may be necessary to get a low deductible. Also, the lowest-premium plan may not provide the type of health coverage you need - so carefully evaluate your upcoming healthcare needs.

Maximum Out-of-Pocket (Max. Out-of-Pocket or MOOP)

The maximum out-of-pocket is the limit, or ceiling, on your costs for medical care within the insurance plan year.

Maximum Rx Out-of-Pocket

The maximum Rx out-of-pocket is the limit, or ceiling, on your costs for prescriptions within the insurance plan year or for a given prescription. This maximum may vary by prescription tier or level.

Learn more about health insurance copays

Watch Healthcare Video: How do deductibles and copays work?