What’s the difference between a deductible and copay?

deductible vs copay

Insurance deductibles and copays explained

Insurance can be confusing. It’s no surprise that people can be easily confused between common insurance terms. For example, deductibles and copays are often mistaken to be the same thing. We’ll take a look to explain the difference between insurance deductibles and copays.

Insurance deductibles are met first

Most insurance policies will include a deductible. In common terms, a deductible is the amount that a member must pay before an insurance plan will begin to make its payment for covered services. Deductibles can be as small as a few hundred dollars or as much as several thousand dollars depending on the type of insurance policy you have.

For example, if your policy has a $500 deductible, you’ll be responsible to pay the first $500 of charges to meet your deductible. Then your plan will kick in to pay its portion of the claim.

Insurance copays are paid for specific services

Insurance copays are different than deductibles. Depending on the type of plan, a copay is a set amount that you are responsible to pay for a specific covered service.

Another way to think about it is a co-payment. You pay your copay and the insurance company will also pay its amount towards a specific covered service. Copays are often smaller amounts such as $30 or $50 for doctors visits or for prescription drugs.

Deductible and copay timing

Insurance deductibles are typically met just once during a calendar year. So you meet you deductible once, but insurance copays can continue indefinitely depending on the type of plan you have.

With copays, your deductible doesn’t have to be met for you to use your plan’s copay feature. Copays are usually separate from deductibles and are accumulated on a per service or per visit basis.

Some insurance plans can include both a deductible and copays. With medical plans, deductibles can be applied towards big ticket items like hospital stays or surgeries, while copays are used for routine items like doctors visits and the pharmacy. These are typically broken down on your Explanation of Benefits.

Understanding your insurance benefits

So it’s actually not that hard to understand deductibles and copays. Remember that deductibles are usually larger amounts for bigger items that is met once a year. Copays are for smaller amounts and can continue on a per service or per visit basis. Once you’ve got these two items down, you’ll be much better at understanding your insurance benefits.

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