What are copayments in health insurance?

Copayments, often referred to as copays, are fixed amounts that an insured individual pays out of pocket for specific medical services at the time care is received. This arrangement is designed to share the cost of healthcare between the insurer and the insured. For instance, a health insurance plan might require a copayment of $20 for a doctor's visit or $10 for a prescription medication. This structure helps to make healthcare costs more predictable for consumers, as they know beforehand the amount they will need to pay when they access certain services.

This method encourages individuals to seek necessary medical care while also deterring overuse of health services, as there is a direct financial cost associated with each visit or service rather than the insured incurring zero costs. Copayments are generally distinct from other payment structures like deductibles, which are amounts that must be paid before insurance covers services, and co-insurance, which is a percentage of the cost that the insured pays after meeting the deductible.

Understanding copayments is important for consumers in managing their healthcare budgets and making informed choices about insurance plans.