When we’re going out for dinner with friends, most of us like to know ahead of time how the check will be handled. Is it going to be split evenly among everyone? Or, will you be expected to pick up the entire tab?
In the same way, when you schedule a doctor’s appointment or head to the drugstore to fill a prescription, you probably want to know how much of the cost you’ll be paying and how much your insurance company will pick up. This is where copayments, or copays, come into play.
What You Need to Know
Copayments, or copays, are one of several ways insurance plans share the cost of healthcare services with you.
A copay is a flat, fixed fee you pay when you receive a service.
Copayments are one cost to consider, and may not be the most important one, when choosing a health insurance plan for you or your family.
A copayment is a flat, fixed amount for healthcare services that you typically pay when you get a service at the doctor’s office or a medication at the pharmacy.1 Your insurance plan might, for example, have a copay of $20 for a routine visit to your primary care physician, $75 when you see a specialist, $10 for generic prescription drugs and $30 for brand-name medications.
In many insurance plans, there will be a set copayment whenever you see a healthcare provider within your network and a higher fee every time you choose an out-of-network provider.
Not every healthcare service has a copay. Many insurance plans, including those available through the federal or a state Health Insurance Marketplace, will cover some preventive services2 without any copay or other cost to you. These typically include services like flu shots and other vaccines, wellness visits, blood pressure screening, counseling on obesity, tobacco use and alcohol misuse, and mammograms.
You can generally expect to owe a copay for office visits with your primary care doctor for non-preventive care, office visits with a specialist, prescriptions, urgent care and emergency room visits, ambulance rides, mental health services, and physical, occupational and speech therapy.
How Do Copays Work with Other Health Insurance Costs?
Copayments are only one of the ways that health insurance plans share medical costs with you, the policyholder. There are several others. These include:
- Premium: The amount you pay each month to remain enrolled in your health insurance plan.
- Deductible: The amount you pay for covered healthcare services each year before your insurance plan begins to pick up costs. If, for example, your annual deductible is $2,000, you’re responsible for the first $2,000 of covered healthcare costs. Some plans have a separate deductible for prescription drugs. Most family insurance plans have both an individual deductible and a family deductible. Once the total amount of the family deductible is met, every member of the family is covered, even those that haven’t met their individual deductible.
- Coinsurance: The percentage of covered medical charges you pay after you’ve met your deductible. If you have an “80/20” plan, for instance, your insurance company pays 80% of covered costs, while you pay 20%.
- Out-of-Pocket Maximum: The most you have to pay in one year for in-network, covered healthcare services before your insurance plan will pay 100% of charges. The federal government sets the limit on out-of-pocket costs for plans sold on the Marketplace. For the 2020 plan year, the out-of-pocket maximum is capped at $8,150 for an individual and $16,300 for a family.3
How Will Copayments Work for You and Your Family?
You’ll want to read the Summary of Benefits and Coverage for any plan you’re considering purchasing. The summary will help you understand how copayments work with other cost-sharing elements. For example, in many insurance plans copayments don’t count toward your deductible and you’ll continue to pay them even after you’ve met your deductible. Generally, copayments do count toward your maximum out-of-pocket limit.
For an example of how copayments work in real life, let’s consider the Wilsons, a family of four living in Philadelphia. The family’s health insurance plan has a monthly premium of about $1,500, a per-person annual deductible of $2,750, and an out-of-pocket maximum of $7,500 for each family member and a $15,000 maximum for the entire family.
Mrs. Wilson visits her primary care physician because she has a cough that won’t go away. If she’s already met her deductible for the year, she just pays a $35 copay for the visit, according to the terms of the family’s policy. If she hasn’t yet met her deductible, she’ll pay for the full cost of the appointment.
The primary care physician then refers Mrs. Wilson to an ear, nose and throat specialist. She’ll pay a copay of $70 for this visit; assuming, again, that she’s met her deductible. The doctor prescribes a cough medicine. If it’s a generic medication, Mrs. Wilson will be responsible for a $15 copay. If the prescription is a brand-name drug, she’ll be charged 50% of its cost in coinsurance, according to her plan.
Now, let’s imagine that Ethan, the family’s 10-year-old son, is taken to the emergency room after a nasty fall off his bike. If he’s already met his deductible—or the family as a whole has met the family deductible—the copay for the ER visit will be $75. If the ER doctor orders X-rays, the copay will be $120.
In general, plans with lower premiums will have higher deductibles, out-of-pocket limits and higher coinsurance costs. The reverse is true, too: Pay a higher premium and you can expect your deductible, out-of-pocket limit and coinsurance costs to all be lower.
While copays can add up with frequent doctor visits and prescriptions, they likely won’t be the factor that has the biggest impact on your healthcare expenses. One large study that tracks family healthcare costs found that Americans spend, on average, a copay of $27 for a general office visit, and $148 in copays annually. Costly premiums, high deductibles and hefty coinsurance are all likely to take a bigger bite out of your family’s healthcare budget.4
Consider these scenarios: If the Wilsons chose a less expensive plan with a monthly premium of around $900, their copay for a visit to their primary care doctor would rise only to $50 and the copay for a visit to a specialist would be $100.
On the other hand, if they picked one of the priciest plans, with monthly premiums of nearly $2,700, they’d still pay $20 to see their primary care physician and $50 to see a specialist.
Medicaid and Copayments
If you’re one of the nearly 70 million people covered by Medicaid, the government-run health insurance program for low-income Americans and children and adults with disabilities, your copays will be minimal.
While Medicaid copayments vary by state, you can generally expect to pay from $1 to $5 for doctor visits and $1 to $4 for most prescription drugs.5
Before you head to the doctor or pharmacy, look at the Summary of Benefits for your health insurance policy or the back of your insurance ID card, so you know exactly what your copay will be.
And if you’re shopping for a new health insurance plan for yourself or your family, consider talking to a licensed health insurance agent. An agent can help you understand how all the cost-sharing elements of the plans you’re considering work together. That way, you’ll have a clear idea of how the plan you choose will affect both your healthcare and budget.
1. U.S. Government Website for the Health Insurance Marketplace. “Copayment.” healthcare.gov (accessed August 31, 2020).
2. U.S. Government Website for the Health Insurance Marketplace. “Preventive Care Benefits.” healthcare.gov (accessed August 31, 2020).
3. U.S. Government Website for the Health Insurance Marketplace. “Out-of-Pocket Maximum.” healthcare.gov (accessed August 31, 2020).
4. Rae, Matthew, Rebecca Copeland, and Cynthia Cox. “Tracking the rise in premium contributions and cost-sharing for families with large employer coverage.” Peterson-KFF Health System Tracker, August 14, 2019 (accessed September 14, 2020)
5. Kaiser Family Foundation. “Medicaid and CHIP Eligibility, Enrollment, and Cost Sharing Policies as of January 2019.” kff.org (accessed August 31, 2020)