Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Courses
  • Tutoring
  • Home
  • Law, Transactions, & Risk Management
  • Insurance & Risk Management

Co-Pay - Explained

What is a Co-Pay?

Written by Jason Gordon

Updated at September 27th, 2021

Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Marketing, Advertising, Sales & PR
    Principles of Marketing Sales Advertising Public Relations SEO, Social Media, Direct Marketing
  • Accounting, Taxation, and Reporting
    Managerial & Financial Accounting & Reporting Business Taxation
  • Professionalism & Career Development
  • Law, Transactions, & Risk Management
    Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
  • Business Management & Operations
    Operations, Project, & Supply Chain Management Strategy, Entrepreneurship, & Innovation Business Ethics & Social Responsibility Global Business, International Law & Relations Business Communications & Negotiation Management, Leadership, & Organizational Behavior
  • Economics, Finance, & Analytics
    Economic Analysis & Monetary Policy Research, Quantitative Analysis, & Decision Science Investments, Trading, and Financial Markets Banking, Lending, and Credit Industry Business Finance, Personal Finance, and Valuation Principles
  • Courses
+ More

Table of Contents

What is a Co-pay?How is a Co-pay Used? How Do Co-pays Affect Insurance Premiums?How Do Co-pays and Deductibles Affect Each Other?How Do Co-pays and Co-insurance Work Together?Academic Research on Co-pays

What is a Co-pay?

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.

Back To: INSURANCE & RISK MANAGEMENT

How is a Co-pay Used? 

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 both 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.

Related Topics

  • What are the primary obligations of the insured?
  • Insurance Premium
  • Cooperation Clause
  • Coinsurance
  • Co-Pay
  • Affidavit of Loss

Academic Research on Co-pays

Panel content


co-pays co-pay

Was this article helpful?

Yes
No

Related Articles

  • Chartered Life Underwriter - Explained
  • Cash Surrender Value - Explained
  • Insurance - Explained
  • Enterprise Risk Management (ERM) - Explained



©2011-2023. The Business Professor, LLC.
  • Privacy

  • Questions

Definition by Author

0
0
Expand