What is the Difference Between Co-Pay and Co-Insurance?

In many cases, even with health insurance, all of the costs for your health care are not covered. This means that there is usually money owed and in some cases, lots of it. However, most people with a decent health insurance plan can rest assured that they will only have to pay a small amount of money out of pocket. In these situations, a co-pay or co-insurance may be necessary. So what exactly is the difference between the two?

Co-Pay

With the rising costs of health care, it’s usually uncommon to see someone able to purchase prescription drugs or medical treatment without having some sort of co-pay built into their plan. Basically, a co-pay – short for co-payment – is a fixed dollar amount that you pay every time you need medical treatment or receive services. If you visit the doctor for a checkup or if you pick up your prescription at the pharmacy, you will be responsible for a co-pay. Usually the amount is relatively low, although it can vary based on the service. For instance, a $15.00 co-pay is not uncommon for a regular doctor’s visit, but this amount could increase to $25.00 for a specialist. Unlike co-insurance, where you are billed, a co-pay is typically owed at the time of service.

Co-Insurance

Co-insurance is a bit different from a co-pay, although you are still paying money out of pocket. With co-insurance, you are actually sharing the costs of your medical with your insurance company by paying a percentage of the costs yourself. Generally, this percentage begins after your deductible has been met. For instance, a typical health care plan today may have what they call an 80/20 split. That means that every time you receive medical treatment, your insurance pays 80% of the bill, while the remaining 20% of all expenses are your responsibility. However, you do not pay your share at the time of your visit, this amount is billed to you later. Often, managed care plans like HMOs and PPOs have co-insurance built into the plan. In some cases, if you choose to use a provider who is not included in your plan’s network, the co-insurance amount can be very high.

No matter how you look at it you will have some sort of costs when it comes to health care and coverage. Being aware of the different amounts and what they mean can be the difference of which plan you ultimately choose. If you are on a group plan you may not have as much choice, but with individual plans, you do. Be conscious of the costs, sit down with an education specialist and decipher the plans. The more you know the more you can potentially save.

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