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What is a copay in health insurance?

Key Takeaways

  • A health insurance copay is a fixed dollar amount that a beneficiary is required to pay out-of-pocket in order to receive certain medical treatments and services.
  • Copays can apply to the essential healthy insurance benefits both before and after reaching the deductible threshold.
  • Copays for network services count towards a plan’s deductible thresholds, the maximum deductible, and out-of-pocket limits.
  • Out of network copays do not count towards deductibles or out-of-pocket limits

Copays Defined

A copay is the price the customer pays for a medical treatment or service, and it is usually a small fraction of the actual costs. For example, a $200 CT scan might cost the consumer a $40 copay.

Comparison shopping is a great tool for finding value in health insurance plans. Copays have two roles: firstly, they cover benefits before customers reach the deductible threshold in some plans. Secondly, they help keep services readily available for everyone, rather than just a select few. 

At Health Insurance Providers, you can enter your zip code to start comparing your state’s most affordable health insurance quotes today!

Understanding Out-of-Pocket Expenses


Elements like copays, coinsurance, and deductibles are a few examples of what are known as out-of-pocket expenses. These consumer-paid costs are part of the price of health insurance.

Just as the monthly premiums pay for the basic terms of the insurance, copays are part of the costs of services that customer’s use.

In order to avoid any confusion regarding out-of-pocket responsibility and plan benefits, one must be aware of the difference between plan limits and the overall Obamacare limit on out-of-pocket expenses.

What are health insurance networks?


Health insurance networks are groups of doctors and medical care providers that agree to treat beneficiaries of certain insurance plans for previously agreed-upon prices. Managed care organizations use networks to set prices and prepare services for diverse populations and territories.

One important difference between different types of health insurance networks is their coverage policy when it comes to out-of-network care. The following are some of the most common types of health insurance networks:

Exclusive Provider Organization (EPO)

The exclusive provider organization does not offer coverage for care received from out-of-network providers. As such, users are typically responsible for paying all out-of-network expenses out-of-pocket. In many EPOs, money spent on out-of-network care may not count towards the plan’s deductible or spending limits.

Health Maintenance Organization (HMO)

The health maintenance organization model does not provide cost-sharing for out-of-network care. Depending on the exact plan you have, this spending may not count towards the deductible or the plan’s out-of-pocket limit.

Private Fixed-Fee-For-Service (PFFS)

The “private fixed-fee-for-services model.” This type of plan does not offer outside services. The consumer’s spending on outside services may not count towards the out-of- pocket maximum or the deductible. The terms of each plan would provide the details

Preferred Provider Organization (PPO)

The preferred provider organization model does provide coverage for care received from out-of-network providers, but it often pays a lower share of out-of-network costs.

Health Maintenance Organization Point of Sale (HMO-POS)

The health maintenance organization point of sale option is an HMO model that allows in-network primary care doctors to refer patients to out-of-network specialists at no additional cost. The HMO-POS model often pays a lower share of cost for out-of-network care than it would for in-network care.

Why do insurers charge copays?


For the most part, insurance companies are for-profit businesses. Small charges not only provide a source of revenue for insurance companies, but they also ensure that people do not overuse a medical service and therefore leave it in short supply from those who need it. 

For the consumer, there is a good side to spending money on copays. Once a beneficiary has reached their out-of-pocket spending limit for the year, the insurance company will pay the entire cost of care. The following consumer spending elements count toward your overall out-of-pocket limit:

  • Network Copays
  • Network Coinsurance
  • Deductible expenses

What about prescription drug copays?

Medicare Part D provides a Prescription Drug benefit for older Americans. Medicare Part D reduces the costs of prescription drugs dramatically.

Medicare Part D copays can vary depending on the terms of a specific insurance plan. Each Medicare Part D plan has a drug formulary, or list of covered medication, that describes the covered drugs and pricing tiers associated with them.

Some pharmaceuticals have higher copays than others. For example, name brand drugs typically carry a higher copay than their generic equivalents.


Copays help reach the deductible threshold if spent on in-network resources. Copays that consumers spend on out-of-network resources do not count towards the policy limits. In effect, a consumer spends to cover coinsurance or copays on out-of-network resources raises the contract and maximum overall limits.

In effect, a consumer spends to cover coinsurance or copays on out-of-network resources raises the contract and maximum overall limits.

Consumers with options to use outside resources should consider the impact on their overall costs. Unlike network resources, going outside for services does not help get to the overall limit.

Once past the overall limit, the insurance company must cover the entire charge for the essential benefit.

The amount you spend on copays depends on the details of your plan.

Insurance plans use the term “copay” to describe charges for services that are the beneficiary’s out-of-pocket responsibility. Customers must review their plans to understand which services have copays, the amounts those copays are, and the number of times they can use the service at the copay price.

Though copays can add up to major amounts for some policyholders who can use a service frequently, comparison shopping is a great method for rating features in health insurance plans to ensure that you always know what to expect from your medical expenses.

Are you ready to find the ideal health insurance plan for you? Stay firmly in control of your budget by entering your zip code in our free search box below to start comparing plans and prices today!


  1. https://www.healthcare.gov/lower-costs/save-on-out-of-pocket-costs/
  2. https://www.healthcare.gov/choose-a-plan/plan-types/
  3. https://www.healthcare.gov/choose-a-plan/your-total-costs/
  4. https://www.healthcare.gov/glossary/out-of-pocket-maximum-limit/
  5. https://www.healthcare.gov/glossary/co-payment/