Individual and Family

What is the Difference Between a Copay and Deductible?

Published on December 19, 2019


Copays and deductibles are both out-of-pocket payments you can expect to make with any health insurance plan.

A copay is a common form of cost-sharing under many insurance plans. Copays are a fixed fee you pay when you receive covered care like an office visit or pick up prescription drugs.

 A deductible is the amount of money you must pay out-of-pocket toward covered benefits before your health insurance company starts paying. In most cases your copay will not go toward your deductible.

What is a copay?

A copay is a fixed amount of money established by an insurance plan as a cost sharing measure for certain health services. Insurance plans are a partnership between the customer and the insurance provider in paying for health care services. Cost-sharing measures, such as copays and coinsurances, are important to consider when purchasing a health coverage.

Which health insurance plans have copays?

Copays are typically associated more with managed care plans such as HMOs. Insurance companies that offer HMO plans have contracts with healthcare providers that let them pay fixed fees for essential healthcare services. It’s easier to predict overall costs and to offer health insurance copay system to health insurance consumers.

Many PPO plans, and other types of health insurance plans, may incorporate copays into the cost-sharing structures, in addition to deductibles or coinsurances.

What other out-of-pocket expenses can I expect?

Other typical expenses that you can expect to pay in addition to copays are annual deductibles and coinsurances.

Additionally, if you choose to go out-of-network provider for any healthcare services, it is likely you will have less or no coverage (this could mean having to pay a higher copay or having to pay for care at full price). You will typically have to pay more out-of-pocket to go to that provider.

Are copays and coinsurance the same?

Copays and coinsurances are both kinds of cost-sharing measures put into place by health insurance providers.

While copays are a set amount of money the customer pays for a covered services, coinsurances are a set percentage the customer pays for a covered service.

For instance, a copay for a doctor’s visit may be $25, you would pay a $25 copay for each visit to your doctor. On the other hand a coinsurance for a similar visit could be 30% and if a doctor’s appointment costs your insurance company $100, then you would owe $30 at the time of your visit.

Keep in mind that some health insurance plans will have both a copay and a coinsurance.

What is a deductible?

Another expense you should expect to have with your health insurance is an annual deductible. A deductible is a set dollar amount you may be required to pay toward covered medical expenses within a single year before your health insurance company will begin paying for your care.

For instance, if you have an annual deductible of $4,000 you may have to pay $4,000 out-of-pocket to meet your deductible before your insurance will pay for your care.

Additionally, it’s important to keep in mind that if you have a family plan you will have to pay toward both a family deductible and individual deductibles before your health insurance picks up the bill.

A note on cost-sharing measures

It’s important to note that a copay, coinsurance, and deductibles can sometimes apply toward the same medical service. However, this isn’t always the case.

It is possible that you may be required to pay coinsurance after you have reached your deductible.

It is also important to know that certain preventative medical services may not be subject to cost-sharing at all. For instance, annual preventative care, well-woman visits, checkups, and childhood immunizations are generally not subject to copays, coinsurances, or deductibles. Generally these services are covered with no out-of-pocket cost.

Will I have a copay after I reach my deductible?

You will likely have to pay your copay and any coinsurances you have after you reach your deductible until you reach your out-of-pocket maximum.

Is there a maximum to how much I can spend out-of-pocket?

Yes, there is a limit to how much money you have to pay out-of-pocket within a year for your medical expenses.

For instance, if you have a plan with an out-of-pocket maximum of $6,500 once you reach that amount you will not have to pay anymore out-of-pocket for covered care for the rest of the year – this includes coinsurances and copays.

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