A Comprehensive Guide to Copayments, Coinsurance, and Deductibles

You just received a medical service and were told your insurance covers it. But now you have to pay a copay or coinsurance. If you’re wondering what is copay in insurance, this post will help you understand that charge. It will also clear up the differences between copays, coinsurance, and deductibles. 

There is a lot of vocabulary in the health care reimbursement system. Insurance companies like to make it complicated for a reason. But we never want you to misunderstand a charge or miss out on a reimbursement. Read on for a comprehensive walkthrough of health insurance copays and more.

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Copays

What is a copay in health insurance?

A copayment (copay) is a fixed rate you pay each time you receive a medical good or service. For example, if you visit an in-network provider for some blood work, you’ll pay a (usually small) flat fee as copay. Your insurance pays the rest. 

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How do copays work?

When you visit a provider or pick up a prescription drug, there is usually a copay. For example, suppose you go to the pharmacy to pick up a prescription. The drug may cost the pharmacy $200, but you might pay $15 for your copay, meaning insurance covers the other $185. 

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Does every good or service have a copay?

No, not necessarily. Not every plan uses copays as their cost-sharing method. Also, some preventive care services, like annual checkups, may come entirely free of charge depending on your plan. 

Furthermore, copays are only associated with in-network services. If you see an out-of-network provider and you’ve met your deductible, you will likely pay coinsurance instead. Scroll down for a description of coinsurance vs deductibles.

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Are copays negotiable?

A copay is an out-of-pocket payment, and it is final. A copay cannot be reimbursed, nor can it be negotiated, because it is governed by a strict contract between providers and insurers. However, in some cases in which a patient is unable to pay the fee, a provider may waive a copay.

And although copays cannot, medical bills can be negotiated. Read through our blog for more on medical bill negotiation. 

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Where can I find a list of my insurance copays?

While the amount may vary according to your insurance, copay definitions do not. The fixed copays for common goods and services are defined in your insurance plan details, which you can find on your insurer’s website. Look for a link to your Full Plan Details, rather than a brochure. Brochures offer a synopsis for advertising purposes that often leaves out specific details like copays and coinsurance.

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Copay vs coinsurance vs deductibles

What are deductibles?

A deductible is the total cost of medical services you must pay before your insurer chips in. For example, if your deductible is $3500, you must spend $3500 on medical services before your insurer pays for their share of the services’ costs. 

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How do deductibles work?

Your insurer will keep track of the total amount you have paid for eligible goods and services with a running tally. They will update you on your progress toward your deductible in your EOBs (Explanations of Benefits). You can also find this information in your patient portal on your insurer’s website. 

Once you meet your deductible, cost-sharing officially starts. For the rest of the year, your insurer pays the amounts they’ve agreed to pay according to your plan. You will still be responsible for copays, coinsurance, and any out-of-pocket expenses not covered by your plan. At the end of your plan year, your deductible resets to zero. 

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What kinds of payments count towards my deductible?

Copays and premiums typically do not count toward your deductible. The costs that do count toward your deductible vary according to your plan, but here’s a list of services that generally do count.

• Hospital bills
• Lab tests
• Surgeries
• Anesthesia
• CAT scans and MRIs
• Doctor’s visits not covered by a copay
• Medical devices like pacemakers

Which plans have the best deductibles?

Usually, plans with lower premiums (the amount you pay each month for your insurance) have higher deductibles, and vice versa. Many plans have separate deductibles for in-network vs out-of-network services, and out-of-network deductibles tend to be higher than in-network deductibles.

Whether you want a low or a high deductible depends on the type and frequency of care you expect to receive. If you are young and healthy, you will likely benefit from a plan with a low premium and a high deductible. On the other hand, a high-premium, low-deductible plan may be more cost-effective if you expect to seek a lot of care.

For a deep dive on the various kinds of insurance plans and their costs, read How to Choose a Health Insurance Plan That’s Right for You. 

What is coinsurance?

Coinsurance is the percentage of medical costs you agree to pay after you’ve paid your deductible. For instance, if your plan has a 20% coinsurance, once you meet your deductible you’ll only owe 20% of the cost of any other covered services you receive. Your insurer pays the rest. 

Coinsurance can apply to in-network or out-of-network services. In-network coinsurance will generally cost less than out-of-network coinsurance, though not always. As with copays, you can find your coinsurance rates on your insurer’s website, under Full Plan Details. 

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How does coinsurance work?

For example, suppose you get an MRI that costs $1,000 after you’ve met your deductible. If your coinsurance is 20%, you’ll owe 20% of $1,000, which comes out to $200. Your insurer pays the remaining $800. 

Thus, a higher coinsurance means you pay a higher fraction of the cost. Unlike with copays which are fixed, higher medical costs mean higher coinsurance amounts. Plans with higher premiums generally have lower coinsurance rates, though this may vary according to the plan. 

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Copay vs coinsurance

 Consult the following graphic for a summary of the difference between copay and coinsurance.

Copays tend to apply to more routine healthcare services. Coinsurance is used for rarer (and more costly) services. It also applies to a wide range of out-of-network services. 

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Can I negotiate my coinsurance costs?

Patients have a bit more wiggle room to negotiate coinsurance than copays. Your coinsurance rate won’t change, but whether or not it’s applied might. This is because coinsurance can operate in a grayer area of medical billing. 

For instance, your insurer may argue that an out-of-network surgery is not covered by your plan and refuse to reimburse it. If you believe that the surgery should be covered, you have the right to file an appeal. Winning the appeal would mean you only have to pay the coinsurance, rather than the full amount. That could save you thousands of dollars!

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How do my costs differ between copay and coinsurance?

Let’s look at how copays and coinsurance might affect your real-life costs.

Copays: If your copay to pick up a routine prescription pill is $15, you’ll pay $15 every time you pick it up from the pharmacy. No surprises there. However, your copays for less routine services like lab tests or physical therapy could vary.

Coinsurance: With coinsurance, the amount you pay increases relative to the cost of your care. So, if you visit a therapist who charges $200 per session, and your coinsurance is 20%, you would pay $40 and your insurer would pay the other $160.

In-network vs out-of-network costs

With both copays and coinsurance, the costs generally increase for out-of-network services, though not as much as you might think. For example, it’s relatively common for insurance plans to bump a 20% in-network coinsurance rate up to 30% for out-of-network services.

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Does coinsurance count toward my deductible?

Nope. Coinsurance only applies after you have hit your deductible, so it will never count towards it. 

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Where does SuperDial come in?

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