Co-Pay - Definition
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Back To: INSURANCE & RISK MANAGEMENT
A co-pay refers to an amount that an insured pays for a service that is covered by an insurance policy. Co-pay often occurs when insured individuals receive health care services, it is an out-of-pocket amount that the insured pays for such services. Oftentimes, co-pay is an agreement in health insurance plans that warrant an insured to co-pat for help services such as doctor consultation, doctor visits, drug prescriptions, and medical counseling. Co-pays are fixed dollar amount paid at the time the service is rendered, insured individuals pay the fixed amount on covered health service.
A Little More on What is Co-pay
Co-Pay is a term that suggests the involvement of an individual. When used in a health insurance plan, the insurance company and the insured party co-pay the amount charged for receiving a health care service. When an insured individual pays a co-pay, it is often a fixed dollar amount determined by the insurer. The fixed dollar amount for a co-pay varies but ranges from $10 to $25 as determined by the insurance company and the amount charged for the health care service received by the insured. Also, a co-pay option in a health insurance plan may mean different amounts for different individuals, also, the nature of the service received determines the co-pay charge.
How Do Co-pays Affect Insurance Premiums?
In every insurance policy, the insured party must pay a premium which is the amount paid to the insurance company before a policy or coverage can take effect. Amount paid as premiums have a direct impact on co-pays so also do co-pays reflect the premiums paid. The premium paid for an insurance policy determines the co-pay the insured party will be liable for. The higher the insurance company co-pays for a health care service, the higher the premium to be paid by the insured. Similarly, insurance plans where the insured paid a low premium, such insured will have high co-pays, vice versa.
How Do Co-pays and Deductibles Affect Each Other?
Deductibles is another term that occurs in insurance coverage, in certain cases, insured individuals might need to pay an out-of-pocket amount before the insurer settles the claim and refunds the amount paid. Deductibles and co-pays have a connection; when an insured has an outstanding amount as deductibles, he is entitled to full coverage until the outstanding amount is settled by the insurer. For instance, if Mr A is an insured individual with Insurance Company XYZ, and has a health insurance plan where Mr A is required to co-pay $10 on every health care service. If Mr A has an amount deductible of $1,000 with the insurance company, Mr A will not co-pay the medical service received until the entirety of the amount deductible is exhausted.
How Do Co-pays and Co-insurance Work Together?
Co-insurance is often mistaken for co-pay but bith terms are different. In a co-pay, an insured pays a fixed out-of-pocket dollar amount for every health care service he receives. A co-insurance, on the other hand, allows an insured to pay a percentage of the amount charged for a medical service rather than a fixed dollar amount. For instance, an insured can pay a fixed amount of $10 in a co-pay agreement while he pays 10% of the health care service in a co-insurance agreement.
Reference for Co-pay
www.businessdictionary.com/definition/copay.htmlhttps://www.investopedia.com Insurance Health Insurancehttps://en.wikipedia.org/wiki/Copaymenthttps://www.medicinenet.com/script/main/art.asp?articlekey=2839https://www.summitmedicalgroup.com/about/insurance/Copay-And-Deductible/