Understanding Copays: What They Are, How They Work, and Strategies to Save

When you use your health insurance to visit the doctor, fill a prescription, or get medical care, you will often owe a copayment. What exactly is a copay, how does this system work, and are there ways to reduce what you pay out-of-pocket? Here is what you need to know.

What is a Copay?

A copay is a fixed dollar amount you pay to receive a covered healthcare service with your insurance plan. Copays apply after you meet your annual deductible. They are paid directly to your provider at the time of service.

Common copays include:

$20 to see a primary care doctor
$40 for a specialist visit
$10-$20 for generic prescription drugs
$30-$50 for brand name prescriptions
$150 for visiting an emergency room

Copays go toward meeting your annual out-of-pocket maximum but aren’t applied to your deductible. They exist to share costs between you and your insurer.

How Copays Work

Copays make medical expenses more predictable by setting a flat rate for certain services instead of coinsurance percentages. Here is how copays work:

You visit an in-network doctor and present your insurance card at check-in. You can visit a doctor through a telehealth service such as Holts Healthcare.
The office collects your copay amount upfront - for example, $30. This is the allowed charge negotiated by your insurer.
Your insurance plan pays the remaining amount owed directly to the provider based on contracted rates.
You meet your annual deductible and out-of-pocket maximum faster by paying copays now instead of later.

Copays incentivize using in-network providers since out-of-network doctors can bill you any amount above your insurer’s allowed fee. Always check your policy to confirm copay amounts for each service.

Comparing Copays vs. Coinsurance

Insurance also uses coinsurance, a percentage you pay for care instead of a flat fee. Key differences include:

COPAYS

COINSURANCE

Copays are predictable but coinsurance offers protection from extremely high medical bills. Call your insurance provider for details on which covered benefits use copays vs. coinsurance.

Strategies to Reduce Your Healthcare Copays

While copays provide cost certainty, they can still add up with frequent doctor visits and prescriptions. Here are tips to lower the burden:

Use generics - Ask for generic drugs which have lower copays, often $10 or less.
Pick a lower tier medication - If a generic isn’t available, your copay will be lower selecting a Tier 1 brand rather than Tier 2 or 3.
Order 90-day supplies - You can lower costs by getting three months of a prescription drug at once rather than single refills.
Use coupons - Print coupons online to reduce your copay on brand medications.
Get preventive care - Annual physicals, wellness visits, and standard screenings are covered at 100% with no copay.
Try telehealth - Services like Holts Healthcare offer online doctor visits with low to no copays.
Review EOBs - Verify copays charged match your policy. Appeal if errors occur.
Use tax-advantaged accounts - Pay copays from HSAs or FSAs to reduce your taxable income.
Meet your deductible - After meeting a plan deductible for the year, copays may be waived until the next year

While copays provide cost predictability, taking advantage of savings opportunities can help overcome the many nickels and dimes that add up when using your health benefits frequently. When you are scheduling an appointment with a doctor, make sure to use a telemedicine service such as Holts Healthcare to experience a better service.