Copayment

A copayment (or copay) is a flat fee that an insurance company charges for a medical service. Most commonly a copay is assessed on doctor visits and prescription drugs.

A Shared Sensation of Loss

The amount of a copayment ($5, $10, $20) is negligible when compared to the cost of most medical services. The reason an insurance company charges a copayment is to reduce usage by including the insured patient in the financial loss of a medical treatment.

Even as little as a $5 fee is enough to trigger a feeling of loss in a person and give them pause to reconsider the merits of their scheduled doctor visit. Studies have shown people with a copay visit doctors 1/3 less than patients without a copay.¹

“It costs me $15 to see a doctor”

The idea that a $15 copayment is your cost to see a doctor is false. A low copayment does little to offset the insurance carrier’s cost for your treatment and is charged merely to discourage you from seeking unnecessary health care.

In the case of health plans with a low copay, the cost to see the doctor is already added into the premium. A health plan with a low copay has a higher premium because you, the insured, are paying for medical treatments in advance.

Difference Between Copay and Coinsurance

While a copay is a type of coinsurance, the difference is that a copayment is a fixed dollar amount whereas coinsurance is a percentage of the cost of the medical treatment.

¹ Brook, Robert H et al “The Effect of Coinsurance on the Health of Adults” http://www.rand.org/pubs/reports/R3055.html