Learn how copayments play an important role in group health plans.
Wondering what a small business health insurance copayment is? Or how copayments are part of cost-sharing in insurance plans? Or how a copayment impacts your group health plan? Continue reading to learn about copayments for small business health insurance.
What is a copayment?
A copayment, also referred to as a copay, is a specific charge that your small business health insurance plan may require you to pay for a certain medical service or supply. A common example of a copayment would be a $25 charge for a doctor’s office visit or brand-name drug prescription, after which the health insurance company may pay for the remainder of the charges.
How does a copayment relate to cost sharing for small business health insurance?
The copayment is a cost paid for by the employee—not shared by employers.
The term “cost-sharing” refers to how health care costs are shared between the health insurance company and the insurance policy holder.
Your group health plan information may list your copayment, allowing you to know in advance exactly how much you will have to pay for medical services. For example, if your group health plan says that you have a $25 copayment for doctor’s office visits, you will pay that fee each time you go visit the doctor.
Depending on the circumstances, you may or may not have a copayment. In some cases, you may still have to pay a copayment even after you have met your annual deductible. Other medical services, such as yearly preventative care checkups, well-woman visits, and childhood immunizations are typically not subject to copays, and are usually covered with no out-of-pocket cost to the insurance policy holder. A copayment is also likely to be capped by the health plan’s annual out-of-pocket maximum limit.
What medical services have a copayment?
There are many medical services which may often require a copayment. Such services include:
|Medical Services Generally Requiring Copayments|
|Doctors and Prescriptions||Therapy Services||Psychology & Emergency|
|Primary Care Physician Visits*||Physical Therapy||Mental Health Services|
|Specialist Office Visits||Occupational Therapy||Drug Counseling|
|Prescription Medications||Speech Therapy||Ambulance or ER Services|
*For non-preventative care
Frequently, there will be a health insurance copayment for in-network medical services only. If you go to a medical provider outside of the insurance company’s network list, the copayment may not apply, and you may need to pay the bill’s full amount or a coinsurance percentage.
What types of health insurance plans have copays?
HMO health insurance plans and other managed care plans generally have a copayment as part of their cost-sharing arrangement. Health insurance companies that offer HMO plans usually have contractual agreements with health care providers. These agreements let the insurance company pay fixed fees for essential health services, allowing them to better predict costs and provide a copayment system to health plan members.
Other small business health insurance plan types, such as PPO plans, EPO plans, and POS plans, may also have a copayment as part of their structure, in addition to coinsurance and annual deductibles.
How does a copayment impact employees in a group health plan?
If you are a small business owner considering a group health insurance plan, you want to make sure that you enroll in the most effective coverage for you and your employees.
- If your employees tend be older, have families, or have more frequent medical needs for doctor’s visits and prescriptions, they may prefer a health plan with a lower, more affordable, and more consistent copayment.
- If your employees tend to be relatively young and healthy and not visit the doctor very often, then they may have less concern about copays compared to the cost of monthly premiums.
Overall, your small business should try to find a group health plan that meets the needs of your workers while remaining within their budget. Be sure to discuss health coverage preferences with your employees prior to selecting a small business health insurance plan.
Small business health insurance copayments in perspective
A copayment serves as an important factor to consider in any health insurance plan. If you have questions about a group health plan’s copayment or finding more information on health plans, you can visit eHealth.com or speak with eHealth’s licensed health insurance agents.
This article is for general information and may not be updated after publication. Consult your own tax, accounting, or legal advisor instead of relying on this article as tax, accounting, or legal advice.