insurance copay vs. deductible

I know this is a real basic question, but I haven’t shopped for health insurance before as it’s been provided by my employers in the past.

My question is do you pay a copay before you’ve reached your deductible amount.

Say your deductible amount is $5,000 and your copay for primary doctor visits is $50 copay per visit.

Does that mean that right off the bat you pay only $50 for a $200 doctor visit, or do your medical expenses have to reach $5,000 before you only $50 per visit?

Yes, you pay a copay before you reach your deductible amount. You’ll normally be expected to pay this at the time of your doctor’s visit. However, your copay is often not going to be all that you owe. You’ll receive a bill later for anything not covered by your insurance.

You may find the glossary at Healthcare.gov to be helpful, it defines a bunch of health insurance related terms.

That’s not what happens, nor is it made clear in that glossary.

Where a copayment is specified for a service, that service is does not fall under the “deductible” concept at all. If your copayment for a doctor visit is $50, then you will always contribute exactly $50 for that service.

For example, your plan has a deductible of $1000, copay for a doctor visit $50. On January 1st, you go to the doctor. The doctor’s bill is $350. Of that, you pay $50, your insurer pays $300. The deductible does not come into the reckoning at all. Later in the year, you have a minor operation. For this, you must pay the first $1000 of costs to meet your deductible. Subsequently, you make another visit to your doctor. You must still make a $50 copayment.

In a nutshell, the reckoning for services where copayment is specified is completely separate from service where no copayment is specified. The deductible concept only applies to the latter.

Always be aware that there are many provisos and caveats to anything in the US health care system. Is the doctor is in-network? Does the entire service that the doctor is providing actually fall under what’s included in that category of copayment service? Are there additional costs for tests or scans that are treated separately, to which your deductible payment may apply? etc., etc.

So the copay is somewhat of an immediate benefit, as I understand it. I ask because I normally don’t have over $5000 in medical expenses so I’d be better off uninsured if the copay doesn’t provide immediate savings.

Copay is an expense.
If an office visit costs $100, insurance might pick up $75, and your Copay is $25. The $75 goes towards your yearly deductible, so you then only need $4,925 in additional expenses before your insurance kicks in.

It’s one tool the insurance companies use to reduce office-visit abuse.

This depends on the kind of plan, and whether you will have co-pays or co-insurance.

A co-pay is an immediate benefit. You know exactly how much an in-network doctor visit will cost, and normally, the doctor’s office will collect it when you arrive, so there’s no mysteries of billing. Whether or not you’ve met the deductible, you will pay the same amount.

I’ve got a PPO plan that works like the old traditional 80/20 co-insurance split where after I meet the annual deductible, I pay 20% co-insurance, so the amount a doctor visit costs will vary based on their “rack” rate. A sick visit to my primary doc will cost me 20% of $180, but a first visit and consultation with an orthopedic surgeon may be 20% of $550. Vists before I meet the deductible will cost me whatever that “rack” rate is.

Ignoring the penalties for not having health insurance, I just can’t imagine not having it. I’ve seen more hospital rooms and doctors than a person ought to this year, and none of them were planned. Between an ER visit for chest pain, needing my gallbladder out, knee surgery and a run-in with lymphoma, we’ve racked up over $600,000 in medical bills this year, but the out of pocket maximum has saved us from financial disaster.

But if I make only 10 $100 office visits during the year and my deductible is $5,000 with no copay, I wouldn’t have any savings. With the copay, I’ve saved $75 x 10 = $750. Wouldn’t the copay be a plus for healthy people like me that don’t usually spend a lot on health care? I think I’d rather have a $5,000 deductible with a $25 copay than a $4,000 deductible with no copay, how I see this.

No Copay means the insurance picks up 100% of the tab.

So, the best arrangement would be $0 deductible and no Copay, but “that ain’t happenin’.”

By “no copay”, I meant you’re paying $100 each visit (versus $75 per visit with $25 copay) until you reach the $5,000 deductible. That doesn’t sound better to me.

No, “no copay” would mean the insurance company pays $100, you pay $0.

Note that it’s a bit more complicated than this. Ignoring the copay issue, having insurance often gives you discounts at in-network doctors, so you need to consider that benefit also.

Right. That is something people commonly misunderstand. Even if you haven’t met your deductible, your insurance is still in effect and the claims still go through your insurance company. That has several advantages to you including negotiated discounts for services and usually a long lead time before you have to pay the bill. If you didn’t have insurance at all, you would likely have to pay right away, the prices are charged would generally be much higher and some doctor’s offices wouldn’t agree to see you at all. You would also be fined come tax time because of penalties associated with ObamaCare. It isn’t advantageous for the vast majority of people to just take the downsides and go without health insurance even if they have the money to pay for routine care out of pocket.

