What is "co-payment" in health insurance?

Co-payment, often referred to as a copay, is defined as a fixed amount that a policyholder pays for a covered healthcare service at the time of service. This structure ensures that insured individuals contribute to their healthcare costs, typically at the point of receiving services like doctor visits, outpatient care, or prescription medications.

Having a predefined copayment allows for predictable out-of-pocket costs for patients, making financial planning easier. For example, an insured individual might have a copayment of $20 for a visit to their primary care doctor. This means that regardless of the actual cost of the visit, the patient will only need to pay $20 at the time of service, with the insurance covering the remaining balance.

In contrast, the other options describe different aspects of health insurance. A variable amount based on the treatment received speaks to coinsurance, where the insured pays a percentage of the service costs rather than a fixed amount. The percentage of costs paid by the insurer refers to how health insurance plans often cover a portion of total costs (like 80% coverage), leaving the insured responsible for the rest. Lastly, the total annual premium for a policy is the amount paid periodically (monthly, quarterly, or annually) to maintain the policy, which is separate