What Is a Copay?

Copays Explained in Less Than 5 Minutes

Doctor and patient having a conversation
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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. If your plan has a deductible, you typically must meet it before you can start using a copay.

Learn more about how copays work and how they affect your health insurance costs.

Definition and Example of Copays

A copay (short for “copayment”) is a fixed amount you’ll pay for each doctor’s visit, prescription, and other medical services after you’ve met your health insurance plan’s deductible. 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. Services such as annual physicals or wellness exams may not require a copay. 

For example, let’s say your plan’s copay for a doctor visit is $20. If you visit your physician and have already met your deductible, you’ll owe $20. If you haven’t yet met your deductible, you’ll pay the full amount outlined by your plan. 

Copays are often a key factor in choosing a health insurance plan, because they can help you plan ahead for 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. 

In general, the lower your monthly premium, the higher your copays will be. Conversely, a higher-premium plan typically has lower copays.

How Does a Copay Work?

If your plan has an annual deductible, copays generally take effect only after you’ve paid it. That means you have to pay all health-related costs out of your own pocket until you reach the annual deductible amount. 

Here’s how a copay works: If your plan’s deductible is $1,000, you’ll pay 100% of the cost for eligible health care expenses up to $1,000. After that, you’ll pay only your designated copay for each type of visit or service.

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.

Key Takeaways

  • A copay is an out-of-pocket cost paid on the spot 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. 
  • In most cases, you must meet your plan’s deductible before copays will take effect.
  • Copays are an important piece of information when choosing a health care plan, since they tell you exactly how much you’ll pay for doctor visits, prescriptions, and other standard medical services after meeting the deductible.
  • Copays, deductibles, and coinsurance all play roles in your total health insurance costs, in addition to your monthly premium.