Everyone knows what copays are, right? Not so fast! We want you to know the basics of your health plan. Here find out more about what copays are and how a copay-style health plan works. Get your copay definition so you can tell people about the difference between copay and coinsurance.
I’ve got a Copay Plan
“Tell me about your health insurance.” I ask. Inevitably, most people dial down to their most used benefits. “I have $20 copays for doctors.”
But what are copays? Sounds too simple, right? Everyone knows what a copay is. Or so I thought.
I asked someone recently to tell me about their insurance. They just looked at me, confused. Seeing as they have been healthy, they never used their insurance and never took the time to understand how their policy works. I asked, “Do you have a copay-style plan?” Again, confused look.
A copay-style plan, is a plan with copays.
What are copays? Copays are a set dollar amount you will pay for certain services when you use your health insurance. This all happens before a deductible is met (except with Medicare Part D). Typically, you will spend less money upfront for a doctor visit or prescription fill if you have a copay (compared to paying the full cost.) *Note: Plans with lower copays will generally have a higher premium and vice versa.
For example, your specialist charges $200 full price, but your plan has a specialist copay of $40. Because the doctor and the insurance carrier have a contract (hence the term ‘in-network’), you only pay the $40. Good savings!
In the past (pre-ACA), if you had a copay plan, the copays you pay were not applied toward your out-of-pocket maximum. Nowadays (until ACA changes), your copays are applied toward you oop max. This is good for you. If you have a Medicare Advantage plan, your copays will be applied to your out-of-pocket spending limit.
The moral of the story is to understand how your plan works. Even more important, make sure your advisor helps you understand the differences in all plans available. Copay-style plans are cool, but they are certainly not for everyone! (I don’t have a copay plan)