Yes, this is one of the (many) fundamental problems with the U.S. healthcare system. There is no price transparency, so market forces simply do not operate.

As a U.K. citizen living in the U.S., long before Obamacare I considered not gettting any insurance, reasoning that could pay for everyday care myself, that I have enough resources to take the risk of a large emergency treatment bill, and that for a non-emergency major condition (getting cancer, say) I could return to the U.K. I realized that this was completely unworkable in practice, because:

(a) As an individual, it is nigh impossible to get a clear price quoted for any service beforehand, so you cannot shop around.
(b) The nominal bill that you end up getting, say from a hospital for a minor operation, will be inflated to literally 5X or 10X the true price. Insurance companies ignore such bills, and pay off predetermines schedules that have been negotiated with the hospitals. As an individual you are faced with a bizarre process of trying to negotiate the hospital down to maybe 2X or 3X the true price.

The U.S. healthcare system is truly Through The Looking Glass, it is beyond broken, it is surreal.

I’m pretty sure this is wrong, although maybe the rules are my plan are not generally applicable.

Treatments where a co-pay is specified fall outside of the “deductible” reckoning altogether. So, in this “office visit with copay” example, although you have not yet met your annual deductible, you would co-pay $25, and the insurance company would pay the remaining $75.

But the flip side is that the $75 portion of this bill that the insurance company has paid does NOT reduce your deductible amount. You still have to pay the first $5,000 of any subsequent healthcare services for which a coypayment scheme is not specified (usually, more major expenditures).

You’re probably right.
I just looked at my summary for the year, and my deductible amount seems to match the amount I paid (including my copay), not the amount the insurance company paid.

The terminology here is something like “no charge after deductible is reached”, not “no copay”, meaning you pay the full 100% for each visit until you reach the deductible, then pay nothing afterwards.

The $25 copay seems like a benefit for a healthy person because you’re saving $75 per visit before the deductible is reached. I guess you also pay the $25 copay after the deductible is reached, but a healthy person probably wouldn’t reach the deductible.

This explanation matches my experience. Which the OP seems to have ignored when it went by.

Bottom line: Co-pays do nothing to reduce your deductible. They are utterly separate charges for utterly separate purposes.

If you went to a doctor for a routine visit twice a day every day you’d pay 500+ co-pays that year. And if you never got any prescriptions or fancier procedures, then despite spending all that money, you’d have paid in exactly zero towards meeting your deductible.

So if on Christmas you ended up in at Emergency after that unfortunate eggnog overdose event, and the bill came to $10,000, you’d pay your full deductible towards that big bill, followed by paying your “co-insurance” percentage of the rest (typically 20%). And if that total of your co-insurance would exceed your “annual out of pocket maximum”, then, and only then, would the insurance pick up 100% of the remaining excess that year.
And as other have said, regardless of any of this detailed stuff, the big advantage to having some insurance, any insurance is that the prices you’re charged will be vastly less than those charged to someone with no insurance.

I’m not ignoring it, I just have never spent more than a couple grand on medical expenses in a single year, so the after-deductible savings are minimal for me. I’d apply maybe a 10% factor to them in any computations as the chance is 1/10 at most that spending would reach any deductible amount. That’s why immediate copay savings seem like a benefit for a healthy person like me.

So, for similar cost, you are leaning toward lower co-pay, higher deductible? I think your analysis is probably reasonable.

However, consider also the following subjective factor when you choose a deductible. If you get sick late in the year, and you have a high deductible plan, you may end up making a poor decision in the heat of the moment when you try to weigh your financial circumstances against your health. Suppose you get sick in November, and you need substantial treatment that may extend over a few months. If you have a higher deductible, there is a greater financial incentive to wait until January to begin treatment, so that all of your treatment falls within a single year.

For this reason, even though I’m healthy like you, I tend to pay up for a lower deductible even though on a simple probabilistic analysis that’s not the rational choice. This way, if I do get really sick in November or December, I have less financial incentive to make a bad choice that might compromise my health, I’m going to get treatment immediately.

Riemann, that makes sense, but the idea behind my thread was to ask if a copay is some form of benefit insofar as it provides immediate cash savings. I think you’re the only one that has indicated that it is. Everyone else implies it’s a penalty.

I suppose you could say it’s a benefit in that the copay is less than the full price for services. For those of old enough to remember when there were no co-pays, a co-pay is simply a way to make my medical care cost more out of pocket than it used to. No discernable benefit there.

A $20 co-pay is better, viewed in isolation, than a $50 co-pay. So the ideal co-pay would be $0. Whether you (any you) think of a $20 co-pay as a benefit depends entirely on whether the alternative is $0 or $50.