Eric Stauffer is a former insurance agent and banker turned consumer advocate. His priority is to help educate individuals and families about the different types of insurance they need, and assist them in finding the best place to get it.

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UPDATED: Jul 18, 2020

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Although health insurance undoubtedly helps to cover a patient’s medical expenses, the insured may still have several out-of-pocket costs to cover.  These out-of-pocket expenses allow the insurance company to keep its own operating costs low, which in turn translates to more affordable premiums and more extensive coverage.  That said, the out-of-pocket costs of any given insurance plan will vary, and understanding these costs will help a customer choose the most affordable and comprehensive insurance policy.

Aside from health care deductibles, the most common out-of-pocket expense for most insureds is the co-payment, also commonly called the copay.  This is the amount owed to the service provider at the time services are rendered.  Unlike coinsurance, which usually operates on a percentage of the final bill, co-pays are typically predetermined flat fees.

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How Much Will the Copay Be?

Insurance companies determine their copay amounts by balancing the needs of a patient with the financial needs of the company.  A copay must be high enough that it will discourage insureds from pursuing unnecessary medical care, but it must be low enough to be affordable so as not to prevent the patient from getting necessary treatments.  This is one reason why copays are higher for emergency rooms than doctor’s offices: The insurance company wants to discourage patients from using the ER for anything short of a true emergency.

Different insurance companies offer different co-payment amounts, so it’s important to check the details and confirm these costs before purchasing a policy.  In general, the copay will vary depending on the type of medical care received and the location of that care.  For example, a common copay amount might be $25 for a doctor’s office visit and $100 for an emergency room visit.

The doctor’s office or emergency room staff will collect the copay at the time services are rendered.  The remainder of the bill will be sent to the insurance company.  If there are additional costs that you must pay yourself, those expenses will be billed to you after the insurer has finished applying their portion.

It’s important to note that, unlike coinsurance, co-payments do not generally count toward your annual out-of-pocket limit.  In other words, you will usually continue paying the copay even if the annual limit has been reached.  This makes co-payments the only unavoidable out-of-pocket expense in any given health insurance policy.

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Copayments Among Different Healthcare Providers

Regardless of the health plan you have, your insurance company will likely require you to work with a doctor inside of its network.  In an HMO plan, receiving this in-network care is essential.  In a PPO or POS plan, you will have the freedom to use a different medical care provider, but going outside of the network will cost you more in terms of co-payments and coinsurance costs.

The back of your insurance card will often tell you how much the copay will be at various types of health care providers both inside and outside of your preferred provider network.  Before purchasing a health insurance policy, you can discuss these amounts with the company to determine exactly what might be expected of you and help you choose the right plan.