Copayment

Copayment or copay is a fixed amount for a covered service, paid by a patient to the provider of service before receiving the service. It is one of the ways that health insurance companies use to share costs with policyholders.

Definition

A copayment or copay is a payment defined in an insurance policy and paid by an insured person each time a medical service is accessed. It is technically a form of coinsurance, but is defined differently in health insurance where a coinsurance is a percentage payment after the deductible up to a maximum benefit from the insurance company. The copay is a flat fee, rather than a percentage. For example, an insured person might pay a $45 copay for a doctor's visit, or a $20 copay for each prescription drug.

Purpose

The purpose of the copayment is to prevent overuse of health care resources by making the insured person responsible for a portion of the healthcare costs. Copayments are a common feature of many health insurance plans.

Types of Services

Copayments are typically used in health insurance, dental insurance, and pharmacy benefits to reduce the potential for overuse of services. Copayments for services can vary, but are typically in the range of $10 to $50 per service. Some services, such as preventative care, may be provided at no cost to the insured person, while other services may require a larger copayment.

Impact on Healthcare Costs

While copayments are intended to reduce unnecessary use of medical services, they can also deter people from seeking necessary medical care. This can lead to higher long-term healthcare costs, as untreated conditions can worsen over time.

See Also

• Health insurance
• Coinsurance
• Deductible
• Out-of-pocket maximum