Define Insurance Copay

Most insurance plans require some form of copay.

The insurance copay is the amount of money that a policy holder has to pay if insurance services are rendered. This is a part of the policy, which is a contract signed by the customer and the insurance company. The amount of a copay varies, depending on the type of insurance policy and other factors.

History

The insurance copay was created to lower the cost of the insurance premium the policy holder or customer has to pay. A premium is the monthly, annual or semi-annual amount a policy holder pays for coverage in the event of an accident, illness, death or other situation. The purpose of insurance is to protect the policy holder from unaffordable costs. Policy types vary by the category of insurance. The different types of insurance policies are divided and policy holders must have a separate policy or contract for each item or situation covered. Copay is the name associated the most with medical and disability insurance. The copay is also known as "out of pocket" costs to the policy holder.

Considerations

Copay comes in different types on different policies. Some policies may have a set deductible rate, while other policies may have varying rates depending on the type of service rendered. Medical insurance is a good example of a policy with a variable deductible rate. For example, appointments to the doctors office may require a payment of $30 for each visit while surgery requires a $2,500 deductible to be paid by the policy holder. Prescription drug coverage can also have several different deductibles. A generic ( a lower cost drug) may have a $10 deductible while more popular name brand drugs have a $20 deductible. Some medical plans may not cover prescription drugs until the first $500 is paid by the policy holder.

Benefits

The copay has numerous benefits for the policy holder, such as reducing the premium cost with a higher deductible. Sometimes customers can save hundreds to thousands of dollars per year for choosing to take a higher copay. Paying a copay is also a benefit to the pharmacy that provides medication for those with health insurance. The pharmacy usually has to submit a bill to the medical insurance company and wait for the bill or invoice to be paid. The copay allows the pharmacy to collect a portion of its money upfront, which could impact the cost of the drugs being provided to the insured customer. The copay is also a benefit to the doctors office. Some medical service payments are reduced or denied when the doctor submits the invoice or bill to the insurance company.

Prevention/Solution

As the cost of medical care increases sometimes copays can be avoided. Some medical insurance policies will waive or not require a policy holder to pay a deductible for an annual physical, teeth cleaning, or gynecological visit for women. In some cases some insurance companies have given policy holders credit toward the annual deductible for having a gym or fitness membership. These benefits can help individuals and families save money on annual health expenses.

Geography

Many medical insurance providers offer services in the state where they originated for employer- sponsored and private (purchased by the consumer) insurance plans. It is now very common for insurance companies to operate in multiple states to expand the number of customers or policy holders. Private plans are very useful for consumers who frequently travel. Private plans usually have a national network or a group of providers that it approves for patient or preventative care. Some employer- sponsored plans restrict policy holders to the state or region of states where they reside. There are also cases where the patient may have to receive a referral from their doctor. In the event of an emergency this can lead to an increase in medical bills if an emergency happens outside of the network. Private insurance policy holders are usually able to pay the copay and receive the same benefits in another region as long as it is in the providers network.

References

• Health and medical insurance facts
• medical Insurance Copays
• the definition of Copay

Resources

• Copay relief