It is almost impossible to avoid an insurance copay as a policyholder. Like deductibles, many out-of-pocket costs have similar purposes to copays, so you are likely to mistake one for the other. However, copays are more commonly associated with sound health insurance plans than with other policies.
Most insurers find this a relevant component for risk-sharing and coverage maintenance. This means it is mutually beneficial to both the insurance provider and the policyholder.
Even when some policyholders can do better with a copayment feature, not all plans make room for it. The essence of this article is to help you understand how the presence or absence of this option can affect your policy.
What is an insurance copay
Simply put, an insurance copay or copayment is the instant fee you pay for a service or procedure you receive. This is the fixed amount insurers charge when you opt for any service, whether a doctor’s appointment or prescription.
Copay tends to change annually and may vary depending on service or policy type. Therefore, you must stay abreast of these changes and review your policy to note all services that require copayment.
Types of copays
All policyholders will experience insurance copay either in the voluntary or involuntary form. Where you have a voluntary copay, there may still be special situations where insurers can enforce compulsory payments. Some of them include:
- Copay for reimbursement claims: When policyholders go for services outside their plan’s network, the copay clause takes effect. This means they’ll be mandated to pay for the services out-of-pocket.
- Copay senior citizens: Policyholders who are senior citizens usually spend more on health care. For this reason, insurers attach a clause for a compulsory copay on their plan.
- Copay for special services: Medical procedures outside the usual plan attract extra costs. Thus, insurers may adjust the co-pay percentage to fit any special condition
- Copay for special locations: Your location may be the reason you pay more for services. When you stay around the big cities, you have higher expenses and insurers expect you to share in the burden.
How does an insurance copay work?
The acceptable range for copay is between 10% -30%. Let’s assume your copayment for an emergency service is 20% while the medical bill is $100. You can pay $80 while the insurers cover the remaining $20.
However, you may have to pay the entire $100 if you are yet to meet your deductible at the time you go for a procedure. If your insurance company has a copay option, other medical services that are outside your annual checkup may attract out-of-pocket costs.
Policyholders can get full details of their copay amount from the contract. For example, charges on Mediclaim policy are already predetermined and stated on your insurance ID card. When purchasing any new plan, equal attention should be given to copayments as much as premiums and other charges.
Benefits of copays
- Regulates premiums: The amount you mark out for insurance copay affects premiums. Plans with higher premiums usually have lower copays, while those with low premiums have higher copays.
- Divides risk: Insurance copay is another means to avoid sole responsibility for risks. With this risk-sharing plan, both the insurer and the insured can bear the burden and cost of claims.
- Reduces unnecessary claims: When there’s a condition that makes the insured pay up to 25% of claims cost, there will be no hurry to file claims. It prevents the misuse of insurance plans and encourages users to take better care of their health.
Conclusion
Lastly, you must understand that copays don’t count towards the deductible but can affect your premium. This means your medical needs and lifestyle must be considered before you choose a plan with a copay clause.
