What Is a Copayment and How Is It Determined?

There are many hard words when it comes to understanding your health insurance. That makes it even harder to use your health insurance in ways that will save you money. Sometimes, you may ask why you have to pay some money when you go to the doctor if you have health insurance. You may think, “Isn’t the insurance supposed to pay for everything?” Sometimes it does when you have an annual physical or well woman visit, but the rest of the time you, will likely need to make a health insurance copayment.

What is Copayment?
A copayment, also known as a copay, is a fixed price that an insured person must pay by the terms of the health care policy for a service like going to the doctor. The insurance company sets a cost for different services with a network of doctors. The doctors that contract with the health insurance company are considered in-network doctors. The insured person will only pay the smaller copayment when he or she has a service with an in-network doctor. The amount of the copayment assistance can change depending on the service. For example, you may have a $30 copay for a primary care doctor visit and a $50 copay for a specialist visit. If you are planning a doctor visit, you can contact your insurance company to learn the amount of your copayment so you can be prepared when you arrive at the doctor’s office. Sometimes, you may learn that you do not have a copayment, but a coinsurance instead, as if things weren’t confusing enough.

What is Coinsurance?
Coinsurance is a fixed percentage rate, rather than a fixed amount, the insured person must pay under the terms of the Coverage Plan. This means the amount the insured is responsible for paying changes depending on the service, facility and doctor. For example, if you have a copayment of $30 for a doctor visit that costs $100, you will pay only $30 when using an in-network doctor. If you have a 40% coinsurance for a specialist visit that costs $100, you will pay a $40 coinsurance to an in-network doctor. Sometimes it is possible that an insured person will be required to pay a copayment plus a coinsurance. What! Why are there two payments now?

How are a Copayment and Coinsurance used together?
Since the insurance company sets different rates for different services and facilities, like an urgent care clinic or hospital, for members, more than one kind of payment may be needed if more than one service is part of a visit. For example, you may go to the dentist and have a filling while you are there. The visit to the dentist may have a $50 copayment, and the cost of the filling may have a 20% coinsurance. The two payments will be added for your total charge, which you should see on an itemized bill. Another example is a hospital stay. You may have a fixed copayment depending on the health insurance negotiated rate for each day you stay in the hospital and you may have a variable coinsurance for a service like an operation or diagnostic test performed while you are in the hospital. These copayments and coinsurances are combined for your total payment due.

How are copayments applied to prescription drugs?
There are three different levels to applying copayments to medicine as part of prescription drug plans. The copayment amounts for prescription drugs are also health insurance negotiated rates with drug companies. You will have a lower copayment for generic drugs, a higher one for name brand drugs, and an even higher copayment for non-formulary, specialty drugs. It always helps to know the details of your prescription drug plan before picking up medicine from the pharmacy or asking for a medicine from your mail order pharmacy.

It can be really hard to know how to use your health insurance so you get the most out of it. Understanding everything you can is the key to saving money and not having unexpected surprises when you go to check out or get a bill in the mail. As always, if you have questions about your health insurance before, during or after you use it, feel free to call the number on the back of your card to contact us with your questions and speak to a customer service advocate.

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