Navigating health insurance terminology: Copayment

COLUMBIA, Mo. – The Affordable Care Act has made health insurance available to many Missourians for the first time. If you’re new to health insurance, the unfamiliar terminology may seem daunting.

When choosing group medical insurance, you need to understand copayments, or copays. A copay is the fee you pay for each visit to a health care provider or when you fill a prescription.

“It’s usually a set amount that can vary depending on the service or medication,” said Brenda Procter, University of Missouri Extension associate professor of personal finance. “It can change based on your health insurance plan, so you need to understand those fees when choosing health insurance.”

In-network and out-of-network services may have different copayments.

“In-network means the insurance company has a contract with a specific facility or provider to get a better deal on care,” said Graham McCaulley, MU Extension personal financial planning specialist. “When you use in-network services the copay will generally be lower.”

Procter says it’s important to consider all fees and expenses when choosing a health insurance plan.

“You can’t just consider the premium amount,” Procter said. You need to look at the copays, deductibles and all the other costs to determine if it’s affordable.

McCaulley agrees. He says you need to shop for a plan that will work with your budget.

For  example, some plans may have lower monthly premiums but higher annual deductibles. The deductible is the amount the you must spend before insurance begins to pay for covered service. Until you have reached your deductible, you pay the full price for services. After that, you are only charged the copay amount and your insurance pays the rest. Some services, such as preventive care, may be covered even if you haven’t met the deductible yet.

“If a lower premium works better for your budget each month, but there’s a high deductible, you will need to make sure you have access to that deductible amount,” McCaulley said.

Also, if you have an idea of what types of medical services are important to you or your family, you can anticipate how much a plan may cost you, which can help you compare plans, McCaulley said.

For example, if you anticipate going to the doctor frequently, a higher-premium plan that has lower copays for doctor visits or a lower deductible may make more sense, he said.

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