The terms copay and deductible may be confusing for some people, since they are related. A copayment can be called a point of service payment, something that a patient would give to doctors, other allied health workers, and possibly to labs when they receive service. In contrast, the deductible is the amount of money that a patient must pay before major services are covered, usually things like hospitalizations or surgery.
Copays are part of a patient’s payment toward one particular bill and something he usually needs to bring with him at the time of service. Rates vary, depending upon the type of service a person is getting and the type of insurance he has. This is the patient’s payment share of that particular visit.
Like copays, deductibles can be highly dependent on the type of insurance a person has. These amounts are usually figured on a yearly basis, however, and once the total is met, his insurance should cover the rest of the payments — up to a point. Each year when the insurance policy renews, the patient has to start over, paying again until he’s reached the deductible.
For example, if a deductible is $500 US Dollars (USD), this means that, before the insurance company will start paying for services, the patient have to pay $500 USD out of his own pocket. If he went to the hospital to have a surgery, the first $500 USD of that bill would be directed toward him, and he’d have to pay that amount before the insurance company kicked in with payment. Usually deductibles are higher than this, sitting in the range of several thousand dollars.
This is where the difference between copay and deductible gets extremely tricky. In most cases, when a patient has both, insurance will cover their part of things like doctor’s visits before the patient reaches his deductible limit. Therefore, when the new insurance year starts and the patient visits a doctor, he’s usually responsible for the copay only and not the deductible amount.
If that patient needs a major or minor operation, however, he’d have to meet that deductible prior to getting reimbursed for the rest of these expenses. Also, in many cases, insurance companies don’t count copays as fulfilling part of the patient’s deductible expenses. A lot of insurances charge something different from copay and deductible, and require individuals to pay a percentage of certain expenses. This may be considered a copayment too by some insurers.
Again, from the example of a new insurance year, a patient might need to meet a $1,000 USD deductible, and then also pay a percentage of the remaining amount due for service, which may be called a copayment. If he has surgery and it costs $26,000 USD, the first $1,000 USD is his responsibility alone. On the remaining amount, he might owe a percentage, say 10%. In total, the bill for the surgery would be $1,000 USD plus $2,500 USD, equaling $3,500 USD.
Some insurers also offer a maximum amount that a patient needs to pay in costs per year, which may be the same amount as the deductible. If he has a lengthy hospital stay, the insurer might only require him to pay to that maximum. So, for instance, if the maximum amount a patient needs to pay per year is $2,000 USD, all costs beyond that point might be covered. Other insurers give a maximum amount they will pay within a given year or a lifetime. If a patient’s medical expenses exceed this amount, he would need to pay any expenses beyond it.