A copayment (also called a copay) in the insurance world is a flat dollar amount that you, the insured, pay for a specific medical service or medication. The amount is only a small portion of the actual cost of the medical service, so the insurance company ends up covering the rest.
A copayment varies between the different companies and policies; average copayments are anywhere between $5 and $25.
Group health insurance policies most often have copayments. Everyone who visits the doctor’s office might pay $15, no matter what service was provided or how much it actually costs the insurance company.
And when these same members pick up their medications, they might each pay $20 per medication, no matter what drug it is. Although, generic drugs are usually cheaper than brand name drugs; so the group insurance members might all pay $15 for a generic drug of any kind and $20 for a brand-name drug of any kind
Copayment for Medical Services
It is thought that insurance companies require a copayment to discourage people from seeking unnecessary medical care. Because you are required to pay a small amount of money every time you want to see the doctor, you probably think twice before running right over every time you don’t feel well. Often, many people choose to wait a day or two to see if rest (and chicken soup!) heals the body. And then if they don’t feel better, they will usually visit the doctor.
Insurance companies encourage this kind of behavior because when people visit the doctor less, they have less medical bills to pay for, and end up saving lots of money.
However, copayments have a negative effect. Often, having to pay a copayment results in some people not seeking the medical care that they actually need. The RAND Health Insurance Experiment was a study that showed that the cost sharing, or copaying, of insurance companies and policyholders reduced necessary and appropriate visits to the doctor as well as unnecessary. During the study, this aversion to visiting the doctor caused many negative health effects, particularly on people with irregular blood pressure and other high-risk individuals.
People with chronic illnesses fall into this category particularly because their illnesses are continual and reoccurring; thus, they may want to go to the doctor’s office as often as once a month or every couple of weeks or even twice a week for medical attention, but they don’t want to pay $20 dollars every single time.
If you were to go to the doctor’s office once a week and pay a $20 copay, that would end up costing you $1,040 after just one year! If you went to the doctor once a month, you would fork over $240. Copayments are probably a huge problem for a penny-pinching hypochondriac!
Copayment for Medications
Medications usually require a copayment as well. The amount for these copayments is similar to copayments for doctor’s visits: anywhere from $5 to $25 is average.
Just like each time you visit the doctor you must pay a copay, each time you pick up a new medication you must pay a copay. You are only paying for part of your medication and your insurance company pays the rest.
When people have to pay a copayment for medication, this may make them not always want to even receive their medication at all. For many people, it may be a hardship to have to copay for medication because they can’t afford to pay it. It has been shown that copayments have also reduced the instances of people, particularly those with chronic conditions, not getting the necessary and appropriate medications that they need.