Copayments, often referred to as a copay, are rates for health care services established by a medical insurer. These are costs are a form of coinsurance designated by your health insurance plan, usually applied to physician’s office visits and prescriptions. Your copay will vary based on the carrier through which your plan was purchased, and indicated in your schedule of benefits.
Though premiums vary for different individuals, copays are always the same. A copayment must be paid upon receiving the service, and tend to be offered for a very affordable rate. Before the insurance company pays their share of service fees, the copayment is required from the policy-holder. Copays are also typically listed on insurance identification cards to help the provider and the patient to have easy access to the proper payment due at the time of service. They are not usually considered part of a plan member’s out-of-pocket maximum.
Both HMO and PPO plans use copayments in their plans. Health care services offered through an HMO plan are most times available for a copayment, regardless of having a deductible or not. An HMO without a deductible relies completely upon copayments from the patient to receive care. Many traditional and value PPO plans offer copays on immediate benefits such as doctor’s office visits with a primary care physician or specialist for illness or injury.
Why Copayments Were Created
Copayments were created in order to avoid the use of unnecessary health care services, or excessive amounts of care by making it too easily accessible. By putting in place a method of simplifying health care payments, patients would have a greater understanding of their expenses. By placing a dollar amount for individuals to pay out-of-pocket as soon as the service is performed, instead of waiting for the cost to go through insurance, it is easier for the beneficiary to see how medical costs add up.
Copays are useful for health insurers in this way, therefore making policy-holders conscious of their cost-sharing and limiting their number of visits. When this system was implemented, it was assumed that without an upfront payment, individuals would take advantage of the health care services at their disposal. By setting copayments for health plans at a reasonable rate, such as a $25 doctor’s office visit, insurance companies allow individuals to feel they can afford to seek medical attention if needed.
Many plans set a limit on how many visits the policy-holder can have with a certain type of service before their rate increases to a percentage of coinsurance or full cost, and the service is no longer available for a copay. This is mostly a PPO characteristic.
Benefits of Using Copayments
For the consumer, copayments are a great benefit. The ability to receive care for a small dollar amount at the time of service is extremely cost-effective and helpful to budgeting, as well as granting the ability to receive care without the looming fear of debt. With HMO plans, most care is offered for a copayment whether it is with a hospital or physician, as many plans do not even require you meet a deductible. PPOs that provide copayments on services have select services, ranging from one or two to more than ten types of services available for a fixed rate. Depending on the carrier and the state, PPO plans can have a necessary few or a wide variety of services for a predictable fee.
Immediacy is the key reason to purchase a plan with services offered for a copayment. As most health insurance is purchased for “just in case” purposes, you never know if the day after you buy your policy an accidental slip while walking down the street causes more than a sprain, or allergies escalate to a sinus infection. This is important to be able to have access to a physician or hospital, though emergency care usually waives the deductible if your condition is serious enough for admittance. Without having to meet the deductible, copays allow you to treat your illnesses and injuries or have access to medications.
If you have any additional questions regarding copayments or want to find the best individual health plan in your area offering first-dollar benefits, call 888 803 5917. You can also get a quote to compare rates and research plan types on your own